The Association of Mortgage Professionals says the Consumer Financial Protection Bureau’s new Know Before You Owe mortgage disclosure rule, also called the TILA-RESPA Integrated Disclosures rule, doesn’t disclose enough and says homebuyers are entitled to know where all the money they pay to buy a home is going.
In a statement, the Association of Mortgage Professionals, also called NAMB, said that it is calling on Congress to require the CFPB to include a line item on the new TRID forms “clearly stating the hidden cost of g-fees.”
The new TRID forms are set to go into effect on Oct. 3, 2015.
G-fees, or guarantee fees, are the fees charged to lenders by Fannie Mae and Freddie Mac to guarantee loans.
According to NAMB’s statement, g-fees are “not readily detectable” to consumers in the mortgage documents because the g-fees are incorporated into the interest rates paid by borrowers, and they want that to change.
"In the spirit of full transparency on behalf of consumers involved in the home buying process, we're asking Congress to require that the new TRID forms being used by CFPB contain a specific line item showing homebuyers exactly how much of their home purchase costs are in fact fees that in no way benefit them and are unrelated to the home purchase itself,” NAMB President John Councilman said.
Councilman also said NAMB is opposed to the four-year delay of scheduled g-fee cuts that would be established to offset the cost of a massive transportation bill currently under consideration in Congress.
“Consumers deserve to know that a portion of the cost of financing a new home will be used by increased federal g-fees used to finance highway legislation and other federal spending not directly related to homeownership,” Councilman said.
“We oppose proposed increases in g-fees and we especially oppose their use in financing highway legislation, or any other legislation, that doesn't directly benefit the homebuyer,” Councilman continued.
In NAMB’s view, Councilman said, g-fees “have essentially become a hidden tax on consumers being used to pay for federal programs unrelated to homeownership.”
NAMB isn’t alone in not wanting g-fees to be used for unrelated federal spending.
Earlier this week, Sen. Mike Crapo, R-Idaho, and Sen. Mark Warner, D-Va., sent a letter to the Senate leadership, asking them to reconsider the use of g-fees for the highway bill.
Earlier this year, Crapo and Warner introduced budget point of order that would prevent g-fees from being used to offset federal spending, a practice the Senators call a “budgetary gimmick” and a “back door tax” on homeowners.
In the letter sent to Senate Majority Leader Mitch McConnell, R-Ky., and Senate Minority Leader Harry Reid, D-Nev., Crapo and Warner say any increase or extension of g-fee standards should be used to protect taxpayers from mortgage losses and to repay the federal bailout, not for unrelated programs.
“Each time guarantee fees are extended, increased and diverted for unrelated spending, homeowners are charged more for their mortgages and taxpayers are exposed to additional risk,” Crapo and Warner said in their letter.
And the NAMB thinks that those fees should be brought out of the shadows.
"Congress should require the CFPB to disclose the costs of g-fees to consumers buying homes," Councilman said, "the CFPB should not start their Know Before You Owe program with hidden fees even if those fees are government taxes."