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Financial Services Law Insights and Observations

CFPB Proposes Two Major Mortgage Rules

CFPB Dodd-Frank

Lending

On July 9, the CFPB issued two proposed rules related to mortgages. The first proposed rule would amend Regulations X and Z to establish new disclosure requirements and forms for most residential mortgage transactions. The proposal would combine existing disclosure requirements in new loan estimate and closing forms and would incorporate new Dodd-Frank Act requirements. This proposed rule also provides extensive guidance regarding compliance with the new disclosure requirements. Comments on most aspects of the proposal are due by November 6, 2012, but the CFPB has requested comments by September 7, 2012 on two portions of the proposal. The second proposed rule would implement the Dodd-Frank Act’s amendments to HOEPA that (i) expand HOEPA’s coverage to more types of mortgage transactions, (ii) amend existing high-cost triggers, (iii) add a prepayment penalty trigger, and (iv) expand protections associated with high-cost mortgages. The proposal also would amend Regulation X to implement other homeownership counseling-related requirements in Dodd-Frank requiring lenders to (i) distribute a list of homeownership counselors or counseling organizations to consumers within a few days after applying for any mortgage loan and (ii) provide first-time borrowers with counseling before taking out a negatively amortizing loan. Comments on this second proposed rule are due by September 7, 2012.

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