The Consumer Financial Protection Bureau’s borrower education tool, released on Tuesday, has ignited a debate between the bureau and mortgage bankers, who argue that the tool likely would violate the CFPB’s own rules.
“Owning a Home,” the CFPB’s new online guide to homeownership, was created as part of an effort to better inform and empower consumers shopping for a mortgage.
From loan options to closing documents, complete with a closing checklist, the suite of tools aims to ensure consumers get the best deal on their mortgage. Included in the suite is a Rate Checker, a tool currently in beta release, which incorporates information from lenders’ internal rate sheets.
“In other words, we are giving consumers direct access to the same type of information that the lenders themselves have,” CFPB Director Richard Cordray said in prepared remarks earlier this week.
But one industry voice decries the “tool,” saying, among other things, that it “sets borrowers up for severe disappointment.”
David Stevens, president and CEO of the Mortgage Bankers Association (MBA) told HousingWire that if the CFPB’s Rate Checker were a lender advertisement or mortgage calculator, it would violate the CFPB’s disclosure rules.
Additionally, Stevens says the tool doesn’t inform borrowers of a host of other costs that lenders are required to disclose under TILA-RESPA, such as closing costs, APR, and other charges and fees.
“This tool has none of that. It gives borrowers none of that,” Stevens said. “It could allow lenders to rate bait the market.”
However, the CFPB has responded by saying the tool is here to stay.
“The Rate Checker is an educational tool, and part of a larger suite of tools to help consumers be more informed and effective mortgage shoppers. The Rate Checker does not connect consumers with lenders,” a spokesperson for the CFPB told HousingWire. “As explained on the website, interest is only one of many costs associated with getting a mortgage.”
While Stevens said he is generally supportive of the CFPB’s initiatives, the Owning a Home tool is disappointing.
“It’s actually disappointing the bureau would put this out,” he said. “I’m not a CFPB knee jerk. They do a lot of good and while I think things can be improved, we’re on board with them. But this wasn’t well thought out.”
Read the full story here.
Written by Emily Study