CFPB Wants New Mortgage Origination Rules on Points, Fees

The Consumer Financial Protection Bureau announced Wednesday that it will be making new rules for all mortgage originators. The rules target the point-fee structure mortgage originators use and set certain qualification and screening standards for bank and non-bank originators.

“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” said CFPB Director Richard Cordray in a press release. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”

The new rules under consideration, which the agency anticipates will be proposed this summer and made final in the beginning days of 2013, specify a required an interest rate deduction when consumers elect to pay discount points; require lenders to offer consumers a no-discount-point option; and ban origination charges that vary with the size of the loan.


Additionally, the CFPB indicates that there will be requirements and screenings for all loan originators, bank and non-bank. Those include character and fitness requirements, criminal background checks and training requirements.

The CFPB also announced that it will likely reaffirm the Federal Reserve Board’s prohibition of steering incentives paid to loan originators. Under Dodd-Frank, the CFPB was required to issue similar rules.

In recent weeks, the agency has reiterated its mission to regulating mortgage markets and leveling the playing field for lenders and borrowers. Currently the agency is conducting a reverse mortgage-specific study under a July 21 deadline.

View an overview of the new rules being considered.

Written by Elizabeth Ecker

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  • Why is there not more uproar over this than I am seeing?  Why no call to action by NRMLA, NAMB, NAIHP and even NAR?  There are so many consequences to this that I don’t even know where to start.  Not only will this affect borrowers with lower valued homes but it will greatly affect our ability to hire and maintain employees, pay the bills of keeping a company open amongst other tangible items.  What has happened to free market and capitalism?

  • “Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” said CFPB Director Richard Cordray in a press release. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
    Is he kidding? The choices to consumers are at an all time low, but things have become so complicated by excessive regulation I can’t believe what he is saying. It is of course because he is not a pratictioner, in the street, dealing with the American public. He is a political appointee, just like what we have endured at HUD, no real life understanding of what he is now going to “improve”.
    This stuff just rolls on and on. People, we MUST clean out the White House and restore sanity to the American Housing market. I fully agree that the Industry needed some cleanup, and it has certainly achieved that by reducing the lender ranks and originator ranks by as much as 80%. Along with consumer choices. Why on earth does this man think  that now he must put his mark on the Industry and interfere with free trade some more?
    Good God, the death of common sense, the end of the free market, socialism, I need a vacation.What happened to America in the past four years?
    Just how much more “transparency” do we need, when you only have two or three choices in the first place? Just how stupid do these people think the American consumer actually is? Is the American Consumer really this stupid?
    Just my angry two cents.
    By the way, “transparency” is on the talking points list. So they don’t have to know what the word really means; just read it.

    • legal_eagle09,

      Getting rid of a leftist regime in the White House did do absolutely nothing about the CFPB.  It will take that plus continued control of the House and 60 member control by conservatives in the Senate to achieve reversal of much of the nonsense Dodd-Frank created.

  • Legal_eagle09 is telling it like it is. This is ludicrous, the whole thing is crazy. Another proposal in the winds in another publication states the CFPB is talking about going to a flat rate fee for originators.

    It is obvious that the CFPB has no idea what the word common sense means. They surely do not know what they are doing. We need to lobby hard to stop this interference by the federal government VIA all there new founded committees and sub committees!.

    They CFPB) say they want something that is more transparent and simple for the consumer to be able to compare and understand. All they have done and are doing is complicating things for the consumer and everyone in the mortgage lending industry.

    Good people are leaving the lending sector and the reverse mortgage part of the industry. Between licensing requirements, over regulation and messing with individuals livelihood and comp plans, good people are saying, enough is enough!

    lets hope AARP, NRMLA and other lobbyists will get behind a movement to cut these people off at the knees!

    John A. Smaldone

  • Don’t you just love what that great Cherokee Indian, Lizzie Warren, has created?  Not only is Lizzie changing the view of what an American Indian is (children of a home where Cherokee Indians are spoken of in a positive light) but creating an empire whose sole goal is to create transparency.  She is a woman of true integrity, clarity, and forthrightness.

    While the Director is absolutely right to level the differences between the qualifications of originators based on employer, he is in another world when it comes to origination fees.  If all loans produce a level origination fee, the problem becomes that the ones who borrower the least will be paying more to subsidize the origination fee of those who borrow more.

    Rather than sitting in an ivory palace in DC, theorizing with other attorneys and auditors about ways to make the mortgage industry better, the Director should be traveling and meeting with mortgage industry.  Since he lacks industry experience, he needs to come face to face with those his ideas will impact to see why things are the way they are.  Simply sitting back in DC and reading Internet posted comments will not get the job done as it should be (or even close). 

  • They wouldn’t dare propose restricting Realtors from charging based on property value (essentially the same theory…takes the same amount of work to sell a $100K property as it does a $500K property) as the NAR has a strong, well organized, well funded lobby.  Until we do the same, the mortgage industry can expect more and more abuse like this. 

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