[Federal Register Volume 80, Number 76 (Tuesday, April 21, 2015)]
[Rules and Regulations]
[Pages 22091-22094]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-09244]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Rules
and Regulations
[[Page 22091]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Parts 1024 and 1026
RIN 3170-AA52
Homeownership Counseling Organizations Lists and High-Cost
Mortgage Counseling Interpretive Rule
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
reissuing a prior interpretive rule regarding the provision of lists of
HUD-approved housing counseling agencies to mortgage loan applicants
with additional interpretations describing permissible addresses for
list generation, as well as additional details for generation. This
interpretive rule also provides guidance, in addition to existing
commentary, on the qualifications for providing high-cost mortgage
counseling and on lender participation in such counseling. This
interpretive rule continues to describe data instructions for lenders
to use in complying with the requirement under the High-Cost Mortgage
and Homeownership Counseling Amendments to the Truth in Lending Act
(Regulation Z) and Homeownership Counseling Amendments to the Real
Estate Settlement Procedures Act (RESPA Homeownership Counseling
Amendments) Final Rule to provide a homeownership counseling list using
data made available by the Bureau or Department of Housing and Urban
Development (HUD).
DATES: This rule is effective April 21, 2015.
FOR FURTHER INFORMATION CONTACT: Rachel Ross, Special Assistant;
Nicholas Hluchyj, Senior Counsel; Office of Regulations, Consumer
Financial Protection Bureau, 1700 G Street NW., at (202) 435-7700.
SUPPLEMENTARY INFORMATION:
I. Background
The Bureau previously issued an interpretive rule \1\ (2013 HC
Interpretive Rule) to assist lender compliance with the homeownership
counseling list requirements of High-Cost Mortgage and Homeownership
Counseling Amendments to the Truth in Lending Act (Regulation Z) and
Homeownership Counseling Amendments to the Real Estate Settlement
Procedures Act (RESPA Homeownership Counseling Amendments) Final Rule
(2013 HOEPA Final Rule). Based on input the Bureau has received through
informal discussion and outreach with stakeholders, the Bureau is
issuing this interpretive rule, which substantively restates the
guidance in the 2013 HC Interpretive Rule and adds further guidance to
address additional questions stakeholders have raised. Specifically,
the Bureau has received questions about: (1) How to provide applicants
abroad with homeownership counseling lists; (2) permissible geolocation
tools; (3) combining the homeownership counseling list with other
disclosures; and (4) use of a consumer's mailing address to provide the
list. The Bureau has also received questions and requests for guidance
about the high-cost mortgage counseling requirements in the 2013 HOEPA
Final Rule, specifically concerning counselor qualifications to provide
such counseling and lender participation in high-cost mortgage
counseling.
---------------------------------------------------------------------------
\1\ 78 FR 68343 (Nov. 14, 2013).
---------------------------------------------------------------------------
To facilitate compliance and make the Bureau's guidance on these
questions more generally accessible, the Bureau is issuing this
official Bureau interpretation to add guidance to the 2013 HC
Interpretive Rule to address these additional issues. Along with the
new guidance, the instructions in the 2013 HC Interpretive Rule are
republished here substantively as previously issued to keep all of this
related information together for the convenience of stakeholders. New
material is added to parts II. B, Location by Zip Code, and D,
Accompanying Information, and new parts II. E and III. are added to
discuss combining the homeownership counseling list with other
disclosures and high-cost mortgage counseling, respectively.\2\
---------------------------------------------------------------------------
\2\ The discussion in this interpretive rule uses the terms
``lender'' or ``creditor,'' as appropriate. Part II, which addresses
Regulation X, uses the term ``lender'' consistent with Regulation X.
Part III, which addresses Regulation Z, uses the term ``creditor''
consistent with Regulation Z.
---------------------------------------------------------------------------
In January 2013, pursuant to the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act), Public Law 111-203, 124 Stat.
1375 (2010), the Bureau issued the 2013 HOEPA Final Rule.\3\ The 2013
HOEPA Final Rule implemented numerous Dodd-Frank Act requirements.
Section 1450 of the Dodd-Frank Act amended section 5(c) of the Real
Estate Settlement Procedures Act (RESPA) to require lenders to provide
federally related mortgage loan applicants with a ``reasonably complete
or updated list of homeownership counselors who are certified pursuant
to section 106(e) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(e)) and located in the area of the lender.'' \4\ The RESPA
Homeownership Counseling Amendments implement this section 1450
amendment in Regulation X Sec. 1024.20(a).
---------------------------------------------------------------------------
\3\ 78 FR 6855 (Jan. 31, 2013).
