Lenders will now have 210 days to correct and change charges that exceed the 3% points-and-fees cap under the qualified mortgage (QM
) rule and reimburse borrowers for any overages under the final rule issued by the CFPB. Originally, the regulator proposed a 120-day period to fix calculations and said the new longer period will give lenders an incentive to do post-closing audits.
Other changes will allow some nonprofits to provide mortgage credit and servicing to populations that are underserved, and allow lenders to refund the excess amount plus interest to consumers when they exceed the points-and-fees cap – and still have the loan be considered a QM.
CFPB finalized several mortgage rules in January 2013 that went into effect in January 2014. One of them, the ability-to-repay (ATR) rule, requires lenders to make a good-faith determination about prospective borrowers’ ability to repay their loans.
"Our mortgage rules are protecting consumers from debt traps, runarounds, and surprises," CFPB Director Richard Cordray said. "These adjustments will maintain those strong protections, while ensuring consumers have access to credit. This includes helping nonprofits that provide working families with important pathways to affordable homeownership."
Other changes include:
- Define nonprofit small servicers: The Bureau learned that some nonprofits service loans for a fee from other nonprofit lenders, and that these organizations are unable to consolidate their servicing activities and still meet the requirements for small servicer exemption from some of CFPB's new mortgage servicing rules (service 5,000 or fewer mortgage loans, among other requirements). An alternate definition of a small servicer is provided under the new rules that will allow certain 501(c)(3) nonprofits to consolidate their servicing activities and still be exempt from some of CFPB's mortgage servicing rules.
- The nonprofit ability-to-repay exemption amendment: Prior to this change, certain 501(c)(3) nonprofits lending to low- to moderate-income consumers were exempt from the ATR rule if they made fewer than 200 mortgage loans a year. The change will allow these non-profits to continue offering interest-free, forgivable loans known as "soft seconds," at a rate of more than 200 per year and still be exempt from the ATR rule.
- Excess points and fees refund: Certain loans called QMs protect the consumer under the ATR rule, and the points and fees a consumer pays on a QM cannot exceed 3% of the loan principal at the time the loan is made. Under the new changes, there are limited circumstances in which a lender can refund the excess amount to the consumer if it is discovered after the loan closes that the 3% cap has been exceeded – and the loan will still meet the legal requirements to be considered a QM. The refund must be made within 210 days of the loan being made. This change is designed to encourage lenders to expand their credit access to include potential borrowers who are at or near the points and fees limit. This provision is set to expire on January 10, 2021.
The Consumer Financial Protection Bureau (CFPB) has finalized changes to its mortgage rule, including giving mortgage lenders an extension to fix errors in their calculations of points and fees.