Everyone in the industry is probably familiar with the required Counseling List implemented on January 10, 2014, along with the other Dodd-Frank changes. IDS Customers may or may not be aware that the CFPB offered lenders an interim alternative fix that entails providing borrowers with a disclosure that has a link to the CFPB website and instructions on how borrowers can obtain a list of counselors on-their-own. The CFPB has given lenders this option while building out their own systems to generate the same list. The CFPB informed lenders that they could use this alternative during about a six month implementation window. IDS has only used this interim alternative fix as a back-up on a few rare occasions when the HUD servers have stopped functioning. Here are the details of this requirement:
Regulation X requires that a counseling list be generated and delivered to customers for most types of loans. The CFPB has given lenders two options: (1) generating a list for borrowers directly from the CFPB's own portal, or (2) generating a similar list with information pulled from HUD servers. IDS provides its customers with the second option so that the list is automatically generated within our system with initial packages.
CFPB Bulletin 2013-13 states:
"Lenders who prefer to adopt the second approach have informed the Bureau that they must undertake significant development of compliance systems to ensure that lists are generated in compliance with the RESPA Homeownership Counseling Amendments and the November interpretive rule. The Bureau understands that the systems development may take approximately six months.
"While lenders are incorporating § 1024.20(a)(1)(ii) list instructions into their systems, they may direct borrowers to the Bureau’s housing counseling agency website to obtain a list of housing counselors ... These steps, if taken by lenders in good faith while they are building their systems or are working with vendors to build systems, would achieve the goals of the regulation and would not raise supervisory or enforcement concerns."
IDS compliance plans on removing the rarely used interim alternative fix, which has only been used a backup during emergencies, before June 10, 2014, to remain compliant with the six month window given by the CFPB for using this option.