In an August 17, 2012 press release, the Bureau of Consumer Financial Protection (CFPB) released a proposed rule that would amend §§1026.25 (Record Retention) and 1026.36 (Prohibited Acts or Practices – dwelling secured credit) of Regulation Z that would generally: (1) Add new three year record retention requirements for loan originator compensation paid by or to mortgage brokers and loan originators, the “zero-zero loan alternative” and good faith determination (discussed below), and the bona fide interest rate reduction (discussed below). (2) Amend the definitions for “loan originator,” “mortgage broker,” and “creditor” and add a definition for “compensation.” (3) Amend the current loan originator compensation provisions of Regulation Z to add a new additional restriction on the imposition of upfront discount points, origination points, or fees on consumers under certain circumstances. (4) Add requirements concerning proper qualification and registration or licensing for loan originators. (5) Add restrictions on mandatory arbitration and the financing of certain credit insurance premiums. (6) Provide additional guidance and clarification under the existing Regulation Z provisions restricting loan originator compensation practices, including guidance on the application of those provisions to certain profit-sharing plans and the appropriate analysis of payments to loan originators based on factors that are not terms but that may act as proxies for a transaction’s terms (i.e., a factor is a proxy if it substantially correlates with a term or terms of the transaction and the loan originator can, directly or indirectly, add, drop, or change the factor when originating the transaction).
