Mortgage Acts and Practices-Advertising (Regulation N); Mortgage Assistance Relief Services (Regulation O), 78130-78138 [2011-31731]

Download as PDF 78130 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations (A) A conspicuous card containing the information described in paragraphs (a)(1) and (2) of this section, and a line for the signature of the depositor; and (B) Accompanying materials requesting that the depositor sign the card, and return the signed card to the institution. (2) An institution described in paragraph (c)(1) of this section must have made the transmission described in paragraph (c)(1)(ii) of this section via mail not later than three months after October 13, 2006. The institution must have made a second identical transmission via mail not less than 30 days, and not more than three months, after the first transmission to the depositor in accordance with paragraph (c)(1)(ii) of this section, if the institution has not, by the date of such mailing, received from the depositor a card referred to in paragraph (c)(1)(i) of this section which has been signed by the depositor. (d) Format and type size. The disclosures required by this section must be clear and conspicuous and presented in a simple and easy to understand format, type size, and manner. § 1009.6 Exception for certain depository institutions. The requirements of this part do not apply to any depository institution lacking Federal deposit insurance and located within the United States that does not receive initial deposits of less than an amount equal to the standard maximum deposit insurance amount from individuals who are citizens or residents of the United States, other than money received in connection with any draft or similar instrument issued to transmit money. § 1009.7 Enforcement. jlentini on DSK4TPTVN1PROD with RULES Compliance with the requirements of this part shall be enforced under the Consumer Financial Protection Act of 2010, Public Law 111–203, Title X, 124 Stat. 1955, by the Bureau of Consumer Financial Protection, subject to subtitle B of the Consumer Financial Protection Act of 2010, and under the Federal Trade Commission Act, 15 U.S.C. 41 et seq, by the Federal Trade Commission. Dated: October 24, 2011. Alastair M. Fitzpayne, Deputy Chief of Staff and Executive Secretary, Department of the Treasury. [FR Doc. 2011–31732 Filed 12–15–11; 8:45 am] BILLING CODE 4810–AM–P VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Parts 1014 and 1015 [Docket No. CFPB–2011–0027] RIN 3170–AA06 Mortgage Acts and Practices— Advertising (Regulation N); Mortgage Assistance Relief Services (Regulation O) Bureau of Consumer Financial Protection. ACTION: Interim final rule with request for public comment. AGENCY: Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking authority for a number of consumer financial protection laws from seven Federal agencies to the Bureau of Consumer Financial Protection (Bureau) as of July 21, 2011. The Bureau is in the process of republishing the regulations implementing those laws with technical and conforming changes to reflect the transfer of authority and certain other changes made by the Dodd-Frank Act. In light of the transfer of the Federal Trade Commission’s (FTC’s) rulemaking authority for section 626 of the Omnibus Appropriations Act, 2009 (Omnibus Appropriations Act) to the Bureau, the Bureau is publishing for public comment an interim final rule establishing a new Regulation N (Mortgage Acts and Practices— Advertising Rule) and a new Regulation O (Mortgage Assistance Relief Services Rule). This interim final rule does not impose any new substantive obligations on persons subject to the existing Mortgages Acts and Practices— Advertising Rule or the existing Mortgage Assistance Relief Services Rule, previously published by the FTC. DATES: This interim final rule is effective December 30, 2011. Comments must be received on or before February 14, 2012. ADDRESSES: You may submit comments, identified by Docket No. CFPB–2011– 0027 or RIN 3170–AA06, by any of the following methods: • Electronic: http:// www.regulations.gov. Follow the instructions for submitting comments. • Mail: Monica Jackson, Office of the Executive Secretary, Bureau of Consumer Financial Protection, 1500 Pennsylvania Ave. NW., (Attn: 1801 L Street), Washington, DC 20220. • Hand Delivery/Courier in Lieu of Mail: Monica Jackson, Office of the Executive Secretary, Bureau of SUMMARY: PO 00000 Frm 00038 Fmt 4700 Sfmt 4700 Consumer Financial Protection, 1700 G Street NW., Washington, DC 20006. All submissions must include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. In general, all comments received will be posted without change to http:// www.regulations.gov. In addition, comments will be available for public inspection and copying at 1700 G Street NW., Washington DC 20006, on official business days between the hours of 10 a.m. and 5 p.m. Eastern Time. You can make an appointment to inspect the documents by telephoning (202) 435– 7275. All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information, such as account numbers or social security numbers, should not be included. Comments will not be edited to remove any identifying or contact information. FOR FURTHER INFORMATION CONTACT: Jane Gao or Krista Ayoub, Office of Regulations, at (202) 435–7700. SUPPLEMENTARY INFORMATION: I. Background Congress enacted section 626 of the Omnibus Appropriations Act, 2009 (Omnibus Appropriations Act) on March 11, 2009 and directed the Federal Trade Commission (FTC) to commence a rulemaking proceeding within 90 days of enactment with respect to mortgage loans.1 On May 22, 2009, the enactment of the Credit Card Accountability Responsibility and Disclosure Act of 2009 2 clarified the FTC’s rulemaking authority under the Omnibus Appropriations Act to specify that the FTC’s rulemaking based on its authority pursuant to the Omnibus Appropriations Act ‘‘shall relate to unfair or deceptive acts or practices regarding mortgage loans,’’ which may involve loan modification and foreclosure rescue services.3 1 Public L. 111–8, 123 Stat. 524 (2009). The Omnibus Appropriations Act also directed the FTC to use notice and comment procedures under section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553, to promulgate rules pursuant to the Omnibus Appropriations Act in lieu of the procedures set forth in section 18 of the FTC Act, 15 U.S.C. 57a. The FTC noted in its Advance Notice of Proposed Rulemaking: Mortgage Acts and Practices, 74 FR 26118 (June 1, 2009), that because Omnibus Appropriations Act rulemaking is not undertaken pursuant to section 18, 15 U.S.C. 57a(f), Federal banking agencies are not required to promulgate substantially similar regulations for entities within their jurisdiction. Id. at 26119, note 2. 2 Public Law 111–24, 123 Stat. 1734 (2009). 3 Id. Section 511(a)(1)(B). E:\FR\FM\16DER1.SGM 16DER1 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations Prior to July 21, 2011, rulemaking authority for the Omnibus Appropriations Act was vested in the FTC. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 4 amended a number of consumer financial protection laws, including the Omnibus Appropriations Act. In addition to various substantive amendments, the Dodd-Frank Act transferred rulemaking authority for the Omnibus Appropriations Act to the Bureau of Consumer Financial Protection (Bureau), effective July 21, 2011. See sections 1061 and 1097 of the Dodd-Frank Act. Pursuant to the DoddFrank Act and the Omnibus Appropriations Act, as amended, the Bureau is publishing for public comment an interim final rule establishing a new Regulation N (Mortgage Acts and Practices— Advertising), 12 CFR part 1014, and a new Regulation O (Mortgage Assistance Relief Services), 12 CFR part 1015, implementing the Omnibus Appropriations Act. jlentini on DSK4TPTVN1PROD with RULES II. Summary of the Interim Final Rule A. General The interim final rule substantially duplicates the FTC’s Mortgage Acts and Practices—Advertising Rule as the Bureau’s new Regulation N, 12 CFR part 1014, and the FTC’s Mortgage Assistance Relief Services Rule as the Bureau’s new Regulation O, 12 CFR part 1015, making only certain nonsubstantive, technical, formatting, and stylistic changes. To minimize any potential confusion, other than republishing 16 CFR parts 321 and 322 with the Bureau’s part number, the Bureau is preserving where possible the numbering the FTC used in the two rules. Additionally, while this interim final rule generally incorporates the FTC’s existing regulatory text, the rule has been edited as necessary to reflect nomenclature and other technical amendments required by the DoddFrank Act. Notably, this interim final rule does not impose any new substantive obligations on regulated entities. In future rulemakings, the Bureau expects to amend Regulations N and O to implement certain other changes to the Omnibus Appropriations Act made by the Dodd-Frank Act, such as expanding the scope of Regulations N and O to include persons excluded from coverage under the FTC’s existing 16 CFR parts 321 and 322 due to the fact that they are not subject to the FTC’s enforcement jurisdiction.5 4 Public Law 111–203, 124 Stat. 1376 (2010). regulatory text of the FTC’s Mortgage Acts and Practices—Advertising Rule contains a clear 5 The VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 B. Specific Changes References to the FTC’s rulemaking authority have been replaced with references to the Bureau. Conforming edits have been made to internal crossreferences. Historical references that are no longer applicable, and references to effective dates that have passed, have been removed as appropriate. In addition, with respect to the Mortgage Assistance Relief Services Rule, the Bureau is correcting a citation error in the FTC’s existing § 322.9(c). As adopted by the FTC, § 322.9(c) contains a cross-reference to § 322.10(a). The correct citation should be to §§ 322.9(a) and (b). The Bureau is republishing § 322.9(c) as § 1015.9(c) with the citation corrected to read §§ 1015.9(a) and (b). III. Legal Authority A. Rulemaking Authority The Bureau is issuing this interim final rule pursuant to its authority under the Omnibus Appropriations Act and the Dodd-Frank Act. Effective July 21, 2011, section 1061 of the Dodd-Frank Act transferred to the Bureau all of the FTC’s authority under an enumerated consumer law to prescribe rules, issue guidelines, conduct studies, or issue reports.6 The Omnibus Appropriations Act is an enumerated consumer law.7 Accordingly, effective July 21, 2011, the authority of the FTC to issue regulations pursuant to the Omnibus Appropriations Act transferred to the Bureau.8 statement that the rule only applies to persons over which the FTC has jurisdiction under the Federal Trade Commission Act in the scope section of the regulation. See 16 CFR 321.1. The existing text of the Mortgage Assistance Relief Services Rule does not contain a similar statement in the scope section of the regulation; however, in the definitions section of the regulation, the definition of ‘‘person’’ subject to the regulation specifically excludes entities excluded from the FTC’s jurisdiction under the Federal Trade Commission Act. See 16 CFR 322.2. FTC staff recommended to the Bureau that the Bureau add a clear statement in the scope section of the Mortgage Assistance Relief Services Rule that states the rule does not apple to entities over which the FTC lacks jurisdiction. Accordingly, the Bureau has added the following sentence, ‘‘This part applies to persons over which the Federal Trade Commission has jurisdiction under the Federal Trade Commission Act.’’ at the end of § 1015.1. 6 Public Law 111–203, section 1061(b)(5). 7 Id. Section 1002(12)(Q) (defining ‘‘enumerated consumer laws’’ to include the Omnibus Appropriations Act). 8 Section 1066 of the Dodd-Frank Act grants the Secretary of the Treasury interim authority to perform certain functions of the Bureau. Pursuant to that authority, Treasury is publishing this interim final rule on behalf of the Bureau. Until this and other interim final rules take effect, existing regulations for which rulemaking authority transferred to the Bureau continue to govern persons covered by this rule. See 76 FR 43569 (July 21, 2011). PO 00000 Frm 00039 Fmt 4700 Sfmt 4700 78131 The Omnibus Appropriations Act, as amended, authorizes the Bureau to issue regulations in accordance with section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553, to carry out the provisions of the Omnibus Appropriations Act. These regulations may pertain to unfair or deceptive acts or practices regarding mortgage loans, which may include unfair or deceptive acts or practices involving loan modification and foreclosure rescue services. In its existing regulations, the FTC used this Omnibus Appropriations Act authority to adopt the Mortgage Acts and Practices—Advertising Rule and the Mortgage Assistance Relief Services Rule. B. Authority To Issue an Interim Final Rule Without Prior Notice and Comment The Administrative Procedure Act (APA) 9 generally requires public notice and an opportunity to comment before promulgation of regulations.10 The APA provides exceptions to notice-andcomment procedures, however, where an agency for good cause finds that such procedures are impracticable, unnecessary, or contrary to the public interest or when a rulemaking relates to agency organization, procedure, and practice.11 The Bureau finds that there is good cause to conclude that providing notice and opportunity for comment would be unnecessary and contrary to the public interest under these circumstances. In addition, substantially all the changes made by this interim final rule, which were necessitated by the Dodd-Frank Act’s transfer of Omnibus Appropriations Act authority from the FTC to the Bureau, relate to agency organization, procedure, and practice and are thus exempt from the APA’s notice-and comment requirements. The Bureau’s good cause findings are based on the following considerations. As an initial matter, the FTC’s existing regulations were a result of notice-andcomment rulemaking to the extent required. Moreover, the interim final rule published today does not impose any new, substantive obligations on regulated entities. Rather, the interim final rule makes only non-substantive, technical changes to the existing text of the regulations, such as renumbering, changing internal cross-references, and replacing appropriate nomenclature to reflect the transfer of authority to the Bureau. Given the technical nature of these changes, and the fact that the interim final rule does not impose any 95 U.S.C. 551 et seq. U.S.C. 553(b), (c). 11 5 U.S.C. 553(b)(3)(A), (B). 10 5 E:\FR\FM\16DER1.SGM 16DER1 78132 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations additional substantive requirements on covered entities, an opportunity for prior public comment is unnecessary. In addition, recodifying the FTC’s regulations to reflect the transfer of authority to the Bureau will help facilitate compliance with the Omnibus Appropriations Act and its implementing regulations, and will help reduce uncertainty regarding the applicable regulatory framework. Using notice-and-comment procedures would delay this process and thus be contrary to the public interest. The APA generally requires that rules be published not less than 30 days before their effective dates. See 5 U.S.C. 553(d). As with the notice and comment requirement, however, the APA allows an exception when ‘‘otherwise provided by the agency for good cause found and published with the rule.’’ 5 U.S.C. 553(d)(3). The Bureau finds that there is good cause for providing less than 30 days notice here. A delayed effective date would harm consumers and regulated entities by needlessly perpetuating discrepancies between the amended statutory text and the implementing regulations, thereby hindering compliance and prolonging uncertainty regarding the applicable regulatory framework.12 In addition, delaying the effective date of the interim final rule for 30 days would provide no practical benefit to regulated entities in this context and in fact could operate to their detriment. As discussed above, the interim final rule published today does not impose any new, substantive obligations on regulated entities. Instead, the rule makes only non-substantive, technical changes to the existing text of the regulations. Thus, regulated entities that are already in compliance with the existing rules will not need to modify business practices as a result of this rule. jlentini on DSK4TPTVN1PROD with RULES C. Section 1022(b)(2) of the Dodd-Frank Act In developing the interim final rule, the Bureau has conducted an analysis of potential benefits, costs, and impacts.13 12 This interim final rule is one of 14 companion rulemakings that together restate and recodify the implementing regulations under 14 existing consumer financial laws (part III.C, below, lists the 14 laws involved). In the interest of proper coordination of this overall regulatory framework, which includes numerous cross-references among some of the regulations, the Bureau is establishing the same effective date of December 30, 2011 for those rules published on or before that date and making those published thereafter (if any) effective immediately. 13 Section 1022(b)(2)(A) of the Dodd-Frank Act addresses the consideration of the potential benefits and costs of regulation to consumers and covered persons, including the potential reduction of access VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 The Bureau believes that the interim final rule will benefit consumers and covered persons by updating and recodifying Regulations N and O to reflect the transfer of authority to the Bureau and certain other changes mandated by the Dodd-Frank Act. This will help facilitate compliance with the Omnibus Appropriations Act and its implementing regulations and help reduce any uncertainty regarding the applicable regulatory framework. The interim final rule will not impose any new substantive obligations on consumers or covered persons and is not expected to have any impact on consumers’ access to consumer financial products and services. Although not required by the interim final rule, covered entities may incur some costs in updating compliance manuals and related materials to reflect the new numbering and other technical changes reflected in the new Regulations N and O. The Bureau has worked to reduce any such burden by preserving the existing numbering to the extent possible and believes that such costs will likely be minimal. These changes could be handled in the short term by providing a short, standalone summary alerting users to the changes and in the long term could be combined with other updates at the firm’s convenience. The Bureau intends to continue investigating the possible costs to affected entities of updating manuals and related materials to reflect these changes and solicits comments on this and other issues discussed in this section. The interim final rule will have no unique impact on depository institutions or credit unions with $10 billion or less in assets as described in section 1026(a) of the Dodd-Frank Act. Also, the interim final rule will have no unique impact on rural consumers. In undertaking the process of recodifying Regulations N and O, as well as regulations implementing thirteen other consumer financial by consumers to consumer financial products or services; the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act; and the impact on consumers in rural areas. Section 1022(b)(2)(B) requires that the Bureau ‘‘consult with the appropriate prudential regulators or other Federal agencies prior to proposing a rule and during the comment process regarding consistency with prudential, market, or systemic objectives administered by such agencies.’’ The manner and extent to which these provisions apply to interim final rules and to benefits, costs, and impacts that are compelled by statutory changes rather than discretionary Bureau action is unclear. Nevertheless, to inform this rulemaking more fully, the Bureau performed the described analyses and consultations. PO 00000 Frm 00040 Fmt 4700 Sfmt 4700 laws,14 the Bureau consulted the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Board of Governors of the Federal Reserve System, the Federal Trade Commission, and the Department of Housing and Urban Development, including with respect to consistency with any prudential, market, or systemic objectives that may be administered by such agencies.15 The Bureau also has consulted with the Office of Management and Budget for technical assistance. The Bureau expects to have further consultations with the appropriate Federal agencies during the comment period. IV. Request for Comment Although notice and comment rulemaking procedures are not required, the Bureau invites comments on this notice. Commenters are specifically encouraged to identify any technical issues raised by the rule. The Bureau is also seeking comment in response to a notice published at 76 FR 75825 (Dec. 5, 2011) concerning its efforts to identify priorities for streamlining regulations that it has inherited from other Federal agencies to address provisions that are outdated, unduly burdensome, or unnecessary. V. