After public criticism, regulators make edits to mortgage rules


The CFPB regulations come just months after the January finalization of the rules and were issued in response to complaints about the new regulations.

“We know that effective implementation helps our rules deliver their intended value to consumers,” said CFPB Director Richard Cordray in a statement issued on Wednesday.

He added, “We are listening closely to feedback on our rules, and today's clarifications show our willingness to make appropriate adjustments to achieve that goal.”

The changes relate to rules determining whether a borrower is able to repay their loan and regulations that protect consumers as they pay back their mortgage, especially those who may be facing foreclosure.

The updates clarify how lenders can calculate the ratio between an employer's debt and income, which is used to determine terms of a Qualified Mortgage, and clarify that the CFPB's rules do not preempt state regulation of mortgage services.

The new amendments also specify which small mortgage servicers will be exempt from some rules, among others.

Additionally, the CFPB and five other financial regulators issued a proposal that would exempt some higher-priced mortgage loans from certain requirements of the Dodd-Frank Act.

Loans with a high interest rate and secured by a consumer's home would be exempted from some of the act's regulations requiring appraisers prepare written reports when they determine a home's value.

A final rule was issued in January, but public comments led to the new exemption proposal.

In addition to the CFPB, the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Housing Finance Agency and National Credit Union Administration proposed the rule.