Tag Archives: consumer financial protection bureau

The Consumer Financial Protection Bureau by the Numbers

CFPB Actions Result in $11.7 Billion in Relief to 27 Million Consumers

By Jeff Sorg, OnlineEd Blog

canstockphoto24908732consumer protection(July 15, 2016) – July 21, 2016, will mark five years since the CFPB opened its doors. After the 2008 financial crisis, Congress created the CFPB as the only federal agency with the sole mission of protecting consumers in the financial marketplace.

To date, the CFPB has provided almost $12 billion in relief to over 27 million consumers. Here’s how their numbers stack up:

  • $11.7 billion: Approximate amount of relief to consumers from CFPB supervisory and enforcement work, including:
    $3.6 billion in monetary compensation to consumers as a result of enforcement activity
    $7.7 billion in principal reductions, cancelled debts, and other consumer relief as a result of
    enforcement activity
    $347 million in consumer relief as a result of supervisory activity
  • 27 million: Consumers who will receive relief as a result of CFPB supervisory and enforcement work
  • $440 million: Money ordered to be paid in civil penalties as a result of CFPB enforcement work
  • 930,700: Complaints CFPB has handled as of July 1, 2016
  • 12 million: Unique visitors to Ask CFPB
  • 1.9 million: Mortgages consumers closed on after receiving the CFPB’s Know Before You Owe
    disclosures
  • 135: Banks and credit unions under the CFPB’s supervisory authority as of March 2016
  • 12 million: Consumers who take out payday loans each year; the CFPB has proposed rules to put an end to payday debt traps
  • 70 million: Consumers who have debts in collection on their credit record; the CFPB is developing proposed rules to protect consumers from harmful collection practices
  • 3,400 Colleges voluntarily adopting the CFPB and Dept. of Ed Financial Aid Shopping Sheet
  • 138: Visits to military installations by the Office of Servicemember Affairs since 2011
  • 61: Times senior CFPB officials have testified before Congress
  • 36: Cities where CFPB has held public town halls or field hearings

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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CFPB Finalizes Rule to Improve Information About Access to Credit in the Mortgage Market

Bureau Takes Steps to Simplify the Reporting Process for Financial Institutions

By Jeff Sorg, OnlineEd Blog

canstockphoto4707670 FINAL StampWASHIGTON, D.C. (October15, 2015) – Today, the Consumer Financial Protection Bureau (CFPB) finalized a rule to improve information reported about the residential mortgage market. The rule will shed more light on consumers’ access to mortgage credit by updating the reporting requirements of the Home Mortgage Disclosure Act (HMDA) regulation. The Bureau is working with other federal agencies to streamline the reporting process for financial institutions.

“The Home Mortgage Disclosure Act helps financial regulators, the public, housing officials, and even the industry itself keep a watchful eye on emerging trends and problem areas in the nation’s mortgage market – the largest consumer financial market in the world,” said CFPB Director Richard Cordray. “With today’s final rule we are shedding more light to foster better understanding of the market, and also ensuring that lenders have sufficient time to come into compliance.”

HMDA, which was originally enacted in 1975, requires many lenders to report information about the home loans for which they receive applications or that they originate or purchase. The public and regulators can use the information to monitor whether financial institutions are serving the housing needs of their communities, to assist in distributing public-sector investment so as to attract private investment to areas where it is needed, and to identify possible discriminatory lending patterns.

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) in 2010 in response to the mortgage market crisis. The Dodd-Frank Act directed the CFPB to expand the HMDA dataset to include additional information about applications and loans that would be helpful to better understand the mortgage market. The CFPB convened a panel of small businesses to provide feedback on potential changes to the rule in February 2014, and issued a proposed rule in July 2014.

In 2014, 7,062 financial institutions reported information about approximately 11.9 million mortgage applications, preapprovals, and loans. While the HMDA dataset is the leading source of information about the mortgage market, it has not kept pace with the market’s evolution. For example, the HMDA data do not provide adequate information about certain loan features that helped contribute to the mortgage crisis, such as adjustable-rate mortgages and non-amortizing loans.

The final rule issued today will improve the quality and type of HMDA data. The CFPB is also working to reduce the reporting burden for lenders, by streamlining and modernizing the submission of the data.

