Reminder: Two Mortgage Rules are Effective on June 1, 2013
May 16, 2013
May 16, 2013
With the effective date a little less than two weeks away, credit unions should be well into implementing the new Consumer Financial Protection Bureau (CFPB) rules on Higher Priced Mortgage Loan Escrow Accounts and the Prohibition on Mandatory Arbitration Agreements.
As we reported last week, the CFPB has issued a proposed delay on Prohibition of Financing Single Premium Credit Insurance Products.
Truth in Lending already requires credit unions that are in first lien position on a higher-priced mortgage loan to maintain an escrow account for items such as property taxes, homeowner’s insurance, and flood insurance. The amendment that is effective on June 1, increases the time frame that the credit union must maintain the escrow account before a member can choose to cancel it from one year to five years. The amendment also creates an exemption for smaller financial institutions that operate in rural or underserved areas.
In addition, starting on June 1, all creditors are prohibited from having mandatory arbitration agreements in their mortgage contracts. Credit unions should have reviewed their contracts by this point and be working with their forms providers if the contracts needed to be updated, and remove the prohibited clauses.
For a more detailed analysis of the new rules check out the NWCUA Compliance Bulletins that are archived in InfoSight.
Questions? Contact the Compliance Hotline: 1.800.546.4465, firstname.lastname@example.org.
Posted in Compliance News.