\4\ Section 106(e) of the Housing and Urban Development Act of
1968, 12 U.S.C. 1701x(e), requires that homeownership counseling
provided under programs administered by HUD can be provided only by
organizations or individuals certified by HUD as competent to
provide homeownership counseling. Section 106(e) also requires HUD
to establish standards and procedures for testing and certifying
counselors.
---------------------------------------------------------------------------
In implementing this Dodd-Frank Act requirement, Sec.
1024.20(a)(1) requires lenders to provide the loan applicant with a
written list of homeownership counseling organizations that provide
relevant services in the loan applicant's location. The Bureau
specified two compliance methods for obtaining this list: (1) Using a
tool developed and maintained by the Bureau on its Web site,\5\ or (2)
using data made available by the Bureau or HUD, provided that the data
are used in accordance with instructions provided with the data.\6\ The
Bureau noted the use of the data in accordance with these instructions
would produce a list consistent with what would have been generated if
the
[[Page 22092]]
tool had been used.\7\ This rule interprets Sec. 1024.20(a)(1) of
Regulation X, as adopted by the RESPA Homeownership Counseling
Amendments, and describes those data instructions.
---------------------------------------------------------------------------
\5\ See www.consumerfinance.gov/find-a-housing-counselor.
\6\ These two pathways are specified in Sec. 1024.20(a)(1)(i)
and (ii), respectively.
\7\ 78 FR 6865 (Jan. 31, 2013).
---------------------------------------------------------------------------
The Bureau's tool, as discussed in Sec. 1024.20(a)(1)(i), follows
these data instructions.
II. List and Data Instructions
This rule interprets the Regulation X Sec. 1024.20(a)(1)
requirement for lenders to provide a list of homeownership counseling
organizations and to obtain the list from data made available by the
Bureau or HUD, provided the data are used in accordance with
instructions provided with the data.\8\ This rule describes
instructions for lenders to use in complying with the Sec.
1024.20(a)(1)(ii) requirement to generate a list of homeownership
counseling organizations by using data provided by the Bureau or HUD.
---------------------------------------------------------------------------
\8\ RESPA and Sec. 1024.20(a)(1) refer to counseling entities
as Homeownership Counseling Organizations. HUD refers to them as
HUD-approved Housing Counseling Agencies. Homeownership Counseling
Organizations as referred to in Sec. 1024.20(a)(1) and this rule
are HUD-approved Housing Counseling Agencies.
---------------------------------------------------------------------------
HUD currently provides the data needed to comply with the
Regulation X Sec. 1024.20(a)(1) list requirement. HUD maintains a free
and publicly available application programming interface (API)
containing data on HUD-approved housing counseling agencies (HUD API).
Although it appears on this site that a token is required to use the
data, credentials are not required to access and use the data. These
data instructions are designed to be applied with publicly available
homeownership counselor agency data from HUD,\9\ as referenced in Sec.
1024.20(a)(1)(ii). The Bureau also has a summary of the data
instructions available on the Bureau's Web site, along with a link to
the publicly available housing counseling agency data.\10\
---------------------------------------------------------------------------
\9\ Available at: http://data.hud.gov/housing_counseling.html.
\10\ Summary of Data instructions available at http://files.consumerfinance.gov/f/201311_cfpb_summary_homeownership-counseling.pdf. Homeownership Counseling Organization data is
available at http://data.hud.gov/housing_counseling.html.
---------------------------------------------------------------------------
A. Number of Homeownership Counselors To Appear on List
Regulation X Sec. 1024.20(a)(1) requires lenders to provide a
written list of homeownership counseling organizations. Consistent with
Sec. 1024.20(a)(1), lenders comply with this requirement when they
provide a list of ten HUD-approved housing counseling agencies. The
tool maintained by the Bureau will generate a list of ten HUD-approved
housing counseling agencies. A lender-generated list under Sec.
1024.20(a)(1)(ii) complies with Sec. 1024.20(a)(1) when the same
number of counseling agencies are provided. Listing ten housing
counseling agencies ensures fairness and equity among housing
counseling agencies, by offering loan applicants a thorough and diverse
list of counseling options.
