The Consumer Financial Protection Bureau (CFPB) has issued proposed rules that it claims will assist consumers in understanding mortgage costs.
‘Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees,’ said CFPB Director Richard Cordray in a press statement. ‘We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them.’
The CFPB is now seeking public comment on a proposal that would achieve the following goals:
- Requiring lenders to offer a no-point, no-fee loan option available,
- Requiring an interest-rate reduction when consumers elect to pay upfront points or fees,
- Setting qualification and screening standards for originators that would include character and fitness requirements, criminal background checks and specified training requirements,
- Prohibiting payment of steering incentives to mortgage loan originators, and
- Placing restrictions on arbitration clauses and financing of credit insurance.
Missing from the proposals was the concept of requiring that brokerage firms and creditors to only charge a flat origination fee, which the CFPB floated in May. No explanation was given regarding why this idea was dropped.
The proposed rules are available online and the public will have until Oct. 16 to review and provide comments. The CFPB plans to issue final rules in January 2013.
David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA), offered a cautious commendation of the CFPB's efforts.
‘The CFPB has released a number of rules in the last few weeks that, if finalized properly over time, will go a long way toward proving needed clarity and certainty to lenders and consumers, helping increase access to credit for qualified borrowers [while] stabilizing and growing the housing market,’ said Stevens in a statement. ‘We look forward to reviewing the proposed rule more thoroughly over the coming weeks and providing comprehensive comments.’