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires each agency to consider the potential impact of its regulations on small entities, including small businesses, small governmental units, and small not-for-profit organizations.16 The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule 14 The fourteen laws implemented by this and its companion rulemakings are: the Consumer Leasing Act, the Electronic Fund Transfer Act (except with respect to section 920 of that Act), the Equal Credit Opportunity Act, the Fair Credit Reporting Act (except with respect to sections 615(e) and 628 of that act), the Fair Debt Collection Practices Act, Subsections (b) through (f) of section 43 of the Federal Deposit Insurance Act, sections 502 through 509 of the Gramm-Leach-Bliley Act (except for section 505 as it applies to section 501(b)), the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the S.A.F.E. Mortgage Licensing Act, the Truth in Lending Act, the Truth in Savings Act, section 626 of the Omnibus Appropriations Act, 2009, and the Interstate Land Sales Full Disclosure Act. 15 In light of the technical but voluminous nature of this recodification project, the Bureau focused the consultation process on a representative sample of the recodified regulations, while making information on the other regulations available. The Bureau expects to conduct differently its future consultations regarding substantive rulemakings. 16 5 U.S.C. 601 et seq. E:\FR\FM\16DER1.SGM 16DER1 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations subject to notice-and-comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.17 The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required.18 The IRFA and FRFA requirements described above apply only where a notice of proposed rulemaking is required,19 and the panel requirement applies only when a rulemaking requires an IRFA.20 As discussed above in part III, a notice of proposed rulemaking is not required for this rulemaking. In addition, as discussed above, this interim final rule has only a minor impact on entities subject to Regulations N and O. The rule imposes no new, substantive obligations on covered entities. Accordingly, the undersigned certifies that this interim final rule will not have a significant economic impact on a substantial number of small entities. VI. Paperwork Reduction Act The Bureau may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. This rule contains information collection requirements under the Paperwork Reduction Act (PRA), which have been previously approved by OMB, and the ongoing PRA burden for which is unchanged by this rule. There are no new information collection requirements in this interim final rule. The Bureau’s OMB control numbers for this information collection are: 3170– 0009 for Regulation N (Mortgage Acts and Practices—Advertising) and 3170– 0007 for Regulation O (Mortgage Assistance Relief Services). List of Subjects in 12 CFR Parts 1014 and 1015 Advertising, Communications, Consumer protection, Credit, Mortgages, Business practices related to mortgage loans, Trade practices, Telemarketing. jlentini on DSK4TPTVN1PROD with RULES Authority and Issuance For the reasons set forth above, the Bureau of Consumer Financial Protection adds parts 1014 and 1015 to 17 5 U.S.C. 603, 604. U.S.C. 609. 19 5 U.S.C. 603(a), 604(a); 5 U.S.C. 553(b)(B). 20 5 U.S.C. 609(b). 18 5 VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 Chapter X in Title 12 of the Code of Federal Regulations to read as follows: PART 1014—MORTGAGE ACTS AND PRACTICES—ADVERTISING (REGULATION N) Sec. 1014.1 1014.2 1014.3 1014.4 1014.5 1014.6 1014.7 Scope of regulations in this part. Definitions. Prohibited representations. Waiver not permitted. Recordkeeping requirements. Actions by states. Severability. Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1638 note. § 1014.1 Scope of regulations in this part. This part, known as Regulation N, is issued by the Bureau of Consumer Financial Protection to implement the 2009 Omnibus Appropriations Act, Public L. 111–8, section 626, 123 Stat. 524 (Mar. 11, 2009), as amended by the Credit Card Accountability Responsibility and Disclosure Act of 2009, Public Law 111–24, section 511, 123 Stat. 1734 (May 22, 2009), and as amended by the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010, Public Law 111– 203, section 1097, 124 Stat. 1376 (July 21, 2010). This part applies to persons over which the Federal Trade Commission has jurisdiction under the Federal Trade Commission Act. § 1014.2 Definitions. For the purposes of this part: Commercial communication means any written or oral statement, illustration, or depiction, whether in English or any other language, that is designed to effect a sale or create interest in purchasing goods or services, whether it appears on or in a label, package, package insert, radio, television, cable television, brochure, newspaper, magazine, pamphlet, leaflet, circular, mailer, book insert, free standing insert, letter, catalogue, poster, chart, billboard, public transit card, point of purchase display, film, slide, audio program transmitted over a telephone system, telemarketing script, on-hold script, upsell script, training materials provided to telemarketing firms, program-length commercial (‘‘infomercial’’), the internet, cellular network, or any other medium. Promotional materials and items and Web pages are included in the term commercial communication. Consumer means a natural person to whom a mortgage credit product is offered or extended. Credit means the right to defer payment of debt or to incur debt and defer its payment. PO 00000 Frm 00041 Fmt 4700 Sfmt 4700 78133 Dwelling means a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes any of the following if used as a residence: an individual condominium unit, cooperative unit, mobile home, manufactured home, or trailer. Mortgage credit product means any form of credit that is secured by real property or a dwelling and that is offered or extended to a consumer primarily for personal, family, or household purposes. Person means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity. Term means any of the fees, costs, obligations, or characteristics of or associated with the product. It also includes any of the conditions on or related to the availability of the product. § 1014.3 Prohibited representations. It is a violation of this part for any person to make any material misrepresentation, expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product, including but not limited to misrepresentations about: (a) The interest charged for the mortgage credit product, including but not limited to misrepresentations concerning: (1) The amount of interest that the consumer owes each month that is included in the consumer’s payments, loan amount, or total amount due, or (2) Whether the difference between the interest owed and the interest paid is added to the total amount due from the consumer; (b) The annual percentage rate, simple annual rate, periodic rate, or any other rate; (c) The existence, nature, or amount of fees or costs to the consumer associated with the mortgage credit product, including but not limited to misrepresentations that no fees are charged; (d) The existence, cost, payment terms, or other terms associated with any additional product or feature that is or may be sold in conjunction with the mortgage credit product, including but not limited to credit insurance or credit disability insurance; (e) The terms, amounts, payments, or other requirements relating to taxes or insurance associated with the mortgage credit product, including but not limited to misrepresentations about: (1) Whether separate payment of taxes or insurance is required; or (2) The extent to which payment for taxes or insurance is included in the E:\FR\FM\16DER1.SGM 16DER1 jlentini on DSK4TPTVN1PROD with RULES 78134 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations loan payments, loan amount, or total amount due from the consumer; (f) Any prepayment penalty associated with the mortgage credit product, including but not limited to misrepresentations concerning the existence, nature, amount, or terms of such penalty; (g) The variability of interest, payments, or other terms of the mortgage credit product, including but not limited to misrepresentations using the word ‘‘fixed’’; (h) Any comparison between: (1) Any rate or payment that will be available for a period less than the full length of the mortgage credit product; and (2) Any actual or hypothetical rate or payment; (i) The type of mortgage credit product, including but not limited to misrepresentations that the product is or involves a fully amortizing mortgage; (j) The amount of the obligation, or the existence, nature, or amount of cash or credit available to the consumer in connection with the mortgage credit product, including but not limited to misrepresentations that the consumer will receive a certain amount of cash or credit as part of a mortgage credit transaction; (k) The existence, number, amount, or timing of any minimum or required payments, including but not limited to misrepresentations about any payments or that no payments are required in a reverse mortgage or other mortgage credit product; (l) The potential for default under the mortgage credit product, including but not limited to misrepresentations concerning the circumstances under which the consumer could default for nonpayment of taxes, insurance, or maintenance, or for failure to meet other obligations; (m) The effectiveness of the mortgage credit product in helping the consumer resolve difficulties in paying debts, including but not limited to misrepresentations that any mortgage credit product can reduce, eliminate, or restructure debt or result in a waiver or forgiveness, in whole or in part, of the consumer’s existing obligation with any person; (n) The association of the mortgage credit product or any provider of such product with any other person or program, including but not limited to misrepresentations that: (1) The provider is, or is affiliated with, any governmental entity or other organization; or (2) The product is or relates to a government benefit, or is endorsed, sponsored by, or affiliated with any VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 government or other program, including but not limited to through the use of formats, symbols, or logos that resemble those of such entity, organization, or program; (o) The source of any commercial communication, including but not limited to misrepresentations that a commercial communication is made by or on behalf of the consumer’s current mortgage lender or servicer; (p) The right of the consumer to reside in the dwelling that is the subject of the mortgage credit product, or the duration of such right, including but not limited to misrepresentations concerning how long or under what conditions a consumer with a reverse mortgage can stay in the dwelling; (q) The consumer’s ability or likelihood to obtain any mortgage credit product or term, including but not limited to misrepresentations concerning whether the consumer has been preapproved or guaranteed for any such product or term; (r) The consumer’s ability or likelihood to obtain a refinancing or modification of any mortgage credit product or term, including but not limited to misrepresentations concerning whether the consumer has been preapproved or guaranteed for any such refinancing or modification; and (s) The availability, nature, or substance of counseling services or any other expert advice offered to the consumer regarding any mortgage credit product or term, including but not limited to the qualifications of those offering the services or advice. § 1014.4 Waiver not permitted. It is a violation of this part for any person to obtain, or attempt to obtain, a waiver from any consumer of any protection provided by or any right of the consumer under this part. § 1014.5 Recordkeeping requirements. (a) Any person subject to this part shall keep, for a period of twenty-four months from the last date the person made or disseminated the applicable commercial communication regarding any term of any mortgage credit product, the following evidence of compliance with this part: (1) Copies of all materially different commercial communications as well as sales scripts, training materials, and marketing materials, regarding any term of any mortgage credit product, that the person made or disseminated during the relevant time period; (2) Documents describing or evidencing all mortgage credit products available to consumers during the time period in which the person made or PO 00000 Frm 00042 Fmt 4700 Sfmt 4700 disseminated each commercial communication regarding any term of any mortgage credit product, including but not limited to the names and terms of each such mortgage credit product available to consumers; and (3) Documents describing or evidencing all additional products or services (such as credit insurance or credit disability insurance) that are or may be offered or provided with the mortgage credit products available to consumers during the time period in which the person made or disseminated each commercial communication regarding any term of any mortgage credit product, including but not limited to the names and terms of each such additional product or service available to consumers. (b) Any person subject to this part may keep the records required by paragraph (a) of this section in any legible form, and in the same manner, format, or place as they keep such records in the ordinary course of business. Failure to keep all records required under paragraph (a) of this section shall be a violation of this part. § 1014.6 Actions by states. Any attorney general or other officer of a state authorized by the state to bring an action under this part may do so pursuant to section 626(b) of the 2009 Omnibus Appropriations Act, Public Law 111–8, section 626, 123 Stat. 524 (Mar. 11, 2009), as amended by the Credit Card Accountability Responsibility and Disclosure Act of 2009, Public Law 111–24, section 511, 123 Stat. 1734 (May 22, 2009), and as amended by Public Law 111–203, section 1097, 124 Stat. 2102 (July 21, 2010). § 1014.7 Severability. The provisions of this part are separate and severable from one another. If any provision is stayed or determined to be invalid, it is the Bureau of Consumer Financial Protection’s intention that the remaining provisions shall continue in effect. PART 1015—MORTGAGE ASSISTANCE RELIEF SERVICES (REGULATION O) Sec. 1015.1 Scope of regulations in this part. 1015.2 Definitions. 1015.3 Prohibited representations. 1015.4 Disclosures required in commercial communications. 1015.5 Prohibition on collection of advance payments and related disclosures. 1015.6 Assisting and facilitating. 1015.7 Exemptions. 1015.8 Waiver not permitted. E:\FR\FM\16DER1.SGM 16DER1 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations 1015.9 Recordkeeping and compliance requirements. 1015.10 Actions by states. 1015.11 Severability. Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1638 note. § 1015.1 Scope of regulations in this part. This part, known as Regulation O, is issued by the Bureau of Consumer Financial Protection to implement the 2009 Omnibus Appropriations Act, Public Law 111–8, section 626, 123 Stat. 524 (Mar. 11, 2009), as clarified by the Credit Card Accountability Responsibility and Disclosure Act of 2009, Public Law 111–24, section 511, 123 Stat. 1734 (May 22, 2009), and as amended by the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010, Public Law 111– 203, section 1097, 124 Stat. 1376 (July 21, 2010). This part applies to persons over which the Federal Trade Commission has jurisdiction under the Federal Trade Commission Act. jlentini on DSK4TPTVN1PROD with RULES § 1015.2 Definitions. For the purposes of this part: Clear and prominent means: (1) In textual communications, the required disclosures shall be easily readable; in a high degree of contrast from the immediate background on which it appears; in the same languages that are substantially used in the commercial communication; in a format so that the disclosure is distinct from other text, such as inside a border; in a distinct type style, such as bold; parallel to the base of the commercial communication, and, except as otherwise provided in this rule, each letter of the disclosure shall be, at a minimum, the larger of 12-point type or one-half the size of the largest letter or numeral used in the name of the advertised Web site or telephone number to which consumers are referred to receive information relating to any mortgage assistance relief service. Textual communications include any communications in a written or printed form such as print publications or words displayed on the screen of a computer; (2) In communications disseminated orally or through audible means, such as radio or streaming audio, the required disclosures shall be delivered in a slow and deliberate manner and in a reasonably understandable volume and pitch; (3) In communications disseminated through video means, such as television or streaming video, the required disclosures shall appear simultaneously in the audio and visual parts of the commercial communication and be VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 delivered in a manner consistent with paragraphs (1) and (2) of this definition. The visual disclosure shall be at least four percent of the vertical picture or screen height and appear for the duration of the oral disclosure; (4) In communications made through interactive media, such as the internet, online services, and software, the required disclosures shall: (i) Be consistent with paragraphs (1) through (3) of this definition; (ii) Be made on, or immediately prior to, the page on which the consumer takes any action to incur any financial obligation; (iii) Be unavoidable, i.e., visible to consumers without requiring them to scroll down a Web page; and (iv) Appear in type at least the same size as the largest character of the advertisement; (5) In all instances, the required disclosures shall be presented in an understandable language and syntax, and with nothing contrary to, inconsistent with, or in mitigation of the disclosures used in any communication of them; and (6) For program-length television, radio, or internet-based multimedia commercial communications, the required disclosures shall be made at the beginning, near the middle, and at the end of the commercial communication. Client trust account means a separate account created by a licensed attorney for the purpose of holding client funds, which is: (1) Maintained in compliance with all applicable state laws and regulations, including licensing regulations; and (2) Located in the state where the attorney’s office is located, or elsewhere in the United States with the consent of the consumer on whose behalf the funds are held. Commercial communication means any written or oral statement, illustration, or depiction, whether in English or any other language, that is designed to effect a sale or create interest in purchasing any service, plan, or program, whether it appears on or in a label, package, package insert, radio, television, cable television, brochure, newspaper, magazine, pamphlet, leaflet, circular, mailer, book insert, free standing insert, letter, catalogue, poster, chart, billboard, public transit card, point of purchase display, film, slide, audio program transmitted over a telephone system, telemarketing script, onhold script, upsell script, training materials provided to telemarketing firms, program-length commercial (‘‘infomercial’’), the internet, cellular network, or any other medium. PO 00000 Frm 00043 Fmt 4700 Sfmt 4700 78135 Promotional materials and items and Web pages are included in the term ‘‘commercial communication.’’ (1) General Commercial Communication means a commercial communication that occurs prior to the consumer agreeing to permit the provider to seek offers of mortgage assistance relief on behalf of the consumer, or otherwise agreeing to use the mortgage assistance relief service, and that is not directed at a specific consumer. (2) Consumer-Specific Commercial Communication means a commercial communication that occurs prior to the consumer agreeing to permit the provider to seek offers of mortgage assistance relief on behalf of the consumer, or otherwise agreeing to use the mortgage assistance relief service, and that is directed at a specific consumer. Consumer means any natural person who is obligated under any loan secured by a dwelling. Dwelling means a residential structure containing four or fewer units, whether or not that structure is attached to real property, that is primarily for personal, family, or household purposes. The term includes any of the following if used as a residence: An individual condominium unit, cooperative unit, mobile home, manufactured home, or trailer. Dwelling loan means any loan secured by a dwelling, and any associated deed of trust or mortgage. Dwelling Loan Holder means any individual or entity who holds the dwelling loan that is the subject of the offer to provide mortgage assistance relief services. Material means likely to affect a consumer’s choice of, or conduct regarding, any mortgage assistance relief service. Mortgage Assistance Relief Service means any service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following: (1) Stopping, preventing, or postponing any mortgage or deed of trust foreclosure sale for the consumer’s dwelling, any repossession of the consumer’s dwelling, or otherwise saving the consumer’s dwelling from foreclosure or repossession; (2) Negotiating, obtaining, or arranging a modification of any term of a dwelling loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees; (3) Obtaining any forbearance or modification in the timing of payments E:\FR\FM\16DER1.SGM 16DER1 jlentini on DSK4TPTVN1PROD with RULES 78136 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations from any dwelling loan holder or servicer on any dwelling loan; (4) Negotiating, obtaining, or arranging any extension of the period of time within which the consumer may: (i) Cure his or her default on a dwelling loan, (ii) Reinstate his or her dwelling loan, (iii) Redeem a dwelling, or (iv) Exercise any right to reinstate a dwelling loan or redeem a dwelling; (5) Obtaining any waiver of an acceleration clause or balloon payment contained in any promissory note or contract secured by any dwelling; or (6) Negotiating, obtaining or arranging: (i) A short sale of a dwelling, (ii) A deed-in-lieu of foreclosure, or (iii) Any other disposition of a dwelling other than a sale to a third party who is not the dwelling loan holder. Mortgage Assistance Relief Service Provider or Provider means any person that provides, offers to provide, or arranges for others to provide, any mortgage assistance relief service. This term does not include: (1) The dwelling loan holder, or any agent or contractor of such individual or entity. (2) The servicer of a dwelling loan, or any agent or contractor of such individual or entity. Person means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity, except to the extent that any person is specifically excluded from the Federal Trade Commission’s jurisdiction pursuant to 15 U.S.C. 44 and 45(a)(2). Servicer means the individual or entity responsible for: (1) Receiving any scheduled periodic payments from a consumer pursuant to the terms of the dwelling loan that is the subject of the offer to provide mortgage assistance relief services, including amounts for escrow accounts under section 10 of the Real Estate Settlement Procedures Act (12 U.S.C. 2609); and (2) Making the payments of principal and interest and such other payments with respect to the amounts received from the consumer as may be required pursuant to the terms of the mortgage servicing loan documents or servicing contract. Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of any service, by use of one or more telephones and which involves more than one interstate telephone call. § 1015.3 Prohibited representations. It is a violation of this rule for any mortgage assistance relief service VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 provider to engage in the following conduct: (a) Representing, expressly or by implication, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, that a consumer cannot or should not contact or communicate with his or her lender or servicer. (b) Misrepresenting, expressly or by implication, any material aspect of any mortgage assistance relief service, including but not limited to: (1) The likelihood of negotiating, obtaining, or arranging any represented service or result, such as those set forth in the definition of Mortgage Assistance Relief Service in § 1015.2; (2) The amount of time it will take the mortgage assistance relief service provider to accomplish any represented service or result, such as those set forth in the definition of Mortgage Assistance Relief Service in § 1015.2; (3) That a mortgage assistance relief service is affiliated with, endorsed or approved by, or otherwise associated with: (i) The United States government, (ii) Any governmental homeowner assistance plan, (iii) Any Federal, State, or local government agency, unit, or department, (iv) Any nonprofit housing counselor agency or program, (v) The maker, holder, or servicer of the consumer’s dwelling loan, or (vi) Any other individual, entity, or program; (4) The consumer’s obligation to make scheduled periodic payments or any other payments pursuant to the terms of the consumer’s dwelling loan; (5) The terms or conditions of the consumer’s dwelling loan, including but not limited to the amount of debt owed; (6) The terms or conditions of any refund, cancellation, exchange, or repurchase policy for a mortgage assistance relief service, including but not limited to the likelihood of obtaining a full or partial refund, or the circumstances in which a full or partial refund will be granted, for a mortgage assistance relief service; (7) That the mortgage assistance relief service provider has completed the represented services or has a right to claim, demand, charge, collect, or receive payment or other consideration; (8) That the consumer will receive legal representation; (9) The availability, performance, cost, or characteristics of any alternative to for-profit mortgage assistance relief services through which the consumer can obtain mortgage assistance relief, including negotiating directly with the PO 00000 Frm 00044 Fmt 4700 Sfmt 4700 dwelling loan holder or servicer, or using any nonprofit housing counselor agency or program; (10) The amount of money or the percentage of the debt amount that a consumer may save by using the mortgage assistance relief service; (11) The total cost to purchase the mortgage assistance relief service; or (12) The terms, conditions, or limitations of any offer of mortgage assistance relief the provider obtains from the consumer’s dwelling loan holder or servicer, including the time period in which the consumer must decide to accept the offer; (c) Making a representation, expressly or by implication, about the benefits, performance, or efficacy of any mortgage assistance relief service unless, at the time such representation is made, the provider possesses and relies upon competent and reliable evidence that substantiates that the representation is true. For the purposes of this paragraph, competent and reliable evidence means tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by individuals qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results. § 1015.4 Disclosures required in commercial communications. It is a violation of this rule for any mortgage assistance relief service provider to engage in the following conduct: (a) Disclosures in All General Commercial Communications—Failing to place the following statements in every general commercial communication for any mortgage assistance relief service: (1) ‘‘(Name of company) is not associated with the government, and our service is not approved by the government or your lender.’’ (2) In cases where the mortgage assistance relief service provider has represented, expressly or by implication, that consumers will receive any service or result set forth in paragraphs (2) through (6) of the definition of Mortgage Assistance Relief Service in § 1015.2, ‘‘Even if you accept this offer and use our service, your lender may not agree to change your loan.’’ (3) The disclosures required by this paragraph must be made in a clear and prominent manner, and— (i) In textual communications the disclosures must appear together and be preceded by the heading ‘‘IMPORTANT NOTICE,’’ which must be in bold face E:\FR\FM\16DER1.SGM 16DER1 jlentini on DSK4TPTVN1PROD with RULES Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations font that is two point-type larger than the font size of the required disclosures; and (ii) In communications disseminated orally or through audible means, wholly or in part, the audio component of the required disclosures must be preceded by the statement ‘‘Before using this service, consider the following information.’’ (b) Disclosures in All ConsumerSpecific Commercial Communications— Failing to disclose the following information in every consumer-specific commercial communication for any mortgage assistance relief service: (1) ‘‘You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating the amount) for our services.’’ For the purposes of this paragraph (b)(1), the amount ‘‘you will have to pay’’ shall consist of the total amount the consumer must pay to purchase, receive, and use all of the mortgage assistance relief services that are the subject of the sales offer, including, but not limited to, all fees and charges. (2) ‘‘(Name of company) is not associated with the government, and our service is not approved by the government or your lender.’’ (3) In cases where the mortgage assistance relief service provider has represented, expressly or by implication, that consumers will receive any service or result set forth in paragraphs (2) through (6) of the definition of Mortgage Assistance Relief Service in § 1015.2, ‘‘Even if you accept this offer and use our service, your lender may not agree to change your loan.’’ (4) The disclosures required by this paragraph must be made in a clear and prominent manner, and— (i) In textual communications the disclosures must appear together and be preceded by the heading ‘‘IMPORTANT NOTICE,’’ which must be in bold face font that is two point-type larger than the font size of the required disclosures; and (ii) In communications disseminated orally or through audible means, wholly or in part, the audio component of the required disclosures must be preceded by the statement ‘‘Before using this service, consider the following information’’ and, in telephone communications, must be made at the beginning of the call. (c) Disclosures in All General Commercial Communications, VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 Consumer-Specific Commercial Communications, and Other Communications—In cases where the mortgage assistance relief service provider has represented, expressly or by implication, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, that the consumer should temporarily or permanently discontinue payments, in whole or in part, on a dwelling loan, failing to disclose, clearly and prominently, and in close proximity to any such representation that ‘‘If you stop paying your mortgage, you could lose your home and damage your credit rating.’’ § 1015.5 Prohibition on collection of advance payments and related disclosures. It is a violation of this rule for any mortgage assistance relief service provider to: (a) Request or receive payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer’s dwelling loan holder or servicer incorporating the offer of mortgage assistance relief the provider obtained from the consumer’s dwelling loan holder or servicer; (b) Fail to disclose, at the time the mortgage assistance relief service provider furnishes the consumer with the written agreement specified in paragraph (a) of this section, the following information: ‘‘This is an offer of mortgage assistance we obtained from your lender [or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [same amount as disclosed pursuant to § 1015.4(b)(1)] for our services.’’ The disclosure required by this paragraph must be made in a clear and prominent manner, on a separate written page, and preceded by the heading: ‘‘IMPORTANT NOTICE: Before buying this service, consider the following information.’’ The heading must be in bold face font that is two point-type larger than the font size of the required disclosure; or (c)(1) Fail to provide, at the time the mortgage assistance relief service provider furnishes the consumer with the written agreement specified in paragraph (a) of this section, a notice from the consumer’s dwelling loan holder or servicer that describes all material differences between the terms, conditions, and limitations associated with the consumer’s current mortgage loan and the terms, conditions, and limitations associated with the consumer’s mortgage loan if he or she PO 00000 Frm 00045 Fmt 4700 Sfmt 4700 78137 accepts the dwelling loan holder’s or servicer’s offer, including but not limited to differences in the loan’s: (i) Principal balance; (ii) Contract interest rate, including the maximum rate and any adjustable rates, if applicable; (iii) Amount and number of the consumer’s scheduled periodic payments on the loan; (iv) Monthly amounts owed for principal, interest, taxes, and any mortgage insurance on the loan; (v) Amount of any delinquent payments owing or outstanding; (vi) Assessed fees or penalties; and (vii) Term. (2) The notice must be made in a clear and prominent manner, on a separate written page, and preceded by heading: ‘‘IMPORTANT INFORMATION FROM YOUR [name of lender or servicer] ABOUT THIS OFFER.’’ The heading must be in bold face font that is twopoint-type larger than the font size of the required disclosure. (d) Fail to disclose in the notice specified in paragraph (c) of this section, in cases where the offer of mortgage assistance relief the provider obtained from the consumer’s dwelling loan holder or servicer is a trial mortgage loan modification, the terms, conditions, and limitations of this offer, including but not limited to: (1) The fact that the consumer may not qualify for a permanent mortgage loan modification; and (2) The likely amount of the scheduled periodic payments and any arrears, payments, or fees that the consumer would owe in failing to qualify. § 1015.6 Assisting and facilitating. It is a violation of this rule for a person to provide substantial assistance or support to any mortgage assistance relief service provider when that person knows or consciously avoids knowing that the provider is engaged in any act or practice that violates this rule. § 1015.7 Exemptions. (a) An attorney is exempt from this part, with the exception of § 1015.5, if the attorney: (1) Provides mortgage assistance relief services as part of the practice of law; (2) Is licensed to practice law in the state in which the consumer for whom the attorney is providing mortgage assistance relief services resides or in which the consumer’s dwelling is located; and (3) Complies with state laws and regulations that cover the same type of conduct the rule requires. (b) An attorney who is exempt pursuant to paragraph (a) of this section E:\FR\FM\16DER1.SGM 16DER1 78138 Federal Register / Vol. 76, No. 242 / Friday, December 16, 2011 / Rules and Regulations is also exempt from § 1015.5 if the attorney: (1) Deposits any funds received from the consumer prior to performing legal services in a client trust account; and (2) Complies with all state laws and regulations, including licensing regulations, applicable to client trust accounts. § 1015.8 Waiver not permitted. It is a violation of this rule for any person to obtain, or attempt to obtain, a waiver from any consumer of any protection provided by or any right of the consumer under this rule. jlentini on DSK4TPTVN1PROD with RULES § 1015.9 Recordkeeping and compliance requirements. (a) Any mortgage assistance relief provider must keep, for a period of twenty-four (24) months from the date the record is created, the following records: (1) All contracts or other agreements between the provider and any consumer for any mortgage assistance relief service; (2) Copies of all written communications between the provider and any consumer occurring prior to the date on which the consumer entered into an agreement with the provider for any mortgage assistance relief service; (3) Copies of all documents or telephone recordings created in connection with compliance with paragraph (b) of this section; (4) All consumer files containing the names, phone numbers, dollar amounts paid, and descriptions of mortgage assistance relief services purchased, to the extent the mortgage assistance relief service provider keeps such information in the ordinary course of business; (5) Copies of all materially different sales scripts, training materials, commercial communications, or other marketing materials, including Web sites and weblogs, for any mortgage assistance relief service; and (6) Copies of the documentation provided to the consumer as specified in § 1015.5 of this rule; (b) A mortgage assistance relief service provider also must: (1) Take reasonable steps sufficient to monitor and ensure that all employees and independent contractors comply with this rule. Such steps shall include the monitoring of communications directed at specific consumers, and shall also include, at a minimum, the following: (i) If the mortgage assistance relief service provider is engaged in the telemarketing of mortgage assistance relief services, performing random, blind recording and testing of the oral VerDate Mar<15>2010 16:23 Dec 15, 2011 Jkt 226001 representations made by individuals engaged in sales or other customer service functions; (ii) Establishing a procedure for receiving and responding to all consumer complaints; and (iii) Ascertaining the number and nature of consumer complaints regarding transactions in which all employees and independent contractors are involved; (2) Investigate promptly and fully each consumer complaint received; (3) Take corrective action with respect to any employee or contractor whom the mortgage assistance relief service provider determines is not complying with this rule, which may include training, disciplining, or terminating such individual; and (4) Maintain any information and material necessary to demonstrate its compliance with paragraphs (b)(1) through (3) of this section. (c) A mortgage assistance relief provider may keep the records required by paragraphs (a) and (b) of this section in any form, and in the same manner, format, or place as it keeps such records in the ordinary course of business. (d) It is a violation of this rule for a mortgage assistance relief service provider not to comply with this section. § 1015.10 Actions by states. Any attorney general or other officer of a state authorized by the state to bring an action under this part may do so pursuant to section 626(b) of the 2009 Omnibus Appropriations Act, Public Law 111–8, section 626, 123 Stat. 524 (Mar. 11, 2009), as amended by Public Law 111–24, section 511, 123 Stat. 1734 (May 22, 2009), and as amended by Public Law 111–203, section 1097, 124 Stat. 2102 (July 21, 2010). § 1015.11 Severability. The provisions of this rule are separate and severable from one another. If any provision is stayed or determined to be invalid, it is the Bureau of Consumer Financial Protection’s intention that the remaining provisions shall continue in effect. Dated: October 24, 2011. Alastair M. Fitzpayne, Deputy Chief of Staff and Executive Secretary, Department of the Treasury. [FR Doc. 2011–31731 Filed 12–15–11; 8:45 am] BILLING CODE 4810–AM–P PO 00000 Frm 00046 Fmt 4700 Sfmt 4700 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2011–1317; Directorate Identifier 2011–NM–193–AD; Amendment 39–16893; AD 2011–26–03] RIN 2120–AA64 Airworthiness Directives; The Boeing Company Model 777–200, –200LR, –300, and –300ER Series Airplanes Federal Aviation Administration (FAA), DOT. ACTION: Final rule; request for comments. AGENCY: We are superseding an existing airworthiness directive (AD) for certain Model 777–200, –300, and –300ER series airplanes. That AD currently requires installing Teflon sleeving under the clamps of certain wire bundles routed along the fuel tank boundary structure, and cap sealing certain penetrating fasteners of the main and center fuel tanks. This AD expands the applicability in the existing AD. This AD was prompted by fuel system reviews conducted by the manufacturer, which determined that electrical arcing on the fuel tank boundary structure or inside the fuel tanks could result in a fire or explosion. We are issuing this AD to correct the unsafe condition on these products. DATES: This AD is effective January 3, 2012. The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of January 20, 2011 (75 FR 78588, December 16, 2010). We must receive any comments on this AD by January 30, 2012. ADDRESSES: You may send comments by any of the following methods: • Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments. • Fax: (202) 493–2251. • Mail: U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. • Hand Delivery: U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services SUMMARY: E:\FR\FM\16DER1.SGM 16DER1

