The CFPB announced it finalized its rule governing practices for the origination of consumer mortgage loans, including the qualification of mortgage originators and their compensation. On balance, the final rule attempts to place brokers, creditors and individual loan originators in a compensation-neutral position relative to the terms of a given loan, and to increase accountability for brokers, creditors and individual loan originators who are primarily responsible for originating loans that are later challenged as unlawful by requiring them to include their unique Nationwide Mortgage Licensing System and Registry identifiers on loan documents. Importantly, in the final rule, the CFPB did not adopt the proposed rule’s zero-zero alternative (see August 21, 2012 Alert). Under the zero-zero alternative, a creditor that chose to offer loans with upfront fees, would also have to make available to the consumer “a comparable, alternative loan with no upfront discount points, origination points, or fees that are retained by the creditor [or] broker.” The CFPB explained that the zero-zero alternative was not included in the final rule due to concerns that, as proposed, the alternative would not “facilitate consumer shopping and enhance consumer decision making,” but rather confuse consumers. The CFPB plans additional study and testing on the alternative and may adopt some variation of the zero-zero alternative in the future. The CFPB also released a detailed summary of the rule, which becomes effective January 10, 2014.
Alert January 22, 2013