B. Location by Zip Code
Regulation X 1024.20(a)(1) requires lenders to provide a written
list of homeownership counseling organizations in the loan applicant's
location. As the Bureau discussed in the RESPA Homeownership Counseling
Amendments, lenders comply with Sec. 1024.20(a)(1) when they use the
loan applicant's five-digit zip code to generate a list of the ten
closest HUD-approved housing counseling agencies to the centroid of the
zip code of the loan applicant's current address, in descending order
of proximity to the centroid. Lenders are also permitted to generate
the list from a more precise geographic marker, such as a street
address. The loan applicant's current zip code satisfies the
requirement that the homeownership counseling organizations be in the
loan applicant's location. The zip code of the loan applicant's current
address generally is the default to be entered for list generation,
subject to additional guidance below concerning use of the loan
applicant's mailing address and circumstances where a zip code is not
available. Lenders may offer loan applicants the option of generating
the list from a zip code different than their home address or from a
more precise geographic marker such as a street address, but lenders
are not required to offer such an option. The Bureau's tool will permit
generating the list of HUD-approved housing counseling agencies through
entry of zip code. A lender-generated list pursuant to Sec.
1024.20(a)(1)(ii) complies with Sec. 1024.20(a)(1) when the lender
generates the list through entry of zip code or from a more precise
geographic marker such as a street address. Lenders generating a list
pursuant to Sec. 1024.20(a)(1)(ii) through zip code or from a more
precise geographic marker such as a street address will ensure that
lists generated under this provision are obtained through similar means
as those generated through the Bureau's tool, pursuant to Sec.
1024.20(a)(1)(i), thus ensuring consistency.
In circumstances where the applicant's current address does not
include a five-digit zip code, e.g., the applicant currently lives
overseas, making it impossible to generate a list based on the zip code
of the applicant's current address, the lender may use the five-digit
zip code of the property securing the mortgage to generate the list.
Additionally, there may be circumstances where an applicant's
current and mailing addresses are different. For example, an applicant
residing in a remote area may receive mail at a post office box. In the
case in which an applicant's current and mailing address are different,
a lender using an applicant's mailing address instead of the current
address to generate the list would be consistent with the requirement
that the list be generated based upon the loan applicant's location.
Consistent with the previous paragraph, a lender may also use an
applicant's mailing address to generate a list if the mailing address
includes a zip code but the current address does not.
The Bureau's tool, as discussed in Sec. 1024.20(a)(1)(i) and
above, uses a third-party, commercially-available geolocation tool to
match counseling organizations to a zip code. A lender is not required
to use the same geolocator or geocoding system as the Bureau, so long
as the results are generated in accordance with Sec. 1024.20 and these
instructions, thus ensuring general consistency.
C. Homeownership Counselor Contact Information
Regulation X Sec. 1024.20(a)(1) requires lenders to provide a
written list of homeownership counseling organizations that provide
relevant services in the loan applicant's location. Consistent with
Sec. 1024.20(a)(1), lenders comply when they provide the following
data fields for each housing counseling agency on the list to the
extent that they are available through the HUD API: Agency name, phone
number, street address, street address continued, city, state, zip
code, Web site URL, email address, counseling services provided, and
languages spoken. Providing a street address is preferable to providing
a mailing address, as available. The tool maintained by the Bureau will
provide these data fields to the extent that they are available through
the HUD API. A lender-generated list under Sec. 1024.20(a)(1)(ii)
complies with Sec. 1024.20(a)(1) when these data fields are provided
to the extent that they are available through the HUD API. The table
below describes how the HUD API data fields relate to the above
required data fields:
[[Page 22093]]
----------------------------------------------------------------------------------------------------------------
Data element required for list HUD field
for each agency HUD API field name definition Example
---------------------------------------------------------------------------------------------------------------
Agency name..................... nme............... Agency name....... ``Local Counseling Agency''.........
Phone number.................... phone1............ Phone number...... ``555-555-5555''....................
Street address.................. adr1.............. Street Address.... ``1234 Main Street''................
Street address continued........ adr2.............. Street Address ....................................
continued.
City............................ city.............. City.............. ``Anytown''.........................
State........................... statecd........... Code for state in ``PA''..............................
which agency is
located.
Zip code........................ zipcd............. Zip Code.......... ``12345''...........................
Website URL..................... weburl............ Agency Web Site ``http://www.counselor.org''........
address.
Email address................... email............. Email address..... ``[email protected]''.........
Counseling services provided.... Services.......... Types of ``DFC, FBC, FHW, HIC, HMC, NDW, PLW,
Counseling PPC, PPW, RHC'' \11\.
Services
available.
Languages spoken................ languages......... The languages in ``ENG''.............................
which agency
provides services.
----------------------------------------------------------------------------------------------------------------
Data fields that are populated with codes not commonly understood
by loan applicants, including the data fields ``Counseling services
provided'' and ``Languages spoken,'' should be translated into their
definitional meanings, according to the Data Dictionary,\7\ to ensure
clarity.
---------------------------------------------------------------------------
\11\ A data dictionary for the Field ``Services'' can be found
at http://data.hud.gov/Housing_Counselor/getServices, and a data
dictionary for ``Languages'' can be found at http://data.hud.gov/Housing_Counselor/getLanguages.
