As part of the government rolling out provisions of landmark mortgage reforms, the agency spearheading the effort plans a host of moves to make sure both consumers and mortgage lenders get the message.
Many mortgage lenders have already taken steps to comply with the major Ability-to-Repay rule and Qualified Mortgages (QM) provisions, the first of seven new mortgage regulations, which are effective in January, 2014.
The Consumer Financial Protection Bureau (CFPB) rules protect consumers from irresponsible mortgage lending by requiring lenders to be certain mortgage borrowers have a real ability to repay their mortgage.
Other new CFPB rules address appraisals, escrow accounts, protections for high-cost mortgages, compensation and qualifications for loan originators and rules for mortgage servicers helping struggling homeowners facing foreclosure.
By protecting consumers from abusive mortgage lending practices, the landmark overhaul of federal mortgage regulations is also designed to prevent conditions that contributed to bringing down the housing market and ruining the economy.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act mandates the changes, which the CFPB must implement.
"Our plan is to work with the mortgage industry to ensure that the CFPB's new rules are implemented accurately and expeditiously," said CFPB Director Richard Cordray.
In an effort to support rule implementation and ensure industry is ready for the new borrower protections, the CFPB will:
Educate consumers. The CFPB will give consumers information about their new protections under these rules through a broad-reaching consumer education campaign.
Publish plain-language guides. The CFPB will publish easy-to-understand summaries of the regulations in both written and video form. The guides, available in the spring, target smaller businesses with limited staff for compliance.
Coordinate with other agencies. The CFPB is coordinating with other federal government regulators that also conduct examinations of mortgage companies to ensure all regulators have a shared understanding of the CFPB's new rules so there is a consistent approach to regulatory enforcement.
Publish updates to the official interpretations. Over the next year, the CFPB plans to issue updates of the "official interpretations," which provide guidance on how to comply with the rules. These updates will allow the CFPB to address important questions raised by industry, consumer groups, or other agencies. Expect the first such update this spring.
Publish readiness guides. These guides, available this summer, will help mortgage originators and servicers prepare to comply with the new rules by giving them helpful check-lists, such as suggesting that implementation plans include items like revising policies and procedures and finalizing training plans for staff. More in-depth examination procedures are expected to be published later this year by the Federal Financial Institutions Examination Council.