The CFPB issued its final loan originator compensation rule, the last in a set of mortgage regulations the CFPB released this month.
As ABA strongly requested, the CFPB dropped from the final rule its proposed “zero-zero alternative” that would have required lenders to offer a loan option with no discount points or origination fees any time they offered a mortgage with such payment features.
ABA advised the CFPB that for various structural and market reasons the proposed zero-zero alternative would not be a viable option for most banks. The association added that the alternative also raised various uncertainties with respect to compliance with timing and disclosure requirements.
Under the rule, originators cannot be paid by both the consumer and the creditor, and they must meet new qualification and screening standards—including character and financial responsibility reviews, criminal background checks and training requirements.
The final rule also implements Dodd-Frank Act provisions that, for mortgage and home equity loans, generally prohibit mandatory arbitration of disputes related to mortgage loans and the practice of increasing loan amounts to cover credit insurance premiums.
The final rule goes into effect on Jan. 10, 2014.
Read the CFPB press release.
Read the CFPB summary of the final rule.
Read the final rule.