Agencies

[Federal Register Volume 76, Number 242 (Friday, December 16, 2011)]
[Rules and Regulations]
[Pages 78130-78138]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31731]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Parts 1014 and 1015

[Docket No. CFPB-2011-0027]
RIN 3170-AA06


Mortgage Acts and Practices--Advertising (Regulation N); Mortgage 
Assistance Relief Services (Regulation O)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interim final rule with request for public comment.

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SUMMARY: Title X of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) transferred rulemaking authority for a 
number of consumer financial protection laws from seven Federal 
agencies to the Bureau of Consumer Financial Protection (Bureau) as of 
July 21, 2011. The Bureau is in the process of republishing the 
regulations implementing those laws with technical and conforming 
changes to reflect the transfer of authority and certain other changes 
made by the Dodd-Frank Act. In light of the transfer of the Federal 
Trade Commission's (FTC's) rulemaking authority for section 626 of the 
Omnibus Appropriations Act, 2009 (Omnibus Appropriations Act) to the 
Bureau, the Bureau is publishing for public comment an interim final 
rule establishing a new Regulation N (Mortgage Acts and Practices--
Advertising Rule) and a new Regulation O (Mortgage Assistance Relief 
Services Rule). This interim final rule does not impose any new 
substantive obligations on persons subject to the existing Mortgages 
Acts and Practices--Advertising Rule or the existing Mortgage 
Assistance Relief Services Rule, previously published by the FTC.

