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Thursday, January 30, 2014

Homeownership Counseling and High Cost Mortgages

QUESTION: 
Are the homeownership counseling list requirements set forth in the High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act and RESPA (“HOEPA Final Rule) only applicable to high-cost loans? 

ANSWER: 
No. As of January 10, 2014 all lenders are required to provide consumers who apply for a federally-related mortgage with a list of HUD-approved housing counseling agencies.  This list must be in writing. The CFPB has provided two ways for a lender to fulfill its obligations as set forth in the HOEPA Final Rule. 
1) A lender may obtain the lists of HUD-approved housing counseling agencies through the CFPB’s website;[1] or
2) A lender may generate the lists of the HUD-approved housing counseling agencies by independently using the same HUD data that the CFPB uses on HUD-approved counseling agencies in accordance with the CFPB’s list instructions.[2] The CFPB published the list instructions and clarified how lenders can provide their own lists on November 8, 2014.[3]
In addition, in Bulletin 2013-13 (the “Bulletin”) the CFPB acknowledged that the second option referenced above will require lenders to “undertake significant development of their compliance systems” to ensure that lists of the HUD-approved housing counseling agencies are compliant. The CFPB also advised that lenders will not be able to provide approved agency lists under the second option for up to six month’s following the January 10, 2014 effective date.

As such, the Bulletin provides that lenders may direct borrowers to the CFPB’s housing counseling website to obtain a list of housing counselors.[4] The CFPB suggests the following text to be provided by lenders.  If followed, the CFPB suggests that the goals of the regulation would be achieved and would not raise supervisory or enforcement concerns. 
“Housing counseling agencies approved by the U.S. Department of Housing and Urban Development (HUD) can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost.

If you are interested in contacting a HUD-approved housing counseling agency in your area, you can visit the Consumer Financial Protection Bureau’s (CFPB) website, www.consumerfinance.gov/find-a-housing-counselor  and enter your zip code.

You can also access HUD’s housing counseling agency website via www.consumerfinance.gov/mortgagehelp.

For additional assistance with locating a housing counseling agency, call the CFPB at 1-855-411-CFPB (2372).”

Michael Barone
Director / Legal and Regulatory Compliance
Lenders Compliance Group


[1] See: www.consumerfinance.gov/find-a-housing-counselor
[2] See: Section 1024.20(a)
[3] See: http://files.consumerfinance.gov/f/201311_cfpb_interpretive-rule_homeownership-counseling-organizations-lists.pdf
[4] See: www.consumerfinance.gov/find-a-housing-counselor