The CFPB has proposed a temporary delay of a small portion of the Loan Originator Compensation Rule. The effective date would be delayed for a prohibition on financing credit insurance premiums (Section 1026.36(i)). The prohibition codified a well-established practice of avoiding the addition of a lump-sum premium to a mortgage loan amount at closing. However, some of the clarifying language in the preamble to the rule appeared to apply the prohibition to other kinds of transactions, an application that would affect the availability of credit insurance for consumers.
The American Bankers Insurance Association (ABIA), a subsidiary of ABA, advocated for a delay to allow the industry to comment on the change in approach. The CFPB is accepting comments on the proposed delay 15 days after it is published in the Federal Register. The CFPB intends to publish a new proposal to seek further notice and comment on this prohibition in June, and that proposal will include a new effective date.
Read the notice.
ABIA follows insurance-related issues on its blog, the Bank-Insurance Connection. Coverage includes legislative and regulatory issues related to the bank sale of insurance in addition to articles to help banks implement their insurance programs. Subscribe for updates.