DATES: This interim final rule is effective December 30, 2011. Comments 
must be received on or before February 14, 2012.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0027 or RIN 3170-AA06, by any of the following methods:
     Electronic: http://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Bureau of Consumer Financial Protection, 1500 Pennsylvania Ave. NW., 
(Attn: 1801 L Street), Washington, DC 20220.
     Hand Delivery/Courier in Lieu of Mail: Monica Jackson, 
Office of the Executive Secretary, Bureau of Consumer Financial 
Protection, 1700 G Street NW., Washington, DC 20006.
    All submissions must include the agency name and docket number or 
Regulatory Information Number (RIN) for this rulemaking. In general, 
all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public 
inspection and copying at 1700 G Street NW., Washington DC 20006, on 
official business days between the hours of 10 a.m. and 5 p.m. Eastern 
Time. You can make an appointment to inspect the documents by 
telephoning (202) 435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or social 
security numbers, should not be included. Comments will not be edited 
to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Jane Gao or Krista Ayoub, Office of 
Regulations, at (202) 435-7700.

SUPPLEMENTARY INFORMATION: 

I. Background

    Congress enacted section 626 of the Omnibus Appropriations Act, 
2009 (Omnibus Appropriations Act) on March 11, 2009 and directed the 
Federal Trade Commission (FTC) to commence a rulemaking proceeding 
within 90 days of enactment with respect to mortgage loans.\1\ On May 
22, 2009, the enactment of the Credit Card Accountability 
Responsibility and Disclosure Act of 2009 \2\ clarified the FTC's 
rulemaking authority under the Omnibus Appropriations Act to specify 
that the FTC's rulemaking based on its authority pursuant to the 
Omnibus Appropriations Act ``shall relate to unfair or deceptive acts 
or practices regarding mortgage loans,'' which may involve loan 
modification and foreclosure rescue services.\3\
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    \1\ Public L. 111-8, 123 Stat. 524 (2009). The Omnibus 
Appropriations Act also directed the FTC to use notice and comment 
procedures under section 553 of the Administrative Procedure Act 
(APA), 5 U.S.C. 553, to promulgate rules pursuant to the Omnibus 
Appropriations Act in lieu of the procedures set forth in section 18 
of the FTC Act, 15 U.S.C. 57a. The FTC noted in its Advance Notice 
of Proposed Rulemaking: Mortgage Acts and Practices, 74 FR 26118 
(June 1, 2009), that because Omnibus Appropriations Act rulemaking 
is not undertaken pursuant to section 18, 15 U.S.C. 57a(f), Federal 
banking agencies are not required to promulgate substantially 
similar regulations for entities within their jurisdiction. Id. at 
26119, note 2.
    \2\ Public Law 111-24, 123 Stat. 1734 (2009).
    \3\ Id. Section 511(a)(1)(B).

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[[Page 78131]]

    Prior to July 21, 2011, rulemaking authority for the Omnibus 
Appropriations Act was vested in the FTC. The Dodd-Frank Wall Street 
Reform and Consumer Protection Act (Dodd-Frank Act) \4\ amended a 
number of consumer financial protection laws, including the Omnibus 
Appropriations Act. In addition to various substantive amendments, the 
Dodd-Frank Act transferred rulemaking authority for the Omnibus 
Appropriations Act to the Bureau of Consumer Financial Protection 
(Bureau), effective July 21, 2011. See sections 1061 and 1097 of the 
Dodd-Frank Act. Pursuant to the Dodd-Frank Act and the Omnibus 
Appropriations Act, as amended, the Bureau is publishing for public 
comment an interim final rule establishing a new Regulation N (Mortgage 
Acts and Practices--Advertising), 12 CFR part 1014, and a new 
Regulation O (Mortgage Assistance Relief Services), 12 CFR part 1015, 
implementing the Omnibus Appropriations Act.
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    \4\ Public Law 111-203, 124 Stat. 1376 (2010).
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II. Summary of the Interim Final Rule

A. General

    The interim final rule substantially duplicates the FTC's Mortgage 
Acts and Practices--Advertising Rule as the Bureau's new Regulation N, 
12 CFR part 1014, and the FTC's Mortgage Assistance Relief Services 
Rule as the Bureau's new Regulation O, 12 CFR part 1015, making only 
certain non-substantive, technical, formatting, and stylistic changes. 
To minimize any potential confusion, other than republishing 16 CFR 
parts 321 and 322 with the Bureau's part number, the Bureau is 
preserving where possible the numbering the FTC used in the two rules. 
Additionally, while this interim final rule generally incorporates the 
FTC's existing regulatory text, the rule has been edited as necessary 
to reflect nomenclature and other technical amendments required by the 
Dodd-Frank Act. Notably, this interim final rule does not impose any 
new substantive obligations on regulated entities. In future 
rulemakings, the Bureau expects to amend Regulations N and O to 
implement certain other changes to the Omnibus Appropriations Act made 
by the Dodd-Frank Act, such as expanding the scope of Regulations N and 
O to include persons excluded from coverage under the FTC's existing 16 
CFR parts 321 and 322 due to the fact that they are not subject to the 
FTC's enforcement jurisdiction.\5\
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    \5\ The regulatory text of the FTC's Mortgage Acts and 
Practices--Advertising Rule contains a clear statement that the rule 
only applies to persons over which the FTC has jurisdiction under 
the Federal Trade Commission Act in the scope section of the 
regulation. See 16 CFR 321.1. The existing text of the Mortgage 
Assistance Relief Services Rule does not contain a similar statement 
in the scope section of the regulation; however, in the definitions 
section of the regulation, the definition of ``person'' subject to 
the regulation specifically excludes entities excluded from the 
FTC's jurisdiction under the Federal Trade Commission Act. See 16 
CFR 322.2. FTC staff recommended to the Bureau that the Bureau add a 
clear statement in the scope section of the Mortgage Assistance 
Relief Services Rule that states the rule does not apple to entities 
over which the FTC lacks jurisdiction. Accordingly, the Bureau has 
added the following sentence, ``This part applies to persons over 
which the Federal Trade Commission has jurisdiction under the 
Federal Trade Commission Act.'' at the end of Sec.  1015.1.
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B. Specific Changes

    References to the FTC's rulemaking authority have been replaced 
with references to the Bureau. Conforming edits have been made to 
internal cross-references. Historical references that are no longer 
applicable, and references to effective dates that have passed, have 
been removed as appropriate. In addition, with respect to the Mortgage 
Assistance Relief Services Rule, the Bureau is correcting a citation 
error in the FTC's existing Sec.  322.9(c). As adopted by the FTC, 
Sec.  322.9(c) contains a cross-reference to Sec.  322.10(a). The 
correct citation should be to Sec. Sec.  322.9(a) and (b). The Bureau 
is republishing Sec.  322.9(c) as Sec.  1015.9(c) with the citation 
corrected to read Sec. Sec.  1015.9(a) and (b).

III. Legal Authority

A. Rulemaking Authority

    The Bureau is issuing this interim final rule pursuant to its 
authority under the Omnibus Appropriations Act and the Dodd-Frank Act. 
Effective July 21, 2011, section 1061 of the Dodd-Frank Act transferred 
to the Bureau all of the FTC's authority under an enumerated consumer 
law to prescribe rules, issue guidelines, conduct studies, or issue 
reports.\6\ The Omnibus Appropriations Act is an enumerated consumer 
law.\7\ Accordingly, effective July 21, 2011, the authority of the FTC 
to issue regulations pursuant to the Omnibus Appropriations Act 
transferred to the Bureau.\8\
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    \6\ Public Law 111-203, section 1061(b)(5).
    \7\ Id. Section 1002(12)(Q) (defining ``enumerated consumer 
laws'' to include the Omnibus Appropriations Act).
    \8\ Section 1066 of the Dodd-Frank Act grants the Secretary of 
the Treasury interim authority to perform certain functions of the 
Bureau. Pursuant to that authority, Treasury is publishing this 
interim final rule on behalf of the Bureau. Until this and other 
interim final rules take effect, existing regulations for which 
rulemaking authority transferred to the Bureau continue to govern 
persons covered by this rule. See 76 FR 43569 (July 21, 2011).
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    The Omnibus Appropriations Act, as amended, authorizes the Bureau 
to issue regulations in accordance with section 553 of the 
Administrative Procedure Act (APA), 5 U.S.C. 553, to carry out the 
provisions of the Omnibus Appropriations Act. These regulations may 
pertain to unfair or deceptive acts or practices regarding mortgage 
loans, which may include unfair or deceptive acts or practices 
involving loan modification and foreclosure rescue services. In its 
existing regulations, the FTC used this Omnibus Appropriations Act 
authority to adopt the Mortgage Acts and Practices--Advertising Rule 
and the Mortgage Assistance Relief Services Rule.

B. Authority To Issue an Interim Final Rule Without Prior Notice and 
Comment

    The Administrative Procedure Act (APA) \9\ generally requires 
public notice and an opportunity to comment before promulgation of 
regulations.\10\ The APA provides exceptions to notice-and-comment 
procedures, however, where an agency for good cause finds that such 
procedures are impracticable, unnecessary, or contrary to the public 
interest or when a rulemaking relates to agency organization, 
procedure, and practice.\11\ The Bureau finds that there is good cause 
to conclude that providing notice and opportunity for comment would be 
unnecessary and contrary to the public interest under these 
circumstances. In addition, substantially all the changes made by this 
interim final rule, which were necessitated by the Dodd-Frank Act's 
transfer of Omnibus Appropriations Act authority from the FTC to the 
Bureau, relate to agency organization, procedure, and practice and are 
thus exempt from the APA's notice-and comment requirements.
---------------------------------------------------------------------------

    \9\ 5 U.S.C. 551 et seq.
    \10\ 5 U.S.C. 553(b), (c).
    \11\ 5 U.S.C. 553(b)(3)(A), (B).
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    The Bureau's good cause findings are based on the following 
considerations. As an initial matter, the FTC's existing regulations 
were a result of notice-and-comment rulemaking to the extent required. 
Moreover, the interim final rule published today does not impose any 
new, substantive obligations on regulated entities. Rather, the interim 
final rule makes only non-substantive, technical changes to the 
existing text of the regulations, such as renumbering, changing 
internal cross-references, and replacing appropriate nomenclature to 
reflect the transfer of authority to the Bureau. Given the technical 
nature of these changes, and the fact that the interim final rule does 
not impose any

[[Page 78132]]

additional substantive requirements on covered entities, an opportunity 
for prior public comment is unnecessary. In addition, recodifying the 
FTC's regulations to reflect the transfer of authority to the Bureau 
will help facilitate compliance with the Omnibus Appropriations Act and 
its implementing regulations, and will help reduce uncertainty 
regarding the applicable regulatory framework. Using notice-and-comment 
procedures would delay this process and thus be contrary to the public 
interest.
    The APA generally requires that rules be published not less than 30 
days before their effective dates. See 5 U.S.C. 553(d). As with the 
notice and comment requirement, however, the APA allows an exception 
when ``otherwise provided by the agency for good cause found and 
published with the rule.'' 5 U.S.C. 553(d)(3). The Bureau finds that 
there is good cause for providing less than 30 days notice here. A 
delayed effective date would harm consumers and regulated entities by 
needlessly perpetuating discrepancies between the amended statutory 
text and the implementing regulations, thereby hindering compliance and 
prolonging uncertainty regarding the applicable regulatory 
framework.\12\
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    \12\ This interim final rule is one of 14 companion rulemakings 
that together restate and recodify the implementing regulations 
under 14 existing consumer financial laws (part III.C, below, lists 
the 14 laws involved). In the interest of proper coordination of 
this overall regulatory framework, which includes numerous cross-
references among some of the regulations, the Bureau is establishing 
the same effective date of December 30, 2011 for those rules 
published on or before that date and making those published 
thereafter (if any) effective immediately.
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    In addition, delaying the effective date of the interim final rule 
for 30 days would provide no practical benefit to regulated entities in 
this context and in fact could operate to their detriment. As discussed 
above, the interim final rule published today does not impose any new, 
substantive obligations on regulated entities. Instead, the rule makes 
only non-substantive, technical changes to the existing text of the 
regulations. Thus, regulated entities that are already in compliance 
with the existing rules will not need to modify business practices as a 
result of this rule.

