15 USC 1639b - Residential mortgage loan origination

U.S Code last checked for updates: Apr 27, 2024

§ 1639b.

Residential mortgage loan origination

(a)

Finding and purpose

(1)

Finding

(2)

Purpose

(b)

Duty of care

(1)

Standard

Subject to regulations prescribed under this subsection, each mortgage originator shall, in addition to the duties imposed by otherwise applicable provisions of State or Federal law—

(A)

be qualified and, when required, registered and licensed as a mortgage originator in accordance with applicable State or Federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 [12 U.S.C. 5101 et seq.]; and

(B)

include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide Mortgage Licensing System and Registry.

(2)

Compliance procedures required

(c)

Prohibition on steering incentives

(1)

In general

(2)

Restructuring of financing origination fee

(A)

In general

(B)

Exception

Notwithstanding subparagraph (A), a mortgage originator may receive from a person other than the consumer an origination fee or charge, and a person other than the consumer may pay a mortgage originator an origination fee or charge, if—

(i)

the mortgage originator does not receive any compensation directly from the consumer; and

(ii)

the consumer does not make an upfront payment of discount points, origination points, or fees, however denominated (other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or originator), except that the Bureau may, by rule, waive or provide exemptions to this clause if the Bureau determines that such waiver or exemption is in the interest of consumers and in the public interest.

(3)

Regulations

The Bureau shall prescribe regulations to prohibit—

(A)

mortgage originators from steering any consumer to a residential mortgage loan that—

(i)

the consumer lacks a reasonable ability to repay (in accordance with regulations prescribed under section 1639c(a) of this title); or

(ii)

has predatory characteristics or effects (such as equity stripping, excessive fees, or abusive terms);

(B)

mortgage originators from steering any consumer from a residential mortgage loan for which the consumer is qualified that is a qualified mortgage (as defined in section 1639c(b)(2) of this title) to a residential mortgage loan that is not a qualified mortgage;

(C)

abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age; and

(D)

mortgage originators from—

(i)

mischaracterizing the credit history of a consumer or the residential mortgage loans available to a consumer;

(ii)

mischaracterizing or suborning the mischaracterization of the appraised value of the property securing the extension of credit; or

(iii)

if unable to suggest, offer, or recommend to a consumer a loan that is not more expensive than a loan for which the consumer qualifies, discouraging a consumer from seeking a residential mortgage loan secured by a consumer’s principal dwelling from another mortgage originator.

(4)

Rules of construction

No provision of this subsection shall be construed as—

(A)

permitting any yield spread premium or other similar compensation that would, for any residential mortgage loan, permit the total amount of direct and indirect compensation from all sources permitted to a mortgage originator to vary based on the terms of the loan (other than the amount of the principal);

(B)

limiting or affecting the amount of compensation received by a creditor upon the sale of a consummated loan to a subsequent purchaser;

(C)

restricting a consumer’s ability to finance, at the option of the consumer, including through principal or rate, any origination fees or costs permitted under this subsection, or the mortgage originator’s right to receive such fees or costs (including compensation) from any person, subject to paragraph (2)(B), so long as such fees or costs do not vary based on the terms of the loan (other than the amount of the principal) or the consumer’s decision about whether to finance such fees or costs; or

(D)

prohibiting incentive payments to a mortgage originator based on the number of residential mortgage loans originated within a specified period of time.

(d)

Liability for violations

(1)

In general

(2)

Maximum

(e)

Discretionary regulatory authority

(1)

In general

(2)

Application

(f)

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(Pub. L. 90–321, title I, § 129B, as added and amended

cite as: 15 USC 1639b