(FROM CUNA's NEWS NOW, May 8)
The Consumer Financial Protection Bureau has favorably responded to the Credit Union National Association's recent request that the agency delay a June 1 effective date relating to the prohibition on financing certain credit insurance charges. The provision is contained within the bureau's mortgage loan originator compensation rule.
The CFPB told CUNA it will seek comment for 15 days on a proposed delay.
In a Federal Register document published today, the CFPB wrote, "Temporary delay of the effective date would permit the bureau to clarify, before the provision takes effect, its applicability to transactions other than those in which a lump-sum premium is
added to the loan amount at closing."
CUNA had expressed concern that certain language within the new rule needed clarification, and that a June 1 effective date of this prohibition could upend practices at some credit unions.
The CFPB's mortgage loan originator compensation rule contains a provision, as required by the Dodd-Frank Act, which bans the financing of any premiums or fees for payment protection products in connection with certain consumer credit transactions secured by a dwelling. The rule does allow the products to be calculated and paid for in full on a monthly basis.
To ease compliance and help avoid unneeded costs, CUNA had urged the CFPB to delay the effective date of any provisions of the final rule that would impact products other than actual single-premium credit insurance, as well as any future rule that will address these issues, until Jan. 10, 2014. Most of the rest of the mortgage loan originator compensation rule is set to take effect at that time.