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CFPB | RIN: 3170-AA13 | Publication ID: Spring 2013 |
Title: Loan Originator Compensation Requirements Under the Truth in Lending Act (Regulation Z) | |
Abstract: The CFPB published for public comment in August 2012 a proposed rule amending Regulation Z (Truth in Lending) to implement amendments to the Truth in Lending Act (TILA) made by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). On January 20, 2013 the CFPB issued a final rule which was published in Federal Register on February 15, 2013. The final rule implements requirements and restrictions imposed by the Dodd-Frank Act concerning loan originator compensation; qualifications of, and registration or licensing of loan originators; compliance procedures for depository institutions; mandatory arbitration; and the financing of single-premium credit insurance. The final rule revises or provides additional commentary on Regulation Z's restrictions on loan originator compensation, including application of these restrictions to prohibitions on dual compensation and compensation based on a term of a transaction or a proxy for a term of a transaction, and to recordkeeping requirements. The final rule also establishes tests for when loan originators can be compensated through certain profits-based compensation arrangements. At this time, the CFPB is not prohibiting payments to and receipt of payments by loan originators when a consumer pays upfront points or fees in the mortgage transaction. Instead the CFPB will first study how points and fees function in the market and the impact of this and other mortgage-related rulemakings on consumers' understanding of and choices with respect to points and fees. The final rule is designed primarily to protect consumers by reducing incentives for loan originators to steer consumers into loans with particular terms and by ensuring that loan originators are adequately qualified. The CFPB will issue at a later time proposed regulations on anti-steering provisions that TILA section 129B(c)(3) requires the CFPB to adopt. | |
Agency: Consumer Financial Protection Bureau(CFPB) | Priority: Other Significant |
RIN Status: Previously published in the Unified Agenda | Agenda Stage of Rulemaking: Completed Actions |
Major: Yes | Unfunded Mandates: No |
CFR Citation: 12 CFR 1026 | |
Legal Authority: 12 USC 5512 12 USC 5581 15 USC 1601 et seq |
Legal Deadline:
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Regulatory Flexibility Analysis Required: Yes | Government Levels Affected: None |
Small Entities Affected: Businesses, Organizations | Federalism: No |
Included in the Regulatory Plan: No | |
RIN Data Printed in the FR: Yes | |
Agency Contact: Charles Honig Office of Regulations Consumer Financial Protection Bureau Phone:202 435-7700 |