Why Haven’t Loan Officers Been Told These
Facts? Disclosure Basics.
Test Your Knowledge
ECOA
A creditor must notify an applicant of an adverse action within how many days of taking adverse action due to an incomplete application?
- 30 Business days
- 30 Calendar days
- 10 Business days
- 10 Calendar days
TILA
Which transactions are subject to the HPML escrow requirements?
- Primary residence, FHA HECM reverse mortgage, APR two percent over APOR.
- Purchase, primary residence, HPML-Qualified Mortgage.
- Refinance, primary residence, open-end credit, first lien, APR 3.5% over APOR.
- Refinance, primary residence, jumbo first mortgage, condominium, APR 2.00% over APOR.
RESPA
What types of transactions are covered by RESPA?
- A non-convertible construction loan of less than 12 months.
- A Two-unit non-owner occupied purchase.
- A three-unit owner-occupied purchase.
- A refinance transaction for a four-unit property that is owner-occupied.
TILA-TRID Rules
What is the general accuracy requirement for Loan Estimates regarding costs without quantified accuracy guidelines, such as prepaid interest, property insurance premiums, and escrows?
- The aggregate amount of charges paid by or imposed on the consumer does not exceed the aggregate amount of such charges by more than 10 percent.
- If no accuracy requirement is specified, the estimated cost is not subject to any accuracy requirements.
- Regulation Z requires the lender’s best efforts to state the estimate accurately.
- The estimate must be consistent with the best information reasonably available to the creditor when the disclosures are provided.
Answers next week!
BEHIND THE SCENES – Another Remarkable About-Face From the CFPB
The Consumer Financial Protection Bureau (CFPB) is responsible for creating and enforcing rules against Unfair, Deceptive, or Abusive Acts or Practices under the Consumer Financial Protection Act, also known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, Title X, Sections 1022 and 1031.
In another remarkable about-face from the CFPB, the Bureau has unilaterally withdrawn the bulk of its published interpretive policy guidance for statutes under its administration since its inception, including previous guidance on abusive acts and practices.
Background
When Congress enacted the Dodd-Frank Act, it adopted definitions of unfair and deceptive acts based on Section 5 of the FTC Act (15 USC §45). Both enforcers and the markets have nearly 100 years of experience navigating the FTC Act and its prohibitions against unfair or deceptive acts and practices. However, Congress introduced a more novel prohibition to Title X: the ban on abusive acts or practices. This was not the first instance of such a safeguard that relied upon the term “abusive,” the Home Ownership and Equity Protection Act (HOEPA) previously established protections against abusive acts, which were to be articulated and enforced by the Federal Reserve Board, the then-laws administrator.
UDAAP
Since the CFPB came into being, a period of over ten years, the market and the CFPB have struggled with Title X’s “abusive” statutory language to provide adequate examples of how covered persons should comply with this section.
On April 3, 2023, the CFPB issued the CFPB Policy Statement on Abusive Acts or Practices (PSAAP) to inform federal regulators and market participants authoritatively, promoting uniformity in enforcement.
From the CFPB’s April 3, 2023 PSAAP notice, “Since the enactment of the CFPA, government enforcers and supervisory agencies have taken dozens of actions to condemn prohibited abusive conduct. This policy statement summarizes those actions and explains how the Consumer Financial Protection Bureau (CFPB) analyzes the elements of abusiveness through relevant examples, with the goal of providing an analytical framework to fellow government enforcers and supervisory agencies and to the market for how to identify violative acts or practices.”
ABOUT-FACE!
On May 12, 2025, the Consumer Financial Protection Bureau (CFPB) withdrew 67 distinct policy statements, interpretive rules, and other forms of guidance affecting financial services, including the mortgage industry. The CFPB states, “The Bureau intends to continue reviewing all guidance documents to determine whether they should ultimately be retained. However, the Bureau has determined that the guidance identified in section III should not be enforced or otherwise relied upon by the Bureau while this review is ongoing. Accordingly, the Bureau is hereby withdrawing all of the guidance materials set forth in section III below.”
Better the devil you know than the devil you don’t?
On the surface, critics of the CFPB might applaud this action; however, it leaves a vacuum that is likely to be filled in unexpected ways. Similar to the perceived reduction in investigation and enforcement that occurred during Mick Mulvaney and Kathy Kraninger’s CFPB tenures, states may step in to enact new and potentially more burdensome consumer protection laws. Additionally, the CFPB cannot lessen the federal statutory obligations on mortgage lenders. Instead, the withdrawal of guidance may increase lender risk by allowing incorrect or specious federal law interpretations by other enforcement agencies, such as state regulators or even other federal regulators like the FTC, FDIC, OCC, or NCUA.
The more uncertainty there is surrounding federal statutes like UDAAP prohibitions, the higher the risk of inconsistent enforcement. We should also consider the pendulum effect: when regulatory winds shift, a return to stricter enforcement could be detrimental, particularly if prior deregulation leads to substantial consumer or market damages. Some stakeholders argue that Dodd-Frank might not have been enacted if the Gramm-Leach-Bliley Act (GLBA) hadn’t set the stage for it.
Every state already has some form of Unfair, Deceptive, and Abusive Practices (UDAP) consumer protection statutes. However, the diminishing federal role in enforcing UDAP provisions encourages state legislatures to strengthen their existing consumer protection laws. As a result, the mortgage industry may face a patchwork of politically charged state enforcement agencies. Blurring the compliance landscape increases the risk of politically motivated investigations and enforcement. Is a politically charged federal enforcer, as some have suggested describes the CFPB, preferable? We shall see.
Recently fired CFPB Director Rohit Chopra expresses some concerns on CNBC; see the link below.
Chopra’s Take on Diminished CFPB
CFPB Withdrawal of guidance, interpretive rules, policy statements, and advisory opinions
Tip of the Week – Sign Up for 2025 CE
Expanding your product offerings is an effective way to enhance your business’s vitality. This year, the Loan Officer School is surveying non-government financing options for construction and renovation projects.
The shortage of affordable housing is unlikely to be resolved anytime soon. As affordable, move-in-ready housing solutions remain hard to find, the demand for construction and renovation loans is expected to increase. According to the JCHS, Harvard University, the US remodeling market soared above $600 billion in the wake of the pandemic and, despite recent softening, remains 50 percent above pre-pandemic levels.
Discover how to enhance borrower advantages through construction and renovation financing.
- Enhanced housing affordability.
- Housing options for aging or disabled borrowers.
- Housing solutions for borrowers caring for aging or disabled family members.
- Multi-generational housing solutions.
For any questions or inquiries regarding state education needs, please feel free to call.