The Consumer Financial Protection Bureau unveiled the latest updates to the exam procedures it will use to scrutinize financial institutions and mortgage companies when new market regulations go into effect next January.
The government regulatory body said the move is aimed at providing the entities subject to the rules with ample opportunity to comply.
Many of the rules, which cover appraisals, escrow accounts, and compensation and qualifications for loan originators, grew out of the Dodd-Frank Wall Street Reform and Consumer Protection Act — an attempt at reforming the mortgage market in the wake of the financial crisis.
“The CFPB recognizes that the easier we make it for financial institutions and mortgage companies to follow the new regulations, the better off consumers will be,” said Richard Cordray, CFPB director. “By releasing details of what our examiners will be looking for well in advance of the effective date of most of the rules, we are giving industry more time to adjust.”
In a press release, the CFPB said the exam procedures would help relevant institutions and companies grasp how they will be examined for a raft of rules that includes the setting of qualification and screening standards for loan originators; a bar on the steering of incentives; the prohibition of dual compensation; the protection of borrowers with higher-priced mortgage loans; and a ban on the waiving of consumer rights.
The exam procedure updates are contained in the sections of CFPB manuals pertinent to two laws: the Truth in Lending Act and the Equal Credit Opportunity Act.
The CFPB says it plans to educate members of the public over the protections they will enjoy when the new rules come into effect. The agency also plans further updates to its exam procedures, with the first round of those related to the ability-to-repay and mortgage servicing rules due within “the next several months.”
