Proposed Clarifications and Revisions to the Servicing, Mortgage Loan Originator Compensation, and Other Mortgage Rules

Dear Ms. Jackson:
The Consumer Bankers Association (CBA) appreciates the opportunity to submit comments to the Consumer Financial Protection Bureau (CFPB) in response to the proposed clarifications and revisions to certain of the mortgage rules issued in January of this year. Specifically, these proposed changes and clarifications address: (1) the loss mitigation and error resolution procedures under the servicing rules; (2) amounts counted as mortgage loan originator (MLO) compensation to retailers and employees of manufactured homes for purposes of the points and fees thresholds; (3) various exemptions available to lenders operating predominantly in “rural or underserved” areas; (4) application of the MLO rules to bank tellers and similar staff; and 5) the prohibition on lender-financed credit insurance. The CFPB is also proposing to move up the effective date to January 1, 2014 for many of the provisions of the MLO rules. CBA generally supports many of these clarifications and revisions, while offering the following comments for consideration.

Summary of CBA’s Comments

  •  For the provisions addressing monthly premiums for credit insurance, we request the CFPB amend this proposal so it is consistent with the corresponding provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which clearly state premiums for credit insurance “calculated and paid in full on a monthly basis” would not be considered financing by the creditor, regardless of whether the premiums are “levelized” or whether the creditor is acting as a “passive conduit” in providing the product.
  • For the proposed short-term forebearance plans servicers may offer, CBA requests this be permitted for up to four months of payments, as opposed to two months that is currently proposed.
  • The CFPB should include a more objective definition of “first notice of filing” for purposes of the prohibition from making the first notice or filing required by applicable law for a foreclosure process until the borrower’s mortgage loan is more than 120 days delinquent.

To read the full Comment Letter, download the PDF.