CFPB Guidance On Housing Counselor Requirements

On April 15, the CFPB issued a final interpretive rule concerning the requirements for providing mortgage applicants with a list of local homeownership counseling organizations. The new interpretive rule amends and restates guidance the CFPB issued in 2013 and provides additional interpretations and guidance describing what addresses of the borrower may be used for purposes of generating a list of local counselors, how to provide applicants abroad with homeownership counseling lists, permissible geolocation tools which may be used, and combining the homeownership counseling list with other disclosures. The revised interpretive rule also provides additional guidance on required qualifications for counselors who provide high-cost mortgage counseling and on the permissibility of lenders participating in that counseling.

By way of background, the Dodd-Frank Act amended section 5(c) of the Real Estate Settlement Procedures Act to require lenders to provide federally related mortgage loan applicants with an updated list of homeownership counselors who are certified by HUD and located in the area of the lender. In implementing this provision of the Act, the CFPB adopted §1024.20(a)(1) of RESPA Reg. X which requires lenders to provide applicants with a written list of homeownership counseling organizations that provide relevant services in the loan applicant's location. The Bureau specified two methods for obtaining this list: 1) using a tool developed and maintained by the Bureau on its website, or 2) using data made available by the Bureau or HUD for the lender to generate its own list, provided that the data are used in accordance with the agency's instructions provided with the data. Since issuing the original interpretive rule in 2013, the Bureau has received questions and requests for additional guidance, and the Bureau issued this official interpretation in response. The rule interprets §1024.20(a)(1) of RESPA Reg. X and §1026.34(a)(5) of TILA Reg. Z regarding pre-loan counseling requirements for HOEPA high cost mortgage loans.

Under Reg. X, lenders must generate a list of homeownership counselors either by using the tool developed and maintained by the Bureau on its website or by using data made available by the Bureau or HUD to generate the list, but the data must be used in accordance with the Bureau or HUD instructions for its use. HUD maintains a free and publicly available application programming interface containing data on...