The Consumer Financial Protection Bureau, or CFPM, outlined rules it is considering that would simplify mortgage points and fees and bring greater transparency to the mortgage loan origination market. These rules, which the CFPB expects to propose this summer and finalize by January 2013, are meant to make it easier for consumers to understand mortgage costs and compare loans so they can choose the best deal.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act places certain restrictions on the points and fees offered with most mortgages. The CFPB is considering proposals that would:
- Require an Interest-Rate Reduction When Consumers Elect to Pay Discount Points
- Require Lenders to Offer Consumers a No-Discount-Point Loan Option
- Ban Origination Charges that Vary with the Size of the Loan
In 2010, the Federal Reserve Board issued a rule that prohibits loan originators from directing consumers into higher priced loans because they could earn more money. The Dodd-Frank Act requires the CFPB to issue rules as well. The proposals the CFPB is considering would reaffirm the Board’s rule, which bans the practice of varying loan originator compensation based on interest rates or certain other loan terms. The CFPB’s proposal would also clarify certain issues in the existing rule that have created industry confusion.
Check dodd-frank.com frequently for updated information on the JOBS Act, the Dodd-Frank Act and other important securities law matters.