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May 11, 2012 – Proposed rules slated for release this summer will include provisions to simplify mortgage points and fees and address mortgage loan originator qualifications and compensation, the Consumer Financial Protection Bureau announced late Wednesday.

The bureau discussed the points and fees provisions during an invitation-only conference call held a couple hours prior to the CFPB's announcement. NAFCU Regulatory Affairs Counsel Dillon Shea participated in that call and will be watching for the proposed rules. The CFPB plans to issue a notice for comment this summer and to finalize the rules by January 2013.

The Dodd-Frank Act set some restrictions on points and fees offered with most mortgages, the bureau notes. The CFPB's proposed rules would:

• require that consumers receive at least a minimum reduction in the interest rate charged when they elect to pay discount points;
• require lenders to offer consumers a no-discount-point loan option so they can better compare competing offers from different lenders;
• ban origination charges – or "origination points," which are different from discount points – that vary with the size of the loan.

The proposed provisions on mortgage originator qualifications and compensation would apply to mortgage brokers and financial institutions' loan officers. They would:

• for all originators, set qualification and screening standards that address character, fitness and financial responsibility for the role,
• require that all originators be screened for felony convictions;
• require all originators to complete training to ensure they have the knowledge necessary for the types of loans they originate;
• reaffirm the Federal Reserve's anti-steering rule, which bans the practice of varying loan originator compensation based on interest rates or certain other loan terms, and make some rule clarifications.

The CFPB says these proposals are designed to preserve consumers' choices while increasing transparency.

The bureau plans to engage with consumers and industry, including a Small Business Review Panel that will meet with a group of representatives of the small financial services providers that would be directly affected by the proposals under consideration. The CFPB will provide panel members with materials in advance of that meeting.

NAFCU will again work to ensure member credit unions are included on the review panel for this set of proposals. It will also prepare a Regulatory Alert for its members and submit an official comment letter reflecting members' concerns.

Materials for Small Business Review Panel members:

• Fact sheet on panel process
• Overview of rules
• Questions they will be asked