The Mortgage Bankers Association (MBA) has called on the Consumer Financial Protection Bureau (CFPB) to alter the evaluation process of proposed mortgage disclosure reforms and provide industry participants a more direct method for contributing to the process.
In a letter to Elizabeth Warren, Special Assistant to the Treasury Secretary in charge of setting up the CFPB, MBA Senior Vice President Stephen O'Connor expressed support for the bureau's effort, but noted that the expedited second round for comments on the revised draft proposals was insufficient to provide meaningful feedback. He suggests that the CFPB meet directly with the MBA, industry representatives and other key stakeholders to provide details about the direction of the effort to help them offer more informed comments. This would allow industry participants to discuss challenges directly with the CFPB related to the RESPA and TILA, and the proposed changes to disclosure forms.
The MBA notes that the proposed forms are improved but still raise concerns. The front page that offers monthly expenses, specifically the principal and interest, is confusing for potential borrowers, especially considering that the "Monthly Loan Payment" and "Projected Payment" figures do not match.
The current design also offers operational concerns as many systems do not support double-sided documents, nor different colors, shading, vertical dots and graphics. The design of the form would be difficult to recreate into existing systems.
Another issue expressed by the MBA is that the prototypes do not reflect existing RESPA and TILA rules. The new forms combine fees that are subject to different tolerance allowances under the new guidelines. Additionally, the forms combine origination fees and fees connected with the interest rate creating issues because those tied to interest rate can change at varying points of the life of the loan, whereas origination fees do not. Lastly, the forms introduce some new terminology, such as "Loan Fees" that differ from terminology defined by RESPA.
According to O'Connor, the MBA believes that the CFPB must allow industry professionals to have sufficient weight in the discussion of these reforms to ensure that the result meets the goals of simplifying the desired information for consumers while providing requirements that are manageable and compliant with current rules and regulations.