Fed Defers Another Mortgage Reform. Originator Comp. on Schedule

Citing the limited benefits of proceeding with it and the potential compliance difficulties that would arise from it, the Federal Reserve Board had decided not to finalize three pending rulemakings scheduled to go into effect in July.  The rules were to be promulgated under Regulation Z which implements the Truth in Lending Act (TILA) currently administered by the Board scheduled to be transferred to the new Consumer Financial Protection Bureau (CFPB.)

Two of the rules were first proposed in August 2009 and would have reformed consumer disclosures under TILA for closed-end mortgage loans and home equity lines of credit.  The third rule, issued in September 2010 included changes to consumer disclosures for rescinding several loan types, clarified lenders' responsibilities when borrowers exercised those rights, changed disclosures for reverse mortgages, proposed new disclosures for loan modifications and proposed restrictions on some advertising and sales practices.   The Board received more than 5,000 comments on these proposed rules.

"This announcement and the delay of risk retention regs indicates the Fed is capable of understanding the implications of implementing 'onesy-twosy' type reforms in the mortgage industry" said MND's Managing Editor Adam Quinones. "If the main intention of these updates is to protect consumers, the Fed should further consider the ramifications if they don't delay originator compensation reform too. No definitive compliance guide has been offered by the Fed. The Consumer Financial Protection Bureau isn't set up and won't be until July.  The GFE and the TIL still need to be simplified. Uncertainty is clearly abundant.  As a result lenders are taking several different approaches on loan officer pay practices that will only reduce financing options and increase costs for consumers. This is not how we rebuild the industry.  We need less confusion and more direct guidance.  Otherwise the consumer will end up suffering".

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Source: http://www.mortgagenewsdaily.com/02022011_tila_cfpb.asp

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