WASHINGTON (5/29/13, UPDATED 2:42 p.m. ET)--The Consumer Financial Protection Bureau (CFPB) Wednesday finalized changes to rules issued in January that require lenders to determine a borrower's ability to repay before writing a mortgage loan. The changes are designed to make it easier for some credit unions and other small creditors to make mortgage credit available to their communities by exempting them from some provisions of the rule.
The CFPB noted that the amendments are intended to facilitate access to credit by creating the specific exemptions and modifications to its Ability-to-Repay rule for small creditors, community development lenders, and housing stabilization programs.
Credit Union National Association President/CEO Bill Cheney, who was contacted by CFPB Director Richard Cordray personally before the amendments were announced, welcomed the changes, noting, "We are hopeful these adjustments will enable more credit unions to continue to meet their members' borrowing needs in a way that minimizes risk and default."
The CFPB also separately approved an effective date delay, sought by the Credit Union National Association and others, for a provision in a rule implementing a Dodd-Frank Act amendment prohibiting creditors from financing certain credit insurance premiums in connection with certain mortgage loans.
The rule is slated to take effect on Jan. 10, 2014, along with the Ability-to-Repay rule and other regulations implementing other Dodd-Frank Act mortgage provisions. However, the CFPB plans to seek comment on the appropriate effective date of the credit insurance premiums rule when it issues proposed credit insurance clarifications for public comment, which is expected next week.
Cheney said of the CFPB's action, "The CFPB's six-month delay of the provision on financing credit insurance premiums is key in that it will give credit unions more time to sort out what has proved to be a confusing element of the Dodd-Frank law.
"We appreciate that Director Cordray and the CFPB staff were responsive to the concerns we expressed to them about this provision and the importance of delaying its June 1 implementation."
He also noted, however, that CUNA is reviewing the rule changes in detail. CUNA will assess the impact of the revisions when it has had an opportunity to view the changes in total. CUNA will be posting a Final Rule Analysis in the next few days.
The newly approved changes to the Ability-to-Repay rule are also effective on Jan. 10, 2014. They include: