The CFPB has issued a “2013 CFPB Dodd-Frank Mortgage Rules Readiness Guide” that is intended “to help financial institutions come into and maintain compliance with” the CFPB’s mortgage rules finalized in January 2013. Unlike the CFPB’s small entity compliance guides, the CFPB states that it designed the Readiness Guide “for use by institutions of all sizes.”
The Readiness Guide has four parts, consisting of a summary of the rules, a readiness questionnaire, FAQs, and tools. The CFPB advises that the Guide is not a substitute for the rules since “[o]nly the rules and their official interpretations can provide compete and definitive information regarding their requirements.” That advice is well-taken since the Guide includes a misleading comment on credit insurance in the section of the readiness questionnaire on loan originator compensation requirements.
More specifically, the Guide asks whether a company’s policies and procedures address provisions that “prohibit financing of any premiums or fees for credit insurance or debt cancellation or suspension in connection with a consumer credit transaction secured by a dwelling” followed by the following parenthetical: “(Note: Credit insurance can be paid on a monthly basis and some unemployment insurance is excluded.)” The CFPB’s comment suggests that all monthly credit insurance premiums are not subject to the prohibition. However, as we have reported, the CFPB has thus far been unwilling to categorically exclude level or levelized premiums from the prohibition even though they are paid monthly and not added to the loan balance.
Despite the Guide’s shortcomings, its readiness questionnaire does provide some insight as to what areas the CFPB considers to be important and steps the CFPB believes companies should take when implementing the new rules. Examples include the CFPB’s questions about third party and vendor management, updates to automated tools, employee training and handling of complaints.