New consumer agency issues first mortgage rule

The Daily Record Newswire

The newly operational Consumer Financial Protection Bureau has issued its first interim rule which it says will fill a regulatory gap in the mortgage industry.

The new rule, published in the Federal Register, allows state-chartered mortgage lenders to offer alternative mortgages under the federal Alternative Mortgage Transaction Parity Act of 1982, rather than under state law.

The rule is effective immediately.

The bureau, which is tasked with enforcing rules governing banks and other consumer financial services providers, issued the interim rule one day after it began operating last week.

Last year, the Dodd-Frank Act amended AMTPA to give states more room to regulate certain fixed-rate loans and certain features of adjustable rate mortgages irrespective of state laws.

Final regulations on alternative mortgages and other issues must wait for a director to be in place at the new bureau, but the agency can operate in limited form before a director is approved by the Senate.

"Without this interim rule implementing the AMTPA amendments, state lenders would lose their ability - overnight - to rely on AMTPA to make alternative mortgages," the bureau said in a statement.

"That could hurt not just state lenders that rely on AMTPA, some of which may be small rural banks. It could also hurt consumers by reducing their access to mortgages from those lenders.

"And, all of this harm would occur quite suddenly."

Published: Thu, Jul 28, 2011

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