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Thursday, July 25, 2013

ABIA Comments on Credit Insurance Included in ABA Letter to CFPB

In light of ongoing revisions to the Consumer Financial Protection Bureau’s mortgage rules, ABA continues to advocate a delay in the rules’ January effective date. “The CFPB’s rules and commentary continue to evolve in very fundamental ways,” ABA said in comment letters Monday.

Included in ABA's letter was ABIA's support -- with modifications -- for the proposal to define “financing” as covering the right to defer payment of a credit insurance premium or fee owed by the consumer beyond the month or period in which the premium is due.

From the letter:
The Bureau is proposing amendments to § 1026.36(i) to clarify the scope of the prohibition on a creditor ability to finance, directly or indirectly, any premiums for credit insurance in connection with a consumer credit transaction secured by a dwelling. The Bureau is refining the January final rule to ensure it is not overbroad and does not leave ambiguity about when a creditor violates the prohibition on financing credit insurance premiums.

Together with ABA’s insurance subsidiary, the American Bankers Insurance Association (ABIA), we commend the Bureau for taking the necessary steps of issuing a temporary delay in the effective date and proposing much needed clarifications on the application of the provision prohibiting financing credit insurance in connection with mortgages (§ 1026.36(i)). We appreciate the Bureau recognizing the negative consequences and consumer harm that would result if the Bureau did not modify the preamble language on this provision in the final Loan Originator Compensation rule.

Read the letter.