C. Section 1022(b)(2) of the Dodd-Frank Act

    In developing the interim final rule, the Bureau has conducted an 
analysis of potential benefits, costs, and impacts.\13\ The Bureau 
believes that the interim final rule will benefit consumers and covered 
persons by updating and recodifying Regulations N and O to reflect the 
transfer of authority to the Bureau and certain other changes mandated 
by the Dodd-Frank Act. This will help facilitate compliance with the 
Omnibus Appropriations Act and its implementing regulations and help 
reduce any uncertainty regarding the applicable regulatory framework. 
The interim final rule will not impose any new substantive obligations 
on consumers or covered persons and is not expected to have any impact 
on consumers' access to consumer financial products and services.
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    \13\ Section 1022(b)(2)(A) of the Dodd-Frank Act addresses the 
consideration of the potential benefits and costs of regulation to 
consumers and covered persons, including the potential reduction of 
access by consumers to consumer financial products or services; the 
impact on depository institutions and credit unions with $10 billion 
or less in total assets as described in section 1026 of the Dodd-
Frank Act; and the impact on consumers in rural areas. Section 
1022(b)(2)(B) requires that the Bureau ``consult with the 
appropriate prudential regulators or other Federal agencies prior to 
proposing a rule and during the comment process regarding 
consistency with prudential, market, or systemic objectives 
administered by such agencies.'' The manner and extent to which 
these provisions apply to interim final rules and to benefits, 
costs, and impacts that are compelled by statutory changes rather 
than discretionary Bureau action is unclear. Nevertheless, to inform 
this rulemaking more fully, the Bureau performed the described 
analyses and consultations.
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    Although not required by the interim final rule, covered entities 
may incur some costs in updating compliance manuals and related 
materials to reflect the new numbering and other technical changes 
reflected in the new Regulations N and O. The Bureau has worked to 
reduce any such burden by preserving the existing numbering to the 
extent possible and believes that such costs will likely be minimal. 
These changes could be handled in the short term by providing a short, 
standalone summary alerting users to the changes and in the long term 
could be combined with other updates at the firm's convenience. The 
Bureau intends to continue investigating the possible costs to affected 
entities of updating manuals and related materials to reflect these 
changes and solicits comments on this and other issues discussed in 
this section.
    The interim final rule will have no unique impact on depository 
institutions or credit unions with $10 billion or less in assets as 
described in section 1026(a) of the Dodd-Frank Act. Also, the interim 
final rule will have no unique impact on rural consumers.
    In undertaking the process of recodifying Regulations N and O, as 
well as regulations implementing thirteen other consumer financial 
laws,\14\ the Bureau consulted the Federal Deposit Insurance 
Corporation, the Office of the Comptroller of the Currency, the 
National Credit Union Administration, the Board of Governors of the 
Federal Reserve System, the Federal Trade Commission, and the 
Department of Housing and Urban Development, including with respect to 
consistency with any prudential, market, or systemic objectives that 
may be administered by such agencies.\15\ The Bureau also has consulted 
with the Office of Management and Budget for technical assistance. The 
Bureau expects to have further consultations with the appropriate 
Federal agencies during the comment period.
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    \14\ The fourteen laws implemented by this and its companion 
rulemakings are: the Consumer Leasing Act, the Electronic Fund 
Transfer Act (except with respect to section 920 of that Act), the 
Equal Credit Opportunity Act, the Fair Credit Reporting Act (except 
with respect to sections 615(e) and 628 of that act), the Fair Debt 
Collection Practices Act, Subsections (b) through (f) of section 43 
of the Federal Deposit Insurance Act, sections 502 through 509 of 
the Gramm-Leach-Bliley Act (except for section 505 as it applies to 
section 501(b)), the Home Mortgage Disclosure Act, the Real Estate 
Settlement Procedures Act, the S.A.F.E. Mortgage Licensing Act, the 
Truth in Lending Act, the Truth in Savings Act, section 626 of the 
Omnibus Appropriations Act, 2009, and the Interstate Land Sales Full 
Disclosure Act.
    \15\ In light of the technical but voluminous nature of this 
recodification project, the Bureau focused the consultation process 
on a representative sample of the recodified regulations, while 
making information on the other regulations available. The Bureau 
expects to conduct differently its future consultations regarding 
substantive rulemakings.
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IV. Request for Comment

    Although notice and comment rulemaking procedures are not required, 
the Bureau invites comments on this notice. Commenters are specifically 
encouraged to identify any technical issues raised by the rule. The 
Bureau is also seeking comment in response to a notice published at 76 
FR 75825 (Dec. 5, 2011) concerning its efforts to identify priorities 
for streamlining regulations that it has inherited from other Federal 
agencies to address provisions that are outdated, unduly burdensome, or 
unnecessary.

V. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, requires each 
agency to consider the potential impact of its regulations on small 
entities, including small businesses, small governmental units, and 
small not-for-profit organizations.\16\ The RFA generally requires an 
agency to conduct an initial regulatory flexibility analysis (IRFA) and 
a final regulatory flexibility analysis (FRFA) of any rule

[[Page 78133]]

subject to notice-and-comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities.\17\ The Bureau also 
is subject to certain additional procedures under the RFA involving the 
convening of a panel to consult with small business representatives 
prior to proposing a rule for which an IRFA is required.\18\
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    \16\ 5 U.S.C. 601 et seq.
    \17\ 5 U.S.C. 603, 604.
    \18\ 5 U.S.C. 609.
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    The IRFA and FRFA requirements described above apply only where a 
notice of proposed rulemaking is required,\19\ and the panel 
requirement applies only when a rulemaking requires an IRFA.\20\ As 
discussed above in part III, a notice of proposed rulemaking is not 
required for this rulemaking.
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    \19\ 5 U.S.C. 603(a), 604(a); 5 U.S.C. 553(b)(B).
    \20\ 5 U.S.C. 609(b).
---------------------------------------------------------------------------

    In addition, as discussed above, this interim final rule has only a 
minor impact on entities subject to Regulations N and O. The rule 
imposes no new, substantive obligations on covered entities. 
Accordingly, the undersigned certifies that this interim final rule 
will not have a significant economic impact on a substantial number of 
small entities.

VI. Paperwork Reduction Act

    The Bureau may not conduct or sponsor, and a respondent is not 
required to respond to, an information collection unless it displays a 
currently valid Office of Management and Budget (OMB) control number. 
This rule contains information collection requirements under the 
Paperwork Reduction Act (PRA), which have been previously approved by 
OMB, and the ongoing PRA burden for which is unchanged by this rule. 
There are no new information collection requirements in this interim 
final rule. The Bureau's OMB control numbers for this information 
collection are: 3170-0009 for Regulation N (Mortgage Acts and 
Practices--Advertising) and 3170-0007 for Regulation O (Mortgage 
Assistance Relief Services).

List of Subjects in 12 CFR Parts 1014 and 1015

    Advertising, Communications, Consumer protection, Credit, 
Mortgages, Business practices related to mortgage loans, Trade 
practices, Telemarketing.

Authority and Issuance

    For the reasons set forth above, the Bureau of Consumer Financial 
Protection adds parts 1014 and 1015 to Chapter X in Title 12 of the 
Code of Federal Regulations to read as follows:

PART 1014--MORTGAGE ACTS AND PRACTICES--ADVERTISING (REGULATION N)

Sec.
1014.1 Scope of regulations in this part.
1014.2 Definitions.
1014.3 Prohibited representations.
1014.4 Waiver not permitted.
1014.5 Recordkeeping requirements.
1014.6 Actions by states.
1014.7 Severability.

    Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1638 note.


Sec.  1014.1  Scope of regulations in this part.

    This part, known as Regulation N, is issued by the Bureau of 
Consumer Financial Protection to implement the 2009 Omnibus 
Appropriations Act, Public L. 111-8, section 626, 123 Stat. 524 (Mar. 
11, 2009), as amended by the Credit Card Accountability Responsibility 
and Disclosure Act of 2009, Public Law 111-24, section 511, 123 Stat. 
1734 (May 22, 2009), and as amended by the Dodd-Frank Wall Street 
Reform and Consumer Financial Protection Act of 2010, Public Law 111-
203, section 1097, 124 Stat. 1376 (July 21, 2010). This part applies to 
persons over which the Federal Trade Commission has jurisdiction under 
the Federal Trade Commission Act.


Sec.  1014.2  Definitions.

    For the purposes of this part:
    Commercial communication means any written or oral statement, 
illustration, or depiction, whether in English or any other language, 
that is designed to effect a sale or create interest in purchasing 
goods or services, whether it appears on or in a label, package, 
package insert, radio, television, cable television, brochure, 
newspaper, magazine, pamphlet, leaflet, circular, mailer, book insert, 
free standing insert, letter, catalogue, poster, chart, billboard, 
public transit card, point of purchase display, film, slide, audio 
program transmitted over a telephone system, telemarketing script, on-
hold script, upsell script, training materials provided to 
telemarketing firms, program-length commercial (``infomercial''), the 
internet, cellular network, or any other medium. Promotional materials 
and items and Web pages are included in the term commercial 
communication.
    Consumer means a natural person to whom a mortgage credit product 
is offered or extended.
    Credit means the right to defer payment of debt or to incur debt 
and defer its payment.
    Dwelling means a residential structure that contains one to four 
units, whether or not that structure is attached to real property. The 
term includes any of the following if used as a residence: an 
individual condominium unit, cooperative unit, mobile home, 
manufactured home, or trailer.
    Mortgage credit product means any form of credit that is secured by 
real property or a dwelling and that is offered or extended to a 
consumer primarily for personal, family, or household purposes.
    Person means any individual, group, unincorporated association, 
limited or general partnership, corporation, or other business entity.
    Term means any of the fees, costs, obligations, or characteristics 
of or associated with the product. It also includes any of the 
conditions on or related to the availability of the product.


Sec.  1014.3  Prohibited representations.

    It is a violation of this part for any person to make any material 
misrepresentation, expressly or by implication, in any commercial 
communication, regarding any term of any mortgage credit product, 
including but not limited to misrepresentations about:
    (a) The interest charged for the mortgage credit product, including 
but not limited to misrepresentations concerning:
    (1) The amount of interest that the consumer owes each month that 
is included in the consumer's payments, loan amount, or total amount 
due, or
    (2) Whether the difference between the interest owed and the 
interest paid is added to the total amount due from the consumer;
    (b) The annual percentage rate, simple annual rate, periodic rate, 
or any other rate;
    (c) The existence, nature, or amount of fees or costs to the 
consumer associated with the mortgage credit product, including but not 
limited to misrepresentations that no fees are charged;
    (d) The existence, cost, payment terms, or other terms associated 
with any additional product or feature that is or may be sold in 
conjunction with the mortgage credit product, including but not limited 
to credit insurance or credit disability insurance;
    (e) The terms, amounts, payments, or other requirements relating to 
taxes or insurance associated with the mortgage credit product, 
including but not limited to misrepresentations about:
    (1) Whether separate payment of taxes or insurance is required; or
    (2) The extent to which payment for taxes or insurance is included 
in the

[[Page 78134]]

loan payments, loan amount, or total amount due from the consumer;
    (f) Any prepayment penalty associated with the mortgage credit 
product, including but not limited to misrepresentations concerning the 
existence, nature, amount, or terms of such penalty;
    (g) The variability of interest, payments, or other terms of the 
mortgage credit product, including but not limited to 
misrepresentations using the word ``fixed'';
    (h) Any comparison between:
    (1) Any rate or payment that will be available for a period less 
than the full length of the mortgage credit product; and
    (2) Any actual or hypothetical rate or payment;
    (i) The type of mortgage credit product, including but not limited 
to misrepresentations that the product is or involves a fully 
amortizing mortgage;
    (j) The amount of the obligation, or the existence, nature, or 
amount of cash or credit available to the consumer in connection with 
the mortgage credit product, including but not limited to 
misrepresentations that the consumer will receive a certain amount of 
cash or credit as part of a mortgage credit transaction;
    (k) The existence, number, amount, or timing of any minimum or 
required payments, including but not limited to misrepresentations 
about any payments or that no payments are required in a reverse 
mortgage or other mortgage credit product;
    (l) The potential for default under the mortgage credit product, 
including but not limited to misrepresentations concerning the 
circumstances under which the consumer could default for nonpayment of 
taxes, insurance, or maintenance, or for failure to meet other 
obligations;
    (m) The effectiveness of the mortgage credit product in helping the 
consumer resolve difficulties in paying debts, including but not 
limited to misrepresentations that any mortgage credit product can 
reduce, eliminate, or restructure debt or result in a waiver or 
forgiveness, in whole or in part, of the consumer's existing obligation 
with any person;
    (n) The association of the mortgage credit product or any provider 
of such product with any other person or program, including but not 
limited to misrepresentations that:
    (1) The provider is, or is affiliated with, any governmental entity 
or other organization; or
    (2) The product is or relates to a government benefit, or is 
endorsed, sponsored by, or affiliated with any government or other 
program, including but not limited to through the use of formats, 
symbols, or logos that resemble those of such entity, organization, or 
program;
    (o) The source of any commercial communication, including but not 
limited to misrepresentations that a commercial communication is made 
by or on behalf of the consumer's current mortgage lender or servicer;
    (p) The right of the consumer to reside in the dwelling that is the 
subject of the mortgage credit product, or the duration of such right, 
including but not limited to misrepresentations concerning how long or 
under what conditions a consumer with a reverse mortgage can stay in 
the dwelling;
    (q) The consumer's ability or likelihood to obtain any mortgage 
credit product or term, including but not limited to misrepresentations 
concerning whether the consumer has been preapproved or guaranteed for 
any such product or term;
    (r) The consumer's ability or likelihood to obtain a refinancing or 
modification of any mortgage credit product or term, including but not 
limited to misrepresentations concerning whether the consumer has been 
preapproved or guaranteed for any such refinancing or modification; and
    (s) The availability, nature, or substance of counseling services 
or any other expert advice offered to the consumer regarding any 
mortgage credit product or term, including but not limited to the 
qualifications of those offering the services or advice.


