The CFPB’s focus on mortgage reform is again in the spotlight with the CFPB’s announcement yesterday of some of its plans for implementing the residential mortgage loan originator compensation provisions in Title XIV of the Dodd-Frank Act. The CFPB announced that it intends to propose origination standards this summer, with a goal of adopting final rules in January 2013. The standards will address the compensation of loan originators, the charging of discount points and origination points and fees, and uniform qualification requirements for individuals who are loan originators.
The focus on uniform qualification requirements for loan originators is particularly interesting given the CFPB’s recent issuance of a bulletin dealing with transitional licensing. As we reported in the Mortgage Banking Update, the CFPB confirmed that the SAFE Act permits a state to provide a transitional license to a mortgage loan originator licensed in another state, but also advised that Regulation H—the final SAFE Act Rule as issued by HUD and now under the CFPB’s authority—does not permit states to provide a transitional license for a registered mortgage loan originator moving from a depository institution to a licensed entity.
To the extent that qualifications for bank and non-bank originators do become more uniform, it supports transitional licensing for bank originators moving to licensed entities – at least that is what the industry likely will argue. Stay tuned as the industry continues its efforts on this front.
We have prepared a legal alert that describes the important elements of the proposal under consideration by the CFPB.