The battle over the Consumer Financial Protection Bureau’s new “borrower education tool” unveiled earlier this week is heating up, with the National Association of Mortgage Bankers now joining the Mortgage Bankers Association in calling on the CFPB to take the “Rate Checker” online tool down.
The CFPB’s new interactive page has come under fire because it mentions rates and costs without including disclosure items that TILA-RESPA rules mandate for borrowers – annual percentage rate, closing fees, etc.
“This tool will do nothing but confuse consumers in their shopping experience,” said John Councilman, president of NAMB. “These rates do not account for closing costs, APR, Loan Level Price Adjustments or other key factors. More important than rate is quality of service and closing reputations of others involved in the transaction.
“If a private company released this exact product, the CFPB and state regulatory authorities would have a team sent in to shut the site down,” Councilman said.
Councilman added that what NAMB views as most egregious is CFPB Director Richard Cordray's statement that cautioned consumer that “[mortgage lenders and brokers] have an important stake in selling the mortgage.....What is best for them is not always best for the consumer."
The CFPB, speaking to HousingWire Thursday, said Rate Checker is an educational tool, and part of a larger suite of tools to help consumers be more informed and effective mortgage shoppers.
“This statement is nothing but divisive, naive, or dishonest; or all three,” Councilman said. “First, the Director should know, since the CFPB issued the regulations, that the loan originator and mortgage broker cannot increase their commissions. Those are set and cannot vary per CFPB regulation.
"Second, mortgage originators, whether they work for banks, mortgage banks, credit unions, or mortgage brokers, all depend on future business by dealing with consumers fairly. The suggestion that licensed mortgage originators are out to get consumers or that consumers should not inherently trust referrals from friends and family is disappointing. Lastly, why would the Bureau launch a 'rate checker' that will confuse consumers if it is to be used in conjunction with the new forms that the industry and CFPB have been developing together for over two years to help consumers shop for a mortgage?," Councilman said. "The new forms are set to launch August 1, 2015. The Bureau at the very least should have consulted with industry stakeholders to weigh input on the usefulness of such a 'tool'."
On Wednesday, HousingWire broke the news about the mortgage industry being in arms over the site.
“It sets borrowers up for severe disappointment,” David Stevens, president and CEO of the Mortgage Bankers Association, told HousingWire on Wednesday. “It should be taken down.”
The CFPB’s response, in a note to HousingWire, seems pretty unequivocal – it’s not coming down.
Below is a video message from NAMB.