The Consumer Financial Protection Bureau (CFPB) is ready to move forward in its efforts to relieve “pain points” associated with the mortgage closing process following new research released this week.
In conjunction with its Know Before You Owe initiative, the CFPB released a report Wednesday that reveals responses from various market participants, consumers and other stakeholders on ways to improve the mortgage closing process.
The agency found that the three major “pain points” for consumers during the mortgage closing process included not having enough time to review closing documents, overwhelming stacks of paperwork, as well as the complexity of documents and errors.
“Mortgage closings are always fraught with anxiety,” said CFPB Director Richard Cordray at the Mortgage Closing Forum in Washington, D.C. on Wednesday. “We have taken action to address some of the problems consumers face, but more needs to be done. Our eClosing pilot project will provide valuable insight into how to improve the closing experience for consumers.”
Beginning in August 2015, consumers must receive their Closing Disclosure at least three business days before they actually close on the house. The Disclosure, however, is only one document among the stacks of paperwork where consumers have raised concerns.
“The sheer volume of the documents can be overwhelming, especially coupled with the short timeframe,” Cordray said. “On top of that, the volume varies from transaction to transaction because closing documents and practices are not uniform.”
An example the CFPB Director offered is the instance where two people could be closing on the same type of loan, for the same amount and in the same location, but one person may have only 40 pages of documentation while the other has 100 pages or more.
“We are convinced that we can make important improvements in the closing process,” Cordray said.
In addition to releasing its “pain points” research, the CFPB also revealed guidelines to its eClosings pilot project—a technology-driven initiative the agency alluded to earlier this week.
The eClosings pilot will explore how electronic mortgage closings enable consumer understanding of the closing process, how they incentive consumers to view documents ahead of closing time, as well as their effectiveness in facilitating error detection.
“The mortgage and real estate markets involve many players, so we will need to work together to bring about the positive change that we are envisioning today,” Cordray said. “The vision we all share is to build a sustainable marketplace in which consumers can once again put their trust.”
Written by Jason Oliva