CFPB Regulations Fuel Mortgage Lenders’ Top Compliance Concerns

TILA/GFE, CFPB-related rulemakings are greatest fears for third year in a row

According to QuestSoft’s fifth annual compliance survey, the 2013 top compliance concerns for lenders stem from Consumer Financial Protection Bureau mandates,including the combined Truth in Lending Disclosure and Good Faith Estimate disclosure form, as well as other CFPB-related rulemakings.

The combined TILA/GFE rules accounted for the highest concern among lenders, with 58.8 percent ranking it a high concern, followed by as yet undefined-CFPB rulemakings at 52.7 percent.

The survey was answered by more than 425 of QuestSoft’s lenders which provided surveyors with nine compliance-related options to express their level of stress over pending regulatory changes. Other concerns included the Real Estate Settlement Procedures Act fee tolerances (49.7 percent high concern) and the Qualified Mortgage Rule (49.1 percent high concern).

“Lenders have a justified reason to be concerned when facing a multitude of regulations that could jeopardize compliance,” says Leonard Ryan, QuestSoft president. “The Bureau is generally interested in working with industry leaders to make implementation and compliance as smooth as possible; however, reforms and requirements can lead to stress and unforeseen consequences – especially if lenders are kept in the dark until the implementation date.”

Ryan notes that regulatory uncertainty has plagued lenders for the third year in a row, and that Dodd-Frank-related questions have been considered a high concern by more than 49 percent of lenders each year since the law passed.

The survey also notes that fair lending exams (41.6 percent high concern), increased Community Reinvestment Act scrutiny (27.8 percent high concern), state consumer lending laws (23.9 percent high concern), the National Mortgage Licensing System Secure and Fair Enforcement for Mortgage Licensing Act (19.6 percent high concern), and mortgage call reports, all rank as high-to-medium concerns in the 2013 survey.

“Dodd-Frank changes are a long train running and will directly affect everyone involved in the mortgage lending industry from now up until January 2014 implementation, when a sense of certainty will hopefully be re-established,” says Ryan. “Until then, lenders remain wary about pending regulations and how they will adjust business practices to meet standards and comply with federal and state laws.”

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