---------------------------------------------------------------------------
D. Accompanying Information
Lenders comply with Regulation X Sec. 1024.20(a)(1) when the
following language is included: ``The counseling agencies on this list
are approved by the U.S. Department of Housing and Urban Development
(HUD), and they 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 to you. This list shows you
several approved agencies in your area. You can find other approved
counseling agencies at the Consumer Financial Protection Bureau's
(CFPB) Web site: consumerfinance.gov/mortgagehelp or by calling 1-855-
411-CFPB (2372). You can also access a list of nationwide HUD-approved
counseling intermediaries at http://portal.hud.gov/hudportal/HUD?src=/ohc_nint.''
Including information about where loan applicants can gain
additional information is consistent with the Bureau's preamble
discussion of how it envisioned implementing the Sec. 1024.20(a)(1)
list requirement in the RESPA Homeownership Counseling Amendments.\12\
Giving loan applicants the link to HUD-approved national counseling
intermediaries offers loan applicants additional housing counseling
options, as national intermediaries often offer phone counseling and
online counseling services, which are particularly useful to loan
applicants in remote areas or areas with fewer counseling agencies or
loan applicants who work during normal business hours and require
alternative meeting time options. The Bureau's tool will generate lists
under Sec. 1024.20(a)(1)(i) that include this text above. By including
this information, lenders generating lists under Sec.
1024.20(a)(1)(ii) will comply with Sec. 1024.20(a)(1). This will
ensure that information provided under this provision is consistent
with information accompanying lists generated by the Bureau's Web site,
thus ensuring consistency.
---------------------------------------------------------------------------
\12\ See 78 FR 6855 (Jan. 31, 2013) (``The Bureau anticipates
the lists generated through its tool will also include information
enabling the consumer to access the Bureau or HUD list of
homeownership counseling organizations, so that an applicant who
receives the list can obtain information about additional counseling
organizations if desired.'').
---------------------------------------------------------------------------
E. Combining the List With Other Disclosures.
Section 5(c) of RESPA does not specify whether the written list may
be combined with other disclosures. In the 2013 HOEPA Final Rule, the
Bureau noted it did not receive any comments concerning the ability to
combine disclosures. The Bureau finalized the combined disclosure
allowance in Sec. 1024.20(a)(2), which provides that the ``list of
homeownership counseling organizations provided under this section may
be combined and provided with other mortgage loan disclosures required
pursuant to Regulation Z, 12 CFR part 1026, or this part [1024] unless
prohibited by Regulation Z or this part.''
Since the 2013 HOEPA Final Rule went into effect, the Bureau has
received questions as to whether the list of counseling organizations
may be combined with other disclosures besides those required pursuant
to Regulations X and Z. Although only disclosures pursuant to
Regulations X and Z are specifically referenced in the rule, the Bureau
does not consider combining the list of organizations with other
mortgage loan disclosures to be a violation of Sec. 1024.20(a), unless
otherwise prohibited. As long as the other requirements of Sec.
1024.20(a) are met, and if not otherwise prohibited, combining the list
with another disclosure does not violate the rule.
III. High-Cost Mortgage Counseling
This rule also interprets the Regulation Z Sec. 1026.34(a)(5) pre-
loan counseling requirement for high-cost mortgages. Specifically, this
rule clarifies the qualifications necessary to provide high-cost
mortgage counseling and to provide guidance on the issue of lender
participation in the counseling.
A. Counseling Qualifications
Regulation Z Sec. 1026.34(a)(5)(i) provides that a creditor
``shall not extend a high-cost mortgage to a consumer unless the
creditor receives written certification that the consumer has obtained
counseling on the advisability of the mortgage from a counselor that is
approved to provide such counseling by the Secretary of the U.S.
Department of Housing and Urban Development or, if permitted by the
Secretary, by a State housing finance authority.'' The Bureau has heard
informally that there has been some concern among creditors and
counselors regarding both the necessary qualifications for providing
high-cost mortgage counseling and what constitutes ``high-cost mortgage
counseling.''
Regulation Z comment 34(a)(5)(iv)-1 describes what is necessary for
a consumer to have received counseling on the advisability of the high-
cost mortgage. The counseling must cover: ``key terms of the mortgage
transaction'' as set out in the relevant disclosure (usually the Good
Faith Estimate or, after August 1, 2015, the Loan Estimate); ``the
consumer's budget, including the consumer's income, assets, financial
[[Page 22094]]
obligations, and expenses; . . . and the affordability of the mortgage
transaction for the consumer.''
