According to a Ballard Spahr report, on Jan. 10, 2013, the CFPB issued a final high-cost loan rule under Dodd-Frank that implements various changes to the Home Ownership and Equity Protection Act provisions of the Truth in Lending Act regarding high-cost home loans.
It implements two Dodd-Frank provisions related to homeownership counseling.
Regulation X under RESPA is amended to require that no later than three business days after a lender or mortgage broker receives a mortgage loan application, or sufficient information to complete an application, “a lender must provide the applicant with a clear and conspicuous written homeownership counseling organizations that provide relevant counseling services in the location of the applicant,” they wrote.
Information about the CFPB or HUD-approved counseling organizations must be available online separately or combined with TILA and or other mortgage disclosures.
Only reverse mortgage loans are excluded from the new counseling-related requirements.
The twist is in making the lender responsible for ensuring that the mortgage broker provides the said list of counseling organizations to borrowers.
Regulation Z is amended to require a lender must confirm “that a first-time borrower with a closed-end mortgage loan obtained homeownership counseling” from a qualifying organization if the loan results in negative amortization, they said.