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Practical Implementation of the CFPB’s New Mortgage Rules: Here is Where You Should Start

In the past year, the CFPB has issued 1,097 pages of final mortgage rules.

I consider myself to be an efficient reader, and it took me roughly three and a half minutes to read just one of those pages.  At that rate, a bank compliance officer would need almost 64 hours of uninterrupted time just to read the text of the new regulations. 


If it takes 64 hours just to read the new rules, you can imagine how much more time will be needed to understand, internalize, apply and implement.  It’s staggering.  And with the January 2014 effective date looming, many banks are beginning to feel the strain.

Fortunately, there is at least some good news for community banks.  The CFPB’s regulations contain a number of exceptions for smaller banks, and so many of those 1,097 pages may not even be applicable.  The struggle, however, is still to understand what the new rules are, identify the areas of your bank that may be affected and determine, either how to comply, or whether there is an available exemption.  In short, even smaller mortgage lenders will need a plan to implement the new rules.  And if you are concerned that your compliance officer doesn’t have a gazillion spare hours for perusing regulations and translating them into a workable implementation plan, you will be happy to know that there is a more realistic alternative.

In the past few months, the CFPB has supplemented its mountain of new regs with a few practical guides and implementation tools.  These materials provide a more realistic starting place for updating compliance programs and internal audit procedures.  So before you spend 64 hours wading through the rules’ complicated provisions, we recommend that you spend an afternoon reviewing these more user-friendly materials.   Then, you can refer to the actual regulations as needed or as questions arise.

  • Dodd-Frank Mortgage Rules Readiness Guide.  This 22-page guide summarizes each of the new mortgage rules, includes a readiness questionnaire that will help banks identify affected areas and processes, answers frequently asked questions about implementation and provides links to additional tools and resources.
  • The CFPB’s Examination Procedures.  These are the materials that examiners will have in hand as they examine your bank for compliance with the new mortgage rules.  As such, they are an ideal starting place for identifying areas of weakness and for updating internal audit procedures to address compliance.  We recommend, in particular, that you focus on the new procedures for Truth in Lending Act and the Real Estate Settlement and Procedures Act that were issued on August 15, 2013.
  • The CFPB’s Mortgage Rule Implementation Website.  This is one-stop resource to access all of the CFPB’s available updates, guidance and tools.  Among other things, it provides links to small-entity compliance guides and training videos for each of the new rules.  It also includes a several quick-reference charts showing how the rules apply to different products and businesses.