HOA Law Blog
The following was reported by Community Associations Institute (CAI) by Andrew S. Fortin, Esq., CAI’s vice president of government and public affairs.
The Consumer Financial Protection Bureau (CFPB), which officially opened for business in July, was created by Congress to enforce most federal financial consumer protection laws and to protect consumers from harmful financial products.
The CFPB has the authority to set standards that govern almost every aspect of the mortgage lending and closing process. Because CAI members have a keen interest in the development of CFPB’s rules and regulations that could affect community associations, CAI recently added a special section about the CFPB to our Mortgage Matters program. CAI is particularly interested in the CFPB’s actions on transfer fees, association assessments, foreclosure prevention, mortgage servicing standards and the definitions of qualified mortgage and real estate settlement fees.
CAI will monitor the following ongoing CFPB initiatives and how they could affect community associations:
Ability to repay. CFPB is looking at how association assessments factor into a borrower’s mortgage payment. Under the Dodd-Frank Act, all lenders must verify that a borrower can afford all payments associated with a mortgage loan, including association assessments. It is the CFPB’s job to write the rules to govern this process, which could include requiring associations to forecast assessment increases and the likelihood of future special assessments.
Transfer fees. CAI also is following CFPB’s review of transfer fees in community associations. While the CFPB hasn’t signaled that it intends to restrict mortgages in associations with transfer fees, the bureau is studying the use of such fees.
Mortgage complaint portal. One feature of CFPB’s website provides a way that homeowners can report mortgage fraud, abusive lending practices and housing discrimination. While this will significantly improve consumer protection for homeowners and allows CFPB to track new mortgage products or any new market abuses, it also is a means for disgruntled residents to air complaints against associations. As the CFPB says its future rulemakings will be influenced by the nature of complaints it receives through this system, associations should be prepared to respond to CFPB inquiries and work cooperatively with the bureau in resolving legitimate consumer and homeowner complaints.
Andrew Fortin is CAI’s vice president of government and public affairs.