CFPB Proposes Delay in Effective Date for Regulation Z Provision Prohibiting Financing of Credit Insurance

In January, the CFPB issued several new mortgage rules under the Dodd-Frank Act. Most of these rules take effect in January 2014, but a few provisions are scheduled to take effect on June 1 of this year. In the attached proposal, the CFPB seeks comment on whether to delay the June 1 effective date with regard to a provision concerning credit insurance while the CFPB addresses some interpretive issues that have arisen about the provision.

The proposal concerns the implementation of a prohibition on creditors financing credit insurance premiums in connection with certain consumer credit transactions secured by a dwelling. This provision was adopted in the Loan Originator Compensation Requirements under the Truth in Lending Act (Regulation Z) Final Rule, issued on January 20, 2013.

Click here to view proposal in full (links externally to CFPB website).Related News: "Ability to Repay Standards under the Truth in Lending Act (Regulation Z); Proposed Rule, Comment Request (CFPB - Pre-Fed. Reg. Version) (with Lofchie Comment)" (January 16, 2013) and "Mortgage Servicing under the Truth in Lending Act (Reg Z); Final Rule, Official Interpretations (CFPB - Pre-Fed. Reg. Version)" (January 16, 2013).