The Consumer Financial Protection Bureau today released new proposed rules regarding mortgage origination and loan origination compensation. The proposed changes were made in an effort toward more greater accountability to the mortgage market, the bureau says.
Among the changes: requiring lender to make a no-point, no-fee loan option available, requiring an interest rate reduction when consumers elect to pay upfront points or fees, and implementing additional requirements for loan originators in terms of background checks, training and steering.
“Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees,” said CFPB Director Richard Cordray. “We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them.”
With respect to reverse mortgages, the bureau clarified interpretation of “amount of credit extended” as it related to compensation. The CFPB specifies the “initial principal limit” rather than the “max claim amount” is the interpretation to be used.
Because government-insured reverse mortgages fall under many of their own rules under the Department of Housing and Urban Development and Federal Housing Administration, the industry has asked for reverse mortgage exceptions with many of the rules that are currently being made.
The current rule making is open for comments through October 16, with a final rule expected in January 2013.
Written by Elizabeth Ecker