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CFPB Proposal to Amend Regulations X and Z

Another comment letter was filed by the Missouri Credit Union Association (MCUA) and Credit Union National Association (CUNA) last week, this one with the CFPB in response to its proposed rule to amend Regulations X and Z to implement changes to the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) that were made under the Dodd-Frank Act. Specifically, the proposed amendments will implement changes to TILA that expand the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protection Act (HOEPA), by revising and expanding the triggers for coverage under HOEPA, and by imposing additional restrictions on HOEPA mortgage loans. As reported last week, the CFPB recently extended the public comment period for the portion of the proposal that addresses whether and how to account for the implications of a more inclusive finance charge on the scope of HOEPA coverage. Thus, the letter filed last week does not address that portion of the proposal.

MCUA and CUNA urged the CFPB to allow flexibility where possible to creditors to reduce the compliance burden associated with this and other rules the Bureau is proposing.

The proposal would implement a statutory requirement that creditors ensure borrowers have received certain information, including on homeownership counselors or counseling organizations located within the applicant’s zip code. While MCUA and CUNA support the CFPB’s proposal to require lenders to provide applicants with a list of counselors, it asks the Bureau to provide flexibility on the number of counselors to be included on the list, such as by requiring “no fewer than three” instead of the proposed requirement of five. In addition, MCUA and CUNA ask the CFPB to consider eliminating the zip code requirement if it believes it has adequate statutory authority to do so. Many states already require lenders to maintain and provide to borrowers a list of counselors within the state. However, since certain states do not require these lists to be zip code-specific, it would ease compliance for certain lenders if the zip code requirement were excluded from the Bureau’s final rule.

The Bureau has not proposed an effective date.