Sec.  1014.4  Waiver not permitted.

    It is a violation of this part for any person to obtain, or attempt 
to obtain, a waiver from any consumer of any protection provided by or 
any right of the consumer under this part.


Sec.  1014.5  Recordkeeping requirements.

    (a) Any person subject to this part shall keep, for a period of 
twenty-four months from the last date the person made or disseminated 
the applicable commercial communication regarding any term of any 
mortgage credit product, the following evidence of compliance with this 
part:
    (1) Copies of all materially different commercial communications as 
well as sales scripts, training materials, and marketing materials, 
regarding any term of any mortgage credit product, that the person made 
or disseminated during the relevant time period;
    (2) Documents describing or evidencing all mortgage credit products 
available to consumers during the time period in which the person made 
or disseminated each commercial communication regarding any term of any 
mortgage credit product, including but not limited to the names and 
terms of each such mortgage credit product available to consumers; and
    (3) Documents describing or evidencing all additional products or 
services (such as credit insurance or credit disability insurance) that 
are or may be offered or provided with the mortgage credit products 
available to consumers during the time period in which the person made 
or disseminated each commercial communication regarding any term of any 
mortgage credit product, including but not limited to the names and 
terms of each such additional product or service available to 
consumers.
    (b) Any person subject to this part may keep the records required 
by paragraph (a) of this section in any legible form, and in the same 
manner, format, or place as they keep such records in the ordinary 
course of business. Failure to keep all records required under 
paragraph (a) of this section shall be a violation of this part.


Sec.  1014.6  Actions by states.

    Any attorney general or other officer of a state authorized by the 
state to bring an action under this part may do so pursuant to section 
626(b) of the 2009 Omnibus Appropriations Act, Public Law 111-8, 
section 626, 123 Stat. 524 (Mar. 11, 2009), as amended by the Credit 
Card Accountability Responsibility and Disclosure Act of 2009, Public 
Law 111-24, section 511, 123 Stat. 1734 (May 22, 2009), and as amended 
by Public Law 111-203, section 1097, 124 Stat. 2102 (July 21, 2010).


Sec.  1014.7  Severability.

    The provisions of this part are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Bureau of Consumer Financial Protection's intention that the 
remaining provisions shall continue in effect.

PART 1015--MORTGAGE ASSISTANCE RELIEF SERVICES (REGULATION O)

Sec.
1015.1 Scope of regulations in this part.
1015.2 Definitions.
1015.3 Prohibited representations.
1015.4 Disclosures required in commercial communications.
1015.5 Prohibition on collection of advance payments and related 
disclosures.
1015.6 Assisting and facilitating.
1015.7 Exemptions.
1015.8 Waiver not permitted.

[[Page 78135]]

1015.9 Recordkeeping and compliance requirements.
1015.10 Actions by states.
1015.11 Severability.

    Authority:  12 U.S.C. 5512, 5581; 15 U.S.C. 1638 note.


Sec.  1015.1  Scope of regulations in this part.

    This part, known as Regulation O, is issued by the Bureau of 
Consumer Financial Protection to implement the 2009 Omnibus 
Appropriations Act, Public Law 111-8, section 626, 123 Stat. 524 (Mar. 
11, 2009), as clarified by the Credit Card Accountability 
Responsibility and Disclosure Act of 2009, Public Law 111-24, section 
511, 123 Stat. 1734 (May 22, 2009), and as amended by the Dodd-Frank 
Wall Street Reform and Consumer Financial Protection Act of 2010, 
Public Law 111-203, section 1097, 124 Stat. 1376 (July 21, 2010). This 
part applies to persons over which the Federal Trade Commission has 
jurisdiction under the Federal Trade Commission Act.


Sec.  1015.2  Definitions.

    For the purposes of this part:
    Clear and prominent means:
    (1) In textual communications, the required disclosures shall be 
easily readable; in a high degree of contrast from the immediate 
background on which it appears; in the same languages that are 
substantially used in the commercial communication; in a format so that 
the disclosure is distinct from other text, such as inside a border; in 
a distinct type style, such as bold; parallel to the base of the 
commercial communication, and, except as otherwise provided in this 
rule, each letter of the disclosure shall be, at a minimum, the larger 
of 12-point type or one-half the size of the largest letter or numeral 
used in the name of the advertised Web site or telephone number to 
which consumers are referred to receive information relating to any 
mortgage assistance relief service. Textual communications include any 
communications in a written or printed form such as print publications 
or words displayed on the screen of a computer;
    (2) In communications disseminated orally or through audible means, 
such as radio or streaming audio, the required disclosures shall be 
delivered in a slow and deliberate manner and in a reasonably 
understandable volume and pitch;
    (3) In communications disseminated through video means, such as 
television or streaming video, the required disclosures shall appear 
simultaneously in the audio and visual parts of the commercial 
communication and be delivered in a manner consistent with paragraphs 
(1) and (2) of this definition. The visual disclosure shall be at least 
four percent of the vertical picture or screen height and appear for 
the duration of the oral disclosure;
    (4) In communications made through interactive media, such as the 
internet, online services, and software, the required disclosures 
shall:
    (i) Be consistent with paragraphs (1) through (3) of this 
definition;
    (ii) Be made on, or immediately prior to, the page on which the 
consumer takes any action to incur any financial obligation;
    (iii) Be unavoidable, i.e., visible to consumers without requiring 
them to scroll down a Web page; and
    (iv) Appear in type at least the same size as the largest character 
of the advertisement;
    (5) In all instances, the required disclosures shall be presented 
in an understandable language and syntax, and with nothing contrary to, 
inconsistent with, or in mitigation of the disclosures used in any 
communication of them; and
    (6) For program-length television, radio, or internet-based 
multimedia commercial communications, the required disclosures shall be 
made at the beginning, near the middle, and at the end of the 
commercial communication.
    Client trust account means a separate account created by a licensed 
attorney for the purpose of holding client funds, which is:
    (1) Maintained in compliance with all applicable state laws and 
regulations, including licensing regulations; and
    (2) Located in the state where the attorney's office is located, or 
elsewhere in the United States with the consent of the consumer on 
whose behalf the funds are held.
    Commercial communication means any written or oral statement, 
illustration, or depiction, whether in English or any other language, 
that is designed to effect a sale or create interest in purchasing any 
service, plan, or program, whether it appears on or in a label, 
package, package insert, radio, television, cable television, brochure, 
newspaper, magazine, pamphlet, leaflet, circular, mailer, book insert, 
free standing insert, letter, catalogue, poster, chart, billboard, 
public transit card, point of purchase display, film, slide, audio 
program transmitted over a telephone system, telemarketing script, 
onhold script, upsell script, training materials provided to 
telemarketing firms, program-length commercial (``infomercial''), the 
internet, cellular network, or any other medium. Promotional materials 
and items and Web pages are included in the term ``commercial 
communication.''
    (1) General Commercial Communication means a commercial 
communication that occurs prior to the consumer agreeing to permit the 
provider to seek offers of mortgage assistance relief on behalf of the 
consumer, or otherwise agreeing to use the mortgage assistance relief 
service, and that is not directed at a specific consumer.
    (2) Consumer-Specific Commercial Communication means a commercial 
communication that occurs prior to the consumer agreeing to permit the 
provider to seek offers of mortgage assistance relief on behalf of the 
consumer, or otherwise agreeing to use the mortgage assistance relief 
service, and that is directed at a specific consumer.
    Consumer means any natural person who is obligated under any loan 
secured by a dwelling.
    Dwelling means a residential structure containing four or fewer 
units, whether or not that structure is attached to real property, that 
is primarily for personal, family, or household purposes. The term 
includes any of the following if used as a residence: An individual 
condominium unit, cooperative unit, mobile home, manufactured home, or 
trailer.
    Dwelling loan means any loan secured by a dwelling, and any 
associated deed of trust or mortgage.
    Dwelling Loan Holder means any individual or entity who holds the 
dwelling loan that is the subject of the offer to provide mortgage 
assistance relief services.
    Material means likely to affect a consumer's choice of, or conduct 
regarding, any mortgage assistance relief service.
    Mortgage Assistance Relief Service means any service, plan, or 
program, offered or provided to the consumer in exchange for 
consideration, that is represented, expressly or by implication, to 
assist or attempt to assist the consumer with any of the following:
    (1) Stopping, preventing, or postponing any mortgage or deed of 
trust foreclosure sale for the consumer's dwelling, any repossession of 
the consumer's dwelling, or otherwise saving the consumer's dwelling 
from foreclosure or repossession;
    (2) Negotiating, obtaining, or arranging a modification of any term 
of a dwelling loan, including a reduction in the amount of interest, 
principal balance, monthly payments, or fees;
    (3) Obtaining any forbearance or modification in the timing of 
payments

[[Page 78136]]

from any dwelling loan holder or servicer on any dwelling loan;
    (4) Negotiating, obtaining, or arranging any extension of the 
period of time within which the consumer may:
    (i) Cure his or her default on a dwelling loan,
    (ii) Reinstate his or her dwelling loan,
    (iii) Redeem a dwelling, or
    (iv) Exercise any right to reinstate a dwelling loan or redeem a 
dwelling;
    (5) Obtaining any waiver of an acceleration clause or balloon 
payment contained in any promissory note or contract secured by any 
dwelling; or
    (6) Negotiating, obtaining or arranging:
    (i) A short sale of a dwelling,
    (ii) A deed-in-lieu of foreclosure, or
    (iii) Any other disposition of a dwelling other than a sale to a 
third party who is not the dwelling loan holder.
    Mortgage Assistance Relief Service Provider or Provider means any 
person that provides, offers to provide, or arranges for others to 
provide, any mortgage assistance relief service. This term does not 
include:
    (1) The dwelling loan holder, or any agent or contractor of such 
individual or entity.
    (2) The servicer of a dwelling loan, or any agent or contractor of 
such individual or entity.
    Person means any individual, group, unincorporated association, 
limited or general partnership, corporation, or other business entity, 
except to the extent that any person is specifically excluded from the 
Federal Trade Commission's jurisdiction pursuant to 15 U.S.C. 44 and 
45(a)(2).
    Servicer means the individual or entity responsible for:
    (1) Receiving any scheduled periodic payments from a consumer 
pursuant to the terms of the dwelling loan that is the subject of the 
offer to provide mortgage assistance relief services, including amounts 
for escrow accounts under section 10 of the Real Estate Settlement 
Procedures Act (12 U.S.C. 2609); and
    (2) Making the payments of principal and interest and such other 
payments with respect to the amounts received from the consumer as may 
be required pursuant to the terms of the mortgage servicing loan 
documents or servicing contract.
    Telemarketing means a plan, program, or campaign which is conducted 
to induce the purchase of any service, by use of one or more telephones 
and which involves more than one interstate telephone call.


Sec.  1015.3  Prohibited representations.

