The Consumer Financial Protection Bureau (CFPB) recently requested the public’s input on the economic impact of the mortgage loan originator rules on small mortgage companies under the Regulatory Flexibility Act (RFA). THE CFPB often uses this feedback to inform potential changes to the rules. This request for the public’s input is part of a regularly conducted 10-year review of rules that have, or will have, a significant economic impact on small businesses. The mortgage loan originator rules are due for this standard review process. The mortgage loan originator rules, part of the Truth in Lending Act’s Regulation Z, protect homebuyers from anti-competitive practices, like double-dealing or steering activities, that lead consumers into more expensive loans.

As set forth in section 610, in each review, agencies must consider several factors: (1) The continued need for the rule; (2) The nature of public complaints or comments on the rule; (3) The complexity of the rule; (4) The extent to which the rule overlaps, duplicates, or conflicts with Federal, State, or other rules; and (5) The time since the rule was evaluated or the degree to which technology, market conditions, or other factors have changed the relevant market.

The CFPB stated that stakeholders have provided feedback on many aspects of Regulation Z’s mortgage loan originator rules, including (1) whether to permit different loan originator compensation for originating State housing finance authority loans as compared to other loans; (2) whether to permit creditors to decrease a loan originator’s compensation due to the loan originator’s error or to match competition; and (3) how the Rule provisions apply to loans originated by mortgage brokers and creditors differently. The CFPB also has received feedback that Regulation Z’s mortgage loan originator rules “provide important consumer protections that have provided benefits to consumers and the market.”

The CFPB requests the public to comment on the impact of the mortgage loan originator rules on small entities by reviewing the following factors:

  • The continued need for the mortgage loan originator rules based on the stated objectives of applicable statutes and the rules.
  • The complexity of the mortgage loan originator rules.
  • The extent to which the mortgage loan originator rules overlap, duplicate or conflict with other federal rules, and, to the extent feasible, with state and local governmental rules.
  • The degree to which technology, market conditions, or other factors have changed the relevant market since the mortgage loan originator rules were evaluated.
  • How the impacts of the rules as a whole, and of major components or provisions of the rules, may differ by origination channel, product type, or other market segment.
  • The current scale of the economic impacts of the rules as a whole, and of major components or provisions of the rules, on small entities.
  • Other current information relevant to the factors that the CFPB considers in completing a section 610 review under the RFA.

Comments must be received on or before 45 days after the request for information is published in the Federal Register.

Please read the CFPB’s full notice and request for public comment on Regulation Z’s Mortgage Loan Originator Rules Review Pursuant to the Regulatory Flexibility Act for more information.