The Bureau of Consumer Financial Protection is publishing for public comment 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). The proposal would implement statutory changes made by the Dodd-Frank Act to Regulation Z's current loan originator compensation provisions, including a new additional restriction on the imposition of any up front discount points, origination points, or fees on consumers under certain circumstances. In addition, the proposal implements additional requirements imposed by the Dodd-Frank Act concerning proper qualification and registration or licensing for loan originators. The proposal also implements Dodd-Frank Act restrictions on mandatory arbitration and the financing of certain credit insurance premiums. Finally, the proposal provides additional guidance and clarification under the existing regulation's provisions restricting loan originator compensation practices, including guidance on the application of those provisions to certain profit-sharing plans and the appropriate analysis of payments to loan originators based on factors that are not terms but that may act as proxies for a transaction's terms.
US Code:
15 USC 1601
Name of Law: The Truth in Lending Act (TILA)
US Code: 15 USC 1601 Name of Law: The Truth in Lending Act (TILA)
New TILA section 129B includes several new requirements, some of which necessitate collections of information addressed in this Supporting Statement. Section 129B(b)(1)(A) requires loan originators to be qualified and licensed or registered to the extent required by State and Federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the SAFE Act).1 TILA section 129B(c)(1) prohibits loan originator compensation that varies
1 12 U.S.C. 5101-5116.
2
based on the terms of the loan. TILA section 129B(c)(2) provides that, if a consumer directly pays the loan originator, the loan originator may not also receive compensation from any other party in connection with that transaction, such as a creditor or brokerage firm. In addition, it generally prohibits consumers from being charged discount points, origination points, or fees where a loan originator is being compensated by a person other than the consumer, such as a creditor or brokerage firm. However, it gives the CFPB authority to waive or create exemptions from the prohibition on charging consumers discount points, origination points, or fees where doing so is in the interest of consumers and in the public interest.
Through a final rule published in the Federal Register on February 15, 2013, the CFPB is amending Regulation Z to implement the statutory provisions described above and to create certain exemptions from the statutory provisions as permitted under the statute.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
Supporting Statement LO Compensation final rule 2-7-2013-final version.pdf
One-time burden: Reviewing Regulations, inital compliance costs