The CFPB issued updates to the Truth in Lending Act and Equal Credit Opportunity Act sections of its examination manual. The release of the updated examination procedures is meant to provide financial institutions and mortgage companies with guidance on how the CFPB will evaluate compliance with many of the mortgage regulations issued in January. According to the CFPB, the updated examination procedures will provide guidance on how the CFPB will examine financial institutions and mortgage companies in the following areas: (1) setting qualification and screening standards for loan originators; (2) prohibitions on steering incentives in loan originator compensation; (3) prohibitions on loan originators being paid by both the consumer and another person; (4) escrow account requirements for higher-priced mortgage loans; (5) prohibitions on mandatory arbitration clauses for mortgage and home equity loans; (6) requirements that lenders provide applicants with appraisals and valuation reports; and (7) prohibitions on financing certain credit insurance premiums. The CFPB plans to publish examination procedures for the ability-to-repay and mortgage servicing rules in the coming months.
Alert June 11, 2013