The Consumer Financial Protection Bureau issued two regulations that expand the types of mortgage loans subject to federal protections and require creditors to provide loan applicants with written appraisals. You can access the regulations here.
One of the regulations expands the types of mortgage loans subject to the protections of the Home Ownership and Equity Protections Act HOEPA, which was enacted to address abusive refinancing practices and equity loans with high interest rates or high fees. HOEPA was amended through the Dodd-Frank Wall Street Reform and Consumer Protection Act to add protections for high-cost mortgages.
Among the changes, the regulation requires borrowers to receive home ownership counseling before obtaining a high-cost mortgage.
The regulation also adds exemptions for three types of loans the CFPB does not believe are as risky: loans to finance initial construction of a house, loans originated and financed by housing finance agencies, and loans from the U.S. Department of Agricultures Rural Housing Service loan program.
The CFPB also issued a rule that would require creditors to provide applicants with free copies of all appraisals and other written valuations and requiring creditors to notify applicants in writing.
The rule is consistent with an amendment to the Equal Credit Opportunity Act. Previously, creditors only had to provide copies of appraisals when applicants requested them.
Creditors are prohibited from charging applicants for copies of appraisals, but may charge for appraisals and other written valuations.
Both rules become effective January 18, 2014.