CFPB ‘quietly’ affirms support for HUD counselors partnering with mortgage originators

The Consumer Financial Protection Bureau (CFPB) last week made a quiet change to its guidance related to the Real Estate Settlement and Procedures Act (RESPA), affirming that mortgage originators who partner with U.S. Department of Housing and Urban Development (HUD)-approved counselors can use fee for pre-purchase counseling and homeownership education services.

The change was confirmed through a LinkedIn post by HUD Deputy Assistant Secretary for Housing Counseling David Berenbaum.

“The CFPB on September 1st, 2023 posted official HUD RESPA guidance documents that are still applied by the agency — including HUD RESPA Statement of Policy 1999-1 issued on March 1st, 1999,” he said. “Specifically, mortgage companies and banks who contract with housing counseling agencies for pre- and post-purchase housing counseling services have clear authority under RESPA to use a fee for service.”

This ongoing interpretation of this rule is informing HUD’s guidance, and is included in the Office of Housing Counseling Handbook for counselors, he said.

“This simple step by the CFPB provides clear regulatory authority and confidence for lenders to contract for services with HUD-approved Housing Counseling Agencies to help the next generation of homeowners to realize their homeownership goals. This is a significant and positive step by the CFPB that should be applauded and affirms the [agency’s] commitment to the critical role that housing counseling plays [in expanding] access to credit.”

On September 1, CFPB released a non-exhaustive list of HUD-issued official rules, interpretations and policy statements that continue to be applied by the CFPB. The list includes Statement of Policy 1999-1 referenced by Berenbaum.

“The documents listed below are select HUD-issued official rules, interpretations, or policy statements that fall within the scope of the official documents as defined in the 2011 Transfer Notice [empowering CFPB to enforce RESPA] and continue to be applied today by the CFPB,” the Bureau said of the recently-released list. “This list is provided for ease of reference.  It is not exhaustive of all HUD documents that continue to apply.”