We are amending Regulation Z to implement amendments to the Truth in Lending Act made by the Dodd-Frank Act. The final rule implements requirements and restrictions imposed by the Dodd-Frank Act concerning loan originator compensation; qualifications of, and registration or licensing of loan originators; compliance procedures for depository institutions; mandatory arbitration; and the financing of single-premium credit insurance. The final rule revises or provides additional commentary on Regulation Z’s restrictions on loan originator compensation, including application of these restrictions to prohibitions on dual compensation and compensation based on a term of a transaction or a proxy for a term of a transaction, and to recordkeeping requirements. The final rule also establishes tests for when loan originators can be compensated through certain profits-based compensation arrangements. At this time, the Bureau is not prohibiting payments to and receipt of payments by loan originators when a consumer pays upfront points or fees in the mortgage transaction. Instead the Bureau will first study how points and fees function in the market and the impact of this and other mortgage-related rulemakings on consumers’ understanding of and choices with respect to points and fees. This final rule is designed primarily to protect consumers by reducing incentives for loan originators to steer consumers into loans with particular terms and by ensuring that loan originators are adequately qualified.
This page also contains summaries and other resources to help you understand the rule and its implications.
The amendments to § 1026.36(h) and (i) are effective on June 1, 2013. All other provisions of the rule are effective on January 10, 2014.
Breakdown of the documents’ contents
This document contains the following parts:
- Preamble summarizing why we are issuing the rule, our legal authority, reasoning behind the rule, responses to comments, and analysis of the benefits, costs, and impacts of the rule
- Regulatory text, which, when effective, will amend Regulation Z and can be found on page 475 of the full document
- Official interpretations of the rule, which can be found on page 488 of the full document
We issued the document containing this final rule on January 20, 2013. View the full document as issued.
The Office of the Federal Register published the final rule on February 15, 2013. View the rule as published in the Federal Register.
August 17, 2012: The Bureau issued its proposal for public comment. The proposal was published in the Federal Register on September 7, 2012. View the proposed rule, comments received in response, and Small Business Review Panel Report on the electronic docket.
May 7, 2012: The Bureau issued a proposal to temporarily delay the effective date of a prohibition on creditors financing credit insurance premiums in connection with certain consumer credit transactions secured by a dwelling.
Watch our video on YouTube to learn more about the rule in a plain language format which makes the content more accessible for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff.
Summary of the rule
Read the summary to learn more about the background of this rule and how it affects providers of financial products and services.
What this means for consumers
The new rule will go into effect on June 1, 2013. This summary outlines some of the ways we expect it to impact consumers who have residential mortgage loans. Download the consumer summary.