The Consumer Financial Protection Bureau on Tuesday released a new toolkit that guides consumers through the process of shopping for a mortgage and buying a house.
In contrast to the industry’s reaction to the CFPB’s Rate Tracker tool, the response has been relatively positive.
The CFPB toolkit is designed to help consumers take full advantage of the new Loan Estimate and Closing Disclosure forms that lenders are required to begin providing in August.
“We fully support efforts by the CFPB to help inform and educate consumers who are working through the complexities of the mortgage process. We look forward to reviewing the details in the Toolkit and providing our input,” said Mortgage Bankers Association President and CEO David Stevens. “Today’s mortgage system has the safest and soundest protections and disclosures ever created for prospective homebuyers. It is critical that all stakeholders work together to ensure that we continue to uphold the highest standards of consumer protection and an efficient marketplace.
“This announcement is a helpful reminder that the mortgage lending industry is there for those entering the housing market and that the American homebuyer should go out and shop for a home loan with confidence knowing that they will be backed by a national network of lenders all following the same set of consumer protection standards for their customers,” Stevens said.
The Community Home Lenders Association says it would like to see the consumer rights embodied in the CFPB’s initiative to be expanded.
“The Community Home Lenders Association applauds many of the CFPB's ‘Know Before You Owe’ policies,” the trade group told HousingWire. “However, CHLA believes every consumer has the right to know before they owe if their mortgage consultant/MLO/LO is licensed and has passed an independent background check. The CFPB should use its existing authority to add this consumer right to its ‘Know Before You Owe’ program since not all MLO’s are licensed and meet the same qualifications.”
The toolkit provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what affordable means to them, and find their best mortgage. The toolkit features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information.
The toolkit is designed to replace an existing booklet that creditors currently must provide to mortgage applicants, which was initially developed by the Department of Housing and Urban Development.
Earlier this year, the industry reacted swiftly and strongly to the CFPB’s creation of a “Rate Tracker” – saying it was misleading.
The MBA, CHLA and Community Mortgage Lenders of America all want the tracker taken down from the CFPB’s website because it could misinform consumers, and therefore it shouldn’t have been launched.
The online tool also came under fire because it mentions rates and costs without including disclosure items that TILA-RESPA rules mandate for borrowers – annual percentage rate, points, closing fees and other charges.
However, the praise is not entirely unanimous.
@BrenaSwansonHW I believe the document is informative, however the length will prevent many from reading through it.— Erika Pilimai (@ErikaPilimai) March 31, 2015