The Bureau understands that these topics are currently covered by
counseling agencies approved by HUD in providing counseling to
prospective borrowers. As stated in the preamble for the 2013 HOEPA
Final Rule, ``HUD already requires counselors to analyze the financial
situation of their clients and establish a household budget for their
clients when providing housing counseling.'' \13\ To the extent that a
counselor from a HUD-approved counseling agency covers the matters
described in comment 34(a)(5)(iv)-1, the counseling requirement of
Sec. 1026.34(a)(5)(i) is met. Unless and until HUD limits the current
scope of counseling in some way that would not include elements of the
comment, counseling agencies that are already approved by HUD to offer
homeownership counseling are also qualified to provide the counseling
required for high-cost mortgages, provided such counseling does indeed
cover the topics prescribed by comment 34(a)(5)(iv)-1. Further, the
Bureau encourages creditors, counselors, and consumers to facilitate
provision of the required counseling as early as feasible in the loan
application process to help ensure the consumer ultimately makes an
informed and considered decision.
---------------------------------------------------------------------------
\13\ 78 FR 6931 (Jan. 31, 2013).
---------------------------------------------------------------------------
B. Lender Participation
The Bureau has also received information that consumers may be
receiving high-cost mortgage counseling by telephone in a creditor's
office while the creditor is present and listening-in. Such listening
in may be objectionable by certain counselors, as it could diminish the
quality of counseling. In the 2013 HOEPA Final Rule, the Bureau
expressed a desire to implement the counseling requirement in a way
that ``ensures that borrowers will receive meaningful counseling, and
at the same time that the required counseling can be provided in a
manner that minimizes operational challenges.'' \14\ The Bureau added
an anti-steering provision to the counseling requirement in Sec.
1026.34(a)(5)(vi) that provides that a creditor ``shall not steer or
otherwise direct a consumer to choose a particular counselor or
counseling organization for the counseling required. . . .'' \15\ The
2013 HOEPA Final Rule described the rationale behind this provision as
``preserv[ing] counselor independence and prevent[ing] conflicts of
interest that may arise. . .''.\16\
---------------------------------------------------------------------------
\14\ 78 FR 6928 (Jan. 31, 2013).
\15\ 12 CFR 1026.34(a)(5)(vi).
\16\ 78 FR 6933 (Jan. 31, 2013).
---------------------------------------------------------------------------
Consistent with the purpose of the high-cost mortgage counseling
requirement and with the anti-steering provision at Sec.
1026.34(a)(5)(vi) in particular, the Bureau is issuing this
interpretive rule, in part, to clarify that a creditor may be steering,
that is directing, if the creditor insists on participating or
listening in to a counseling call or session if such behavior results
in a consumer's selection of a particular counselor. Under these
circumstances, creditors comply with the anti-steering provision if a
counselor is allowed to request that the creditor not participate or
listen on the call. A counselor also is allowed to request that a
creditor participate in a call or a portion of a call. For example, a
counselor may request that a creditor participate in part of the
counseling session to provide additional information related to the
loan.
The Bureau believes that counselor independence and impartiality,
which the anti-steering provision seeks to preserve, may be adversely
affected by a concern that another counselor may be selected or the
content of the counseling influenced if the counselor requests that the
creditor not listen to the counseling and the creditor does not agree.
Counselor independence and impartiality may also be compromised by the
knowledge that the creditor is listening-in to the advice given.
Moreover, creditor participation in such conversations may influence
loan applicants away from a full and frank conversation with an
independent and impartial counselor, thus undermining the purpose of
the rule.
IV. Regulatory Requirements
This rule articulates the Bureau's official interpretations of the
Bureau's Regulation X and Regulation Z. It is therefore exempt from the
APA's notice and comment rulemaking requirements pursuant to 5 U.S.C.
553(b).
Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).
The Bureau has determined that this rule does not impose any new or
revise any existing recordkeeping, reporting, or disclosure
requirements on covered entities or members of the public that would be
collections of information requiring OMB approval under the Paperwork
Reduction Act, 44 U.S.C. 3501, et seq. The RESPA requirements under
Regulation X that lenders provide loan applicants with a written list
of homeownership counseling organizations in the loan applicants'
location are currently approved by OMB and assigned the OMB control
number 3170-0025. The related TILA requirements are approved under OMB
control number 3170-0023. Generally, the collections of information
contained in Regulation X are assigned the OMB control number 3170-
0016, and the collections of information contained in Regulation Z are
assigned the OMB control number 3170-0015.
Dated: April 15, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2015-09244 Filed 4-20-15; 8:45 am]
BILLING CODE 4810-AM-P