CFPB TILA Escrow Rule guidance and Amendments

Last week the Consumer Financial Protection Bureau (CFPB) issued two documents that pertain to the Truth in Lending Act (TILA) Higher Priced Mortgage Loan (HPML) Escrow Rule. The first is a proposed rule that will clarify and make technical amendments to the HPML Escrow Rule, and the second is the Small Entity Compliance Guide for the HPML Escrow Rule.

The proposed amendments have two primary purposes. The first is to maintain certain consumer protections. The 2013 Escrows Final Rule amends an existing rule that also provides protections regarding assessments of consumers’ ability to repay, and prepayment penalties on certain “higher-priced” mortgage loans. The Dodd-Frank Act and certain other mortgage regulations issued in January expand and strengthen the requirements concerning ability to repay and prepayment penalties. However, the 2013 Escrows Final Rule as adopted in January can be read to cut off the old protections before the new expanded protections take effect. This would create a six-month period when those consumer protections would not apply. The proposed rule establishes a temporary provision to ensure existing protections remain in place for higher-priced mortgage loans until the expanded provisions take effect in January 2014.

The second purpose is to clarify how to determine whether a county is considered “rural” or “underserved” for purposes of applying an exemption in the escrows rule and special provisions adopted in three other Dodd-Frank Act mortgage rules issued in January. The Consumer Financial Protection Bureau (CFPB) also proposes illustrations of how to handle the determinations to facilitate compliance. The determinations are made based on currently applicable Urban Influence Codes or UICs, which are established by the USDA’s Economic Research Service (for “rural”), or based on HMDA data (for “underserved”). In addition, the CFPB used the proposed changes to compile the preliminary rural or underserved counties list posted on the agency’s website.

The Small Entity Compliance Guide is designed to provide an easy-to-use summary of the TILA Escrow Rule. The guide highlights issues that small creditors and their business partners might find helpful to consider when implementing the rule.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News.