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Recent Consumer Financial Protection Bureau (CFPB) Developments

Rules Creating Exemptions to the ATR Rule Finalized

The Consumer Financial Protection Bureau (CFPB) recently finalized rules that modified and created specific exemptions to the CFPB’s Ability-to-Repay Rule. The rules have three main effects.

  1. They exempt certain community development lenders and nonprofits—specifically those that lend only to low- and moderate-income consumers, and make 200 or fewer such loans per year—from the ATR Rule. 

  2. They facilitate lending by community banks and credit unions that have less than $2 billion in assets, and make 500 or fewer first lien mortgages per year. 

  3. They no longer require that compensation paid by a broker or lender to a loan originator counts towards the Dodd-Frank points and fees limits.

These changes to the ATR Rule will take effect on January 10, 2014.

Effective Date of Prohibitions on Financing Credit Insurance Premiums Delayed

The CFPB has delayed the effective date of a regulation prohibiting creditors from financing credit insurance premiums secured by a dwelling. The regulation, previously effective June 1, 2013, has been delayed until January 10, 2014. The CFPB wanted to clarify how the rule applied to transactions other than those where a lump-sum premium was added to the loan amount at closing.

CFBP Seeking Comments on Possible Revisions to the Civil Penalty Rule

The CFPB is seeking comments on possible revisions to the Consumer Financial Civil Penalty Fund Rule. The CFBP uses this fund, established by the Dodd-Frank Act, to deposit civil penalties obtained in judicial or administrative actions under federal consumer financial laws. The fund can be used to pay victims of violations of federal consumer financial laws, or, if victims cannot be found, to educate consumers and provide financial literacy programs. The rule articulates the CFPB’s interpretations of what kind of victim payments are appropriate and how to otherwise allocate the funds. Comments are due on July 8, 2013.

White Paper Concerning Overdraft Practice Concerns Published

The CFPB published a white paper concerning overdraft practice concerns and institutional practices. The paper finds that a large portion of consumer checking account revenue continues to come from overdraft fees. Furthermore, those consumers who choose, let alone use, overdraft coverage have higher costs and a higher chance of having their checking accounts involuntary closed. No action, other than further research, is currently planned.

CFPB Launches New Mortgage Rule Implementation Page

The new mortgage rule implementation page is part of an effort to help lenders comply with the Dodd-Frank Act reforms and CFPB rules. Debtors and potential debtors can find potentially useful information, including quick reference charts, video guides, manuals, etc.—related to the new 2013 mortgage rules. While the CFPB’s intention for the site is to help understand the rules, the materials are not a substitute for the rules themselves.

Ryan C. Fairchild, summer law clerk at Poyner Spruill, co-authored this article.

© 2020 Poyner Spruill LLP. All rights reserved.


About this Author

E. Bardin Simmons, Transactional, Finance, Attorney, Poyner Spruill Law Firm

Bardin has experience representing and advising clients in a broad range of regulatory compliance and transactional matters. He regularly advises financial institution clients regarding compliance with complex state and federal regulations, including regulations relating to banking operations and activities, lending, deposit-taking, and privacy matters.

Bardin also represents clients in connection with a broad range of transactional matters, including real estate acquisitions and developments,  financing transactions, asset purchases and sales,...

Paul M. Fogleman, Financial Services, Real Estate Lawyer, Poyner Spruill, Law Firm

Paul M. Fogleman represents financial institutions, borrowers, and real estate owners in a variety of transactional matters.

Paul assists banks, non-traditional lenders, and borrowers in a broad range of finance transactions, including term and revolving facilities, construction facilities, asset-based lending, receivables financing, loan workouts and debt restructuring. He also has experience advising banking clients with regulatory compliance issues.  Paul represents borrowers and real estate owners in many aspects of real estate transactions, including real estate secured financings, acquisitions and sales, developments, leases, title review and due diligence analysis. Paul also regularly serves as North Carolina counsel in the issuance of local counsel real estate and enforceability opinions.