The Consumer Financial Protection Bureau (CFPB) has delayed the comment deadline from September 7 to November 6 for two important proposals, one on the definition of “finance charge” under the “Know Before You Owe” combined Truth-in-Lending and Real Estate Settlement Procedure Act forms proposal, and the other to implement changes to Regulation Z under the Home Ownership and Equity Protection Act (HOEPA) as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The decision to delay the comment period for those proposals came about 24 hours after CUNA’s audio conference call with CFPB Director Richard Cordray in which compressed comment periods and the need for more time to comment as well as get ready to comply with new rules was raised.
The expanded definition of “finance change” is tricky. On the one hand, having a definition that is more inclusive of charges borrowers face in connection with loans might be useful for lenders and borrowers alike. On the other hand, if the definition is approved as proposed, a number of fees that are not included now, such as fees for third party closing agents and credit insurance products, would be incorporated into the finance charge. That would mean that more mortgage loans would likely be subject to regulatory requirements and restrictions under HOEPA.
Credit unions are asked to participate in a survey on the definition of “finance charge.” The survey will be distributed sometime this week from CUNA.
The Dodd-Frank Act requires the proposal to implement the combined forms to be issued for comments by July 21, 2012 but did not indicate a compliance date. Additionally, the Dodd-Frank Act requires a number of new disclosures that have a statutory deadline of January 2013. The agency is seeking comments on when compliance with the rule should become mandatory and also on delaying the effective date of the new disclosures to coincide with compliance with the overall rule. Comments on these issues are STILL due September 7.
The HOEPA proposal, which also has delayed comments until November 6, 2012, would expand the types of mortgage loans that are subject to the protections of HOEPA, by revising and expanding the triggers for coverage under HOEPA, and by imposing additional restrictions on such loans, including a pre-loan counseling requirement. The Dodd-Frank Act also amends the Truth in Lending Act and the Real Estate Settlement Procedures Act by imposing certain other requirements related to homeownership counseling.