    It is a violation of this rule for any mortgage assistance relief 
service provider to engage in the following conduct:
    (a) Representing, expressly or by implication, in connection with 
the advertising, marketing, promotion, offering for sale, sale, or 
performance of any mortgage assistance relief service, that a consumer 
cannot or should not contact or communicate with his or her lender or 
servicer.
    (b) Misrepresenting, expressly or by implication, any material 
aspect of any mortgage assistance relief service, including but not 
limited to:
    (1) The likelihood of negotiating, obtaining, or arranging any 
represented service or result, such as those set forth in the 
definition of Mortgage Assistance Relief Service in Sec.  1015.2;
    (2) The amount of time it will take the mortgage assistance relief 
service provider to accomplish any represented service or result, such 
as those set forth in the definition of Mortgage Assistance Relief 
Service in Sec.  1015.2;
    (3) That a mortgage assistance relief service is affiliated with, 
endorsed or approved by, or otherwise associated with:
    (i) The United States government,
    (ii) Any governmental homeowner assistance plan,
    (iii) Any Federal, State, or local government agency, unit, or 
department,
    (iv) Any nonprofit housing counselor agency or program,
    (v) The maker, holder, or servicer of the consumer's dwelling loan, 
or
    (vi) Any other individual, entity, or program;
    (4) The consumer's obligation to make scheduled periodic payments 
or any other payments pursuant to the terms of the consumer's dwelling 
loan;
    (5) The terms or conditions of the consumer's dwelling loan, 
including but not limited to the amount of debt owed;
    (6) The terms or conditions of any refund, cancellation, exchange, 
or repurchase policy for a mortgage assistance relief service, 
including but not limited to the likelihood of obtaining a full or 
partial refund, or the circumstances in which a full or partial refund 
will be granted, for a mortgage assistance relief service;
    (7) That the mortgage assistance relief service provider has 
completed the represented services or has a right to claim, demand, 
charge, collect, or receive payment or other consideration;
    (8) That the consumer will receive legal representation;
    (9) The availability, performance, cost, or characteristics of any 
alternative to for-profit mortgage assistance relief services through 
which the consumer can obtain mortgage assistance relief, including 
negotiating directly with the dwelling loan holder or servicer, or 
using any nonprofit housing counselor agency or program;
    (10) The amount of money or the percentage of the debt amount that 
a consumer may save by using the mortgage assistance relief service;
    (11) The total cost to purchase the mortgage assistance relief 
service; or
    (12) The terms, conditions, or limitations of any offer of mortgage 
assistance relief the provider obtains from the consumer's dwelling 
loan holder or servicer, including the time period in which the 
consumer must decide to accept the offer;
    (c) Making a representation, expressly or by implication, about the 
benefits, performance, or efficacy of any mortgage assistance relief 
service unless, at the time such representation is made, the provider 
possesses and relies upon competent and reliable evidence that 
substantiates that the representation is true. For the purposes of this 
paragraph, competent and reliable evidence means tests, analyses, 
research, studies, or other evidence based on the expertise of 
professionals in the relevant area, that have been conducted and 
evaluated in an objective manner by individuals qualified to do so, 
using procedures generally accepted in the profession to yield accurate 
and reliable results.


Sec.  1015.4  Disclosures required in commercial communications.

    It is a violation of this rule for any mortgage assistance relief 
service provider to engage in the following conduct:
    (a) Disclosures in All General Commercial Communications--Failing 
to place the following statements in every general commercial 
communication for any mortgage assistance relief service:
    (1) ``(Name of company) is not associated with the government, and 
our service is not approved by the government or your lender.''
    (2) In cases where the mortgage assistance relief service provider 
has represented, expressly or by implication, that consumers will 
receive any service or result set forth in paragraphs (2) through (6) 
of the definition of Mortgage Assistance Relief Service in Sec.  
1015.2, ``Even if you accept this offer and use our service, your 
lender may not agree to change your loan.''
    (3) The disclosures required by this paragraph must be made in a 
clear and prominent manner, and--
    (i) In textual communications the disclosures must appear together 
and be preceded by the heading ``IMPORTANT NOTICE,'' which must be in 
bold face

[[Page 78137]]

font that is two point-type larger than the font size of the required 
disclosures; and
    (ii) In communications disseminated orally or through audible 
means, wholly or in part, the audio component of the required 
disclosures must be preceded by the statement ``Before using this 
service, consider the following information.''
    (b) Disclosures in All Consumer-Specific Commercial 
Communications--Failing to disclose the following information in every 
consumer-specific commercial communication for any mortgage assistance 
relief service:
    (1) ``You may stop doing business with us at any time. You may 
accept or reject the offer of mortgage assistance we obtain from your 
lender [or servicer]. If you reject the offer, you do not have to pay 
us. If you accept the offer, you will have to pay us (insert amount or 
method for calculating the amount) for our services.'' For the purposes 
of this paragraph (b)(1), the amount ``you will have to pay'' shall 
consist of the total amount the consumer must pay to purchase, receive, 
and use all of the mortgage assistance relief services that are the 
subject of the sales offer, including, but not limited to, all fees and 
charges.
    (2) ``(Name of company) is not associated with the government, and 
our service is not approved by the government or your lender.''
    (3) In cases where the mortgage assistance relief service provider 
has represented, expressly or by implication, that consumers will 
receive any service or result set forth in paragraphs (2) through (6) 
of the definition of Mortgage Assistance Relief Service in Sec.  
1015.2, ``Even if you accept this offer and use our service, your 
lender may not agree to change your loan.''
    (4) The disclosures required by this paragraph must be made in a 
clear and prominent manner, and--
    (i) In textual communications the disclosures must appear together 
and be preceded by the heading ``IMPORTANT NOTICE,'' which must be in 
bold face font that is two point-type larger than the font size of the 
required disclosures; and
    (ii) In communications disseminated orally or through audible 
means, wholly or in part, the audio component of the required 
disclosures must be preceded by the statement ``Before using this 
service, consider the following information'' and, in telephone 
communications, must be made at the beginning of the call.
    (c) Disclosures in All General Commercial Communications, Consumer-
Specific Commercial Communications, and Other Communications--In cases 
where the mortgage assistance relief service provider has represented, 
expressly or by implication, in connection with the advertising, 
marketing, promotion, offering for sale, sale, or performance of any 
mortgage assistance relief service, that the consumer should 
temporarily or permanently discontinue payments, in whole or in part, 
on a dwelling loan, failing to disclose, clearly and prominently, and 
in close proximity to any such representation that ``If you stop paying 
your mortgage, you could lose your home and damage your credit 
rating.''


Sec.  1015.5  Prohibition on collection of advance payments and related 
disclosures.

    It is a violation of this rule for any mortgage assistance relief 
service provider to:
    (a) Request or receive payment of any fee or other consideration 
until the consumer has executed a written agreement between the 
consumer and the consumer's dwelling loan holder or servicer 
incorporating the offer of mortgage assistance relief the provider 
obtained from the consumer's dwelling loan holder or servicer;
    (b) Fail to disclose, at the time the mortgage assistance relief 
service provider furnishes the consumer with the written agreement 
specified in paragraph (a) of this section, the following information: 
``This is an offer of mortgage assistance we obtained from your lender 
[or servicer]. You may accept or reject the offer. If you reject the 
offer, you do not have to pay us. If you accept the offer, you will 
have to pay us [same amount as disclosed pursuant to Sec.  
1015.4(b)(1)] for our services.'' The disclosure required by this 
paragraph must be made in a clear and prominent manner, on a separate 
written page, and preceded by the heading: ``IMPORTANT NOTICE: Before 
buying this service, consider the following information.'' The heading 
must be in bold face font that is two point-type larger than the font 
size of the required disclosure; or
    (c)(1) Fail to provide, at the time the mortgage assistance relief 
service provider furnishes the consumer with the written agreement 
specified in paragraph (a) of this section, a notice from the 
consumer's dwelling loan holder or servicer that describes all material 
differences between the terms, conditions, and limitations associated 
with the consumer's current mortgage loan and the terms, conditions, 
and limitations associated with the consumer's mortgage loan if he or 
she accepts the dwelling loan holder's or servicer's offer, including 
but not limited to differences in the loan's:
    (i) Principal balance;
    (ii) Contract interest rate, including the maximum rate and any 
adjustable rates, if applicable;
    (iii) Amount and number of the consumer's scheduled periodic 
payments on the loan;
    (iv) Monthly amounts owed for principal, interest, taxes, and any 
mortgage insurance on the loan;
    (v) Amount of any delinquent payments owing or outstanding;
    (vi) Assessed fees or penalties; and
    (vii) Term.
    (2) The notice must be made in a clear and prominent manner, on a 
separate written page, and preceded by heading: ``IMPORTANT INFORMATION 
FROM YOUR [name of lender or servicer] ABOUT THIS OFFER.'' The heading 
must be in bold face font that is two-point-type larger than the font 
size of the required disclosure.
    (d) Fail to disclose in the notice specified in paragraph (c) of 
this section, in cases where the offer of mortgage assistance relief 
the provider obtained from the consumer's dwelling loan holder or 
servicer is a trial mortgage loan modification, the terms, conditions, 
and limitations of this offer, including but not limited to:
    (1) The fact that the consumer may not qualify for a permanent 
mortgage loan modification; and
    (2) The likely amount of the scheduled periodic payments and any 
arrears, payments, or fees that the consumer would owe in failing to 
qualify.


Sec.  1015.6  Assisting and facilitating.

    It is a violation of this rule for a person to provide substantial 
assistance or support to any mortgage assistance relief service 
provider when that person knows or consciously avoids knowing that the 
provider is engaged in any act or practice that violates this rule.


Sec.  1015.7  Exemptions.

    (a) An attorney is exempt from this part, with the exception of 
Sec.  1015.5, if the attorney:
    (1) Provides mortgage assistance relief services as part of the 
practice of law;
    (2) Is licensed to practice law in the state in which the consumer 
for whom the attorney is providing mortgage assistance relief services 
resides or in which the consumer's dwelling is located; and
    (3) Complies with state laws and regulations that cover the same 
type of conduct the rule requires.
    (b) An attorney who is exempt pursuant to paragraph (a) of this 
section

[[Page 78138]]

is also exempt from Sec.  1015.5 if the attorney:
    (1) Deposits any funds received from the consumer prior to 
performing legal services in a client trust account; and
    (2) Complies with all state laws and regulations, including 
licensing regulations, applicable to client trust accounts.


Sec.  1015.8  Waiver not permitted.

    It is a violation of this rule for any person to obtain, or attempt 
to obtain, a waiver from any consumer of any protection provided by or 
any right of the consumer under this rule.


Sec.  1015.9  Recordkeeping and compliance requirements.

    (a) Any mortgage assistance relief provider must keep, for a period 
of twenty-four (24) months from the date the record is created, the 
following records:
    (1) All contracts or other agreements between the provider and any 
consumer for any mortgage assistance relief service;
    (2) Copies of all written communications between the provider and 
any consumer occurring prior to the date on which the consumer entered 
into an agreement with the provider for any mortgage assistance relief 
service;
    (3) Copies of all documents or telephone recordings created in 
connection with compliance with paragraph (b) of this section;
    (4) All consumer files containing the names, phone numbers, dollar 
amounts paid, and descriptions of mortgage assistance relief services 
purchased, to the extent the mortgage assistance relief service 
provider keeps such information in the ordinary course of business;
    (5) Copies of all materially different sales scripts, training 
materials, commercial communications, or other marketing materials, 
including Web sites and weblogs, for any mortgage assistance relief 
service; and
    (6) Copies of the documentation provided to the consumer as 
specified in Sec.  1015.5 of this rule;
    (b) A mortgage assistance relief service provider also must:
    (1) Take reasonable steps sufficient to monitor and ensure that all 
employees and independent contractors comply with this rule. Such steps 
shall include the monitoring of communications directed at specific 
consumers, and shall also include, at a minimum, the following:
    (i) If the mortgage assistance relief service provider is engaged 
in the telemarketing of mortgage assistance relief services, performing 
random, blind recording and testing of the oral representations made by 
individuals engaged in sales or other customer service functions;
    (ii) Establishing a procedure for receiving and responding to all 
consumer complaints; and
    (iii) Ascertaining the number and nature of consumer complaints 
regarding transactions in which all employees and independent 
contractors are involved;
    (2) Investigate promptly and fully each consumer complaint 
received;
    (3) Take corrective action with respect to any employee or 
contractor whom the mortgage assistance relief service provider 
determines is not complying with this rule, which may include training, 
disciplining, or terminating such individual; and
    (4) Maintain any information and material necessary to demonstrate 
its compliance with paragraphs (b)(1) through (3) of this section.
    (c) A mortgage assistance relief provider may keep the records 
required by paragraphs (a) and (b) of this section in any form, and in 
the same manner, format, or place as it keeps such records in the 
ordinary course of business.
    (d) It is a violation of this rule for a mortgage assistance relief 
service provider not to comply with this section.


Sec.  1015.10  Actions by states.

    Any attorney general or other officer of a state authorized by the 
state to bring an action under this part may do so pursuant to section 
626(b) of the 2009 Omnibus Appropriations Act, Public Law 111-8, 
section 626, 123 Stat. 524 (Mar. 11, 2009), as amended by Public Law 
111-24, section 511, 123 Stat. 1734 (May 22, 2009), and as amended by 
Public Law 111-203, section 1097, 124 Stat. 2102 (July 21, 2010).


Sec.  1015.11  Severability.

    The provisions of this rule are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Bureau of Consumer Financial Protection's intention that the 
remaining provisions shall continue in effect.

    Dated: October 24, 2011.
Alastair M. Fitzpayne,
Deputy Chief of Staff and Executive Secretary, Department of the 
Treasury.
[FR Doc. 2011-31731 Filed 12-15-11; 8:45 am]
BILLING CODE 4810-AM-P