Compliance Blog

Oct 31, 2014
Categories: Home-Secured Lending

CFPB Mortgage Rule Tidbits – Final Rule on Points and Fees Cure; Updated Mortgage Readiness Guide; Proposed Changes to TILA/RESPA Final Rule

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

Final Rule on Points and Fees Cure. Recently, the CFPB issued a final rule that, among other things, provides a limited cure mechanism under the ability-to-repay rule that allows lenders to refund points and fees that exceed the 3 percent cap on a loan that otherwise meets the qualified mortgage (QM) requirements at consummation.

Under the rule, a lender can refund excess points and fees, with interest, within 210 days after the loan is made to meet the QM requirements as long as one of the following has not occurred:

(1)   The institution of any action by the consumer in connection with the loan;

(2)   Receipt by the creditor, assignee, or servicer of written notice from the consumer that the transaction’s total points and fees exceed the cap; or

(3)   The consumer becomes 60 days past due on the legal obligation.

In addition, the creditor must maintain and follow policies and procedures for reviewing points and fees and providing refunds to consumers. Note that this provision will expire on January 10, 2021.


Updated Mortgage Readiness Guide. The CFPB also recently revised its 2014 CFPB Dodd-Frank Mortgage Rules Readiness Guide to include the TILA-RESPA Integrated Disclosure Rule that takes effect August 1, 2015.  The guide, designed to help institutions come into and maintain compliance with mortgage rule changes, is now current as of final rule changes issued through August 1, 2014.


Proposed Changes to TILA/RESPA Final Rule. This CFPB proposed rule would amend the Truth in Lending Act (TILA) /Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures Rule (TILA/RESPA final rule) to allow more time for providing a revised Loan Estimate disclosure when the consumer locks a rate or extends a rate lock after the initial Loan Estimate is provided. Under the TILA/RESPA final rule, a creditor must issue a revised Loan Estimate on the same business day the interest rate is locked. The proposal would relax the redisclosure timeframe, giving creditors until the next business day to provide the revised disclosures. 

The proposal would also permit language related to new construction loans to be included on the Loan Estimate disclosure. Under the TILA/RESPA final rule, a creditor can issue a revised Loan Estimate for a new construction loan where the creditor reasonably expects settlement will occur more than 60 days after providing the initial Loan Estimate if the creditor includes a clear and conspicuous statement on the initial disclosure reserving that right. However, the TILA/RESPA final rule does not allow a creditor to state that it may issue revised disclosures on the Loan Estimate, so this amendment has been proposed to resolve that issue.

The proposal would also amend the 2013 Mortgage Loan Originator Final Rule to provide for the placement of the NMLSR ID on the integrated disclosures.

Have a great weekend everyone and Happy Halloween!