On July 22, 2011 the CFPB published an interim final rule establishing Regulation D (§1004 of the Bureau of Consumer Financial Protection regulations) pursuant to the Alternative Mortgage Transaction Parity Act (AMTPA). The interim final rule is necessary to avoid a regulatory gap created by the amendments to AMTPA in the Dodd-Frank Act. Without an interim final rule that takes immediate effect, state housing creditors would no longer be able to make variable rate mortgage loans and other alternative mortgage transactions pursuant to AMTPA in states that prohibit such transactions, thus denying consumers access to that form of credit.
Until July 22, 2012, the interim final rule applies only to state housing creditors seeking to invoke federal preemption of state law under AMTPA. The interim final rule will be in place as a temporary measure pending the CFPB’s completion of a notice-and-comment rulemaking to promulgate permanent rules, including rules governing alternative mortgage transactions made by federally chartered housing creditors.
Effective Date
The interim final rule is effective July 22, 2011. Compliance with § 1004.4, which establishes requirements for ARMs, is optional until July 22, 2012 for federal housing creditors and for state housing creditors that are not relying on preemption of state law under § 1004.3. On July 22, 2012, compliance with § 1004.4 is mandatory for all creditors, except as provided in § 1004.4(d).
What is the AMTPA?
The Alternate Mortgage Transaction Parity Act has been around since 1982. It creates a preemption of state laws that do not allow or severely restrict the ability of mortgage lenders to make variable-rate mortgage loans. Most states do not have such restrictive laws. So for most bankers the preemption is not essential.
What is the impact of the new regulation?
You may continue to make adjustable-rate mortgages.
Is the CFPB adjusting the alphabet?
That appears to be the case. We have been concerned that as existing regulations are transferred to the CFPB that new regulatory citations would be created. The new regulation for AMTPA is Regulation D. Where are regulations A, B and C? It looks like places are being held.
And the Federal Reserve Board already has a Regulation D, which deals with reserve requirements. Apparently when we cite regulations in the future we will need to add a prefix to clarify whether we are referencing the Federal Reserve Board’s regulation D or the CFPB’s Regulation D.