Compliance OutlookCFPB MLO Compensation:

Arbitration & Credit Insurance

CFPB MLO Compensation

• Arbitration Agreements

• Single Premium Credit Insurance

CFPB MLO Compensation

ARBITRATION

Requires dispute be settled through arbitration, rather than court action. Can also include mediation.

CFPB MLO Compensation

Mandatory Arbitration Clauses 

CFPB Rule only applies to

members primary residence.

CFPB MLO CompensationSAMPLE: Mortgage Agreement Arbitration Clause Arbitration: Upon demand of any party hereto, whether made before or after institution of any judicial proceeding, any dispute, claim or controversy arising out of, connected with or relating to this mortgage and other loan documents between or among parties to this mortgage, shall be resolved by binding arbitration as provided herein. Institution of a judicial proceeding by a party does not waive the right of that party to demand arbitration hereunder. Disputes may include, without limitation, tort claims, counterclaims, disputes as to whether a matter is subject to arbitration, claims brought as class actions, claims arising from loan documents executed in the future, or claims arising out of or connected with the transaction reflected by this mortgage. Arbitration shall be conducted by the National Arbitration Forum (NAF) under the NAF Code of Procedure then in effect. Preservation and Limitation of Remedies: Notwithstanding the preceding binding arbitration provisions, lender and borrower agree to preserve, without diminution, certain remedies that any party hereto may employ or exercise freely, independently or in connection with an arbitration proceeding or after an arbitration action is brought. Lender and borrower shall have the right to proceed in any court of proper jurisdiction or by self-help to exercise or prosecute the following remedies, as applicable, unless arbitration will afford the parties substantively the same rights and remedies: (i) all rights to foreclose against any real or personal property or other security by exercising a power of sale granted under loan documents or under applicable law or by judicial foreclosure and sale, including a proceeding to confirm the sale; (ii) all rights of self-help including peaceful occupation of real property and collection of rents, set-off, and peaceful possession of personal property; (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and filing an involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by confession of judgment. Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies that may be requested by a party in a dispute.

CFPB MLO Compensation

Arbitration Agreements –Member and the credit union can agree to arbitration or mediation to come to an agreement, but this process CANNOT be mandated and required through the member’s contract agreement with the credit union.

CFPB MLO CompensationSingle Premium Credit Insurance –

Section 1026.36(i) of the Truth in Lending Act prohibits the financing any premiums or fees for credit insurance in connection with a closed-end consumer credit transaction secured by a member’s principal residence:

Closed-end; and Open-end loans.

CFPB MLO Compensation

• Credit life,• Credit disability, • Credit

unemployment,• Credit property

insurance, • Accident, loss-of

income, life, or health insurance product; and

• Debt cancellation

Single Premium Credit Insurance –

CFPB MLO Compensation

Prohibition does not apply to:• Credit insurance for which premiums or

fees are calculated and paid in full on a monthly basis to

• Credit unemployment insurance with reasonable premiums, creditor receives no compensation, and separate insurance contract.

Single Premium Credit Insurance –

CFPB MLO Compensation

Credit insurance is allowed if:• Single premium credit insurance is paid

separately from the loan and is not financed as a part of the loan;

• Insurance is paid in full each month; and • Unemployment credit insurance premiums are

reasonable, and the credit union does not receive direct or indirect compensation.

Single Premium Credit Insurance –

Thank you for joining me for this overview of the Compliance Outlook.

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