ABA and its American Bankers Insurance Association (ABIA) subsidiary last week expressed support for the CFPB’s proposal to delay a section of its loan originator compensation rule that would prohibit the financing of single-premium credit insurance offered in connection with residential mortgages.
The CFPB proposed the delay after ABIA flagged issues with language included in the preamble of the final rule. While the original proposal would have barred, as of June 1, adding a lump-sum premium to a mortgage loan amount at closing, the final rule’s preamble included other more common premium structures in the prohibition.
ABA, ABIA and six other trade groups in a comment letter noted that monthly paid premiums are commonly sold by banks, and that it would be challenging if not impossible to unwind such programs by June 1. They added they did not believe the prohibition should apply to monthly premium structures, but that if the CFPB decided to bar them anyway, banks would need an additional year to comply.
Read the letter.