CFPB Seeks Comment on Loan Originator Rules

The Consumer Financial Protection Bureau (“CFPB”) is conducting a review of Regulation Z’s Loan Originator Rules (the “Rules”) pursuant to section 610 of the Regulatory Flexibility Act.  Regulation Z, which implements the Truth in Lending Act (TILA), includes certain requirements regarding loan originator compensation. The CFPB is seeking comment on the Rules, in particular the economic impact of the Rules on small entities.  

Specifically, the CFPB is asking for input on the following topics:

• The continued need for the Rules;

• The complexity of the Rules;

• The extent to which the Rules overlap, duplicate or conflict with other Federal rules and/or state and local rules; and

• The degree to which technology, market conditions, or other factors have changed since the Rules were last evaluated, including the economic impact of the Rules on small entities and how the impact of the Rules differ by origination channel, product type or other market segment. 

The Notice and Request for comment was published in the Federal Register today, and any comments must be received on or before May 1, 2023, 45 days after publication.  To read the notice, please visit CFPB Notice of Review and Request for Comment - Loan Originator Rules.

LIBOR Transition News:

Fannie Mae and Freddie Mac Provide Details on LIBOR Replacement for Legacy Loans; Federal Reserve Board Publishes Final Rule

In late-December 2022, Fannie Mae and Freddie Mac officially announced that SOFR (Secured Overnight Financing Rate) will serve as the replacement index for their legacy LIBOR-based adjustable rate loans.  A follow-up announcement was issued by each of the GSE’s on January 25, 2023, providing more clarity on the SOFR transition for legacy single-family ARM loans by including a table identifying the specific SOFR plus transition tenor spread adjustment that replaces each of the three LIBOR indices.

The final rule issued by the Federal Reserve Board in December implementing the LIBOR Act and establishing default rules for benchmark replacement in certain existing contracts that use LIBOR as a reference rate was published in the Federal Register on January 26, 2023 and will become effective 30 days later on February 27, 2023.

The transition to the replacement indices will occur on July 1, 2023, the day after the last date on which the Intercontinental Exchange, Inc. (ICE) Benchmark Administration Limited will publish a representative rate for LIBOR.

To review Fannie Mae’s announcement, please visit Fannie Mae LIBOR Transition Announcement

To review Freddie Mac’s announcement, please visit Freddie Mac LIBOR Transition Announcement

To read the Federal Reserve Board’s final rule implementing the LIBOR Act, please visit Federal Reserve Board's Final Rule Implementing the LIBOR Act