By Tracy M. Evans, Associate, Saxon, Gilmore, Carraway & Gibbons, P.A.

Tevans2-cropped-sThe Consumer Financial Protection Bureau (CFPB) is a federal agency established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, responsible for regulating consumer protection with respect to financial products and services. One of the core functions of the CFPB is to write rules governing banks and financial institutions and to enforce federal consumer financial protection laws.

Recent activity of the CFPB of particular interest to lenders is a change to Regulation Z, which implements the Truth in Lending Act (TILA). Currently, Regulation Z requires a creditor to determine a consumer’s ability to repay a loan prior to making a mortgage loan. The new amendment implements exemptions to this ability-to-repay rule, and is intended to foster lending by non-profit organizations, small creditors, and community lenders. In particular, creditors designated as either a Community Housing Development Organization or a Down Payment Assistance Provider of Secondary Financing will be exempt from the ability-to-repay rule under certain circumstances. In addition, non-profit creditors who extend credit no more than 200 times annually, provide credit to only low to moderate income consumers, and follow their own written procedures for determining a consumer’s reasonable ability to repay a loan, will be exempt. The exemption also applies to extension of credit made by a housing finance agency and those made pursuant to the Emergency Economic Stabilization Act. Aside from these changes, the amendment also provides exceptions to limits on compensation to loan originators. These changes to Regulation Z are intended to “foster access to responsible credit for consumers,” according to CFPB Director Richard Cordray. The amendment is scheduled to take effect on January 10, 2014.

Read more about the changes here: http://www.mortgagenewsdaily.com/05292013_qualified_mortgages.asp

To learn more about this and other recent activity of the CFPB go here: http://www.consumerfinance.gov/regulations/

 

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