Better Information About the Mortgage Market

The final rule changes what data financial institutions are required to provide in order to improve the quality of HMDA data in today’s housing market. The changes include:

  • Improving market information: In the Dodd-Frank Act, Congress directed the Bureau to update the HMDA regulation by having lenders report specific new information that improves public understanding of market conditions and could help identify emerging risks and potential discriminatory lending practices in the marketplace. This new information includes the property value, term of the loan, and the duration of any teaser or introductory interest rates.
  • Monitoring fair lending compliance and access to credit: Financial institutions will be required to provide more information about mortgage loan underwriting and pricing, such as an applicant’s debt-to-income ratio, the interest rate of the loan, and the discount points charged for the loan. This information will enhance the ability to screen for possible fair lending problems, helping both institutions and regulators focus their attention on the riskiest areas where fair lending problems are most likely to exist. This information will also help the Bureau and other stakeholders monitor developments in specific markets such as multifamily housing, affordable housing, and manufactured housing. The rule also requires that covered lenders report, with some exceptions, information about all applications and loans secured by dwellings, including reverse mortgages and open-end lines of credit.

Simplifying Reporting Requirements

One of the goals in updating the reporting requirements is to identify opportunities to streamline reporting and make it easier for financial institutions to comply with the law. The final rule issued today will:

  • Ease reporting requirements for some small banks and credit unions:The final rule retains the existing provisions that ease the burden on small banks and credit unions. For example, small depository institutions that are located outside a metropolitan statistical area remain excluded from coverage. In addition, under a new standardized reporting threshold in the rule, small depository institutions that have a low loan volume will no longer have to report HMDA data. For small lenders with few staff members, this change could make a significant impact in easing compliance costs. The new threshold will reduce the overall number of banks and credit unions required to report HMDA data by an estimated 22 percent. However, because those lenders receive a low volume of applications and originate a low volume of mortgage loans, the change will not compromise the usefulness of the dataset.
  • Align reporting requirements with industry data standards: In addition to collecting data under HMDA, many financial institutions are collecting the same or similar data for their own processing, underwriting, and pricing of loans, or to facilitate the sale of loans on the secondary market. Many of the amended requirements align with well-established industry data standards, including definitions that are already in use by a significant portion of the mortgage market. The Bureau anticipates that this alignment will mitigate the burden on many lenders, and improve the quality and the value of the information reported.

The Bureau is working with the other members of the Federal Financial Institutions Examination Council and the Department of Housing and Urban Development to modernize the HMDA data submission process to collect information more efficiently. Feedback from financial institutions and their vendors has helped the Bureau identify ways to reduce the burden of this information collection on industry. The Bureau has completed a pilot of a new web-based tool to collect HMDA information more efficiently. Industry stakeholders have tested the pilot and the feedback has been very positive – the new tool is simple and easy to use. Implementing this technology will reduce manual and paper-based systems currently used by regulators and reporting financial institutions. These changes will ultimately reduce associated compliance costs.

The final rule adopts many of the provisions proposed in 2014. However, a number of changes were made after considering comments received from the public. For example, the final rule does not include several of the data points proposed by the Bureau (such as the “risk-adjusted, pre-discounted interest rate”), and does not adopt the proposal to require reporting of all dwelling-secured transactions made for commercial purposes.

The CFPB is looking at ways to improve public access to HMDA data that has been modified to protect applicant and borrower privacy. The CFPB is exploring various strategies and techniques to address both borrower and applicant privacy and users’ interests in public disclosure and market transparency. The Bureau continues to update an online tool that helps the public better use available mortgage loan data. The tool allows users to filter information, create summary tables, download the data, and save their results.

Most of the provisions of the final rule will take effect on January 1, 2018. Lenders will collect the new information in 2018 and then report this information by March 1, 2019.

A copy of the final rule is available at:
http://files.consumerfinance.gov/f/201510_cfpb_final-rule_home-mortgage-disclosure_regulation-c.pdf

Resources that explain and facilitate implementation of the rule are available at:
consumerfinance.gov/regulatory-implementation/hmda/

The CFPB’s online HMDA tool is available at:
consumerfinance.gov/hmda/

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

CFPB Director Addresses National Association of Realtors®

Prepared Remarks of Richard Cordray
Director, Consumer Financial Protection Bureau

 National Association of Realtors

Richard Cordray

Richard Cordray

WASHINGTON (September 17, 2015) – Thank you for inviting me today.  That renowned philosopher from the Garden State of New Jersey, Bruce Springsteen, once said, “I have spent my life judging the distance between American reality and the American dream.”  For the past few years, we have all been judging that distance for ourselves, and we have seen how the worst financial crisis of our lifetimes caused the gap to widen for far too many people.  But as we continue to emerge from the Great Recession, we are now starting to see things turn around.  The housing market is finally breaking out in many areas around the country.  It is a very happy development, one that is good for consumers, good for real estate professionals, and good for the United States of America.

In the wake of the financial crisis, Congress created the Consumer Bureau with the sole purpose of protecting consumers.  We do that by working to ensure that people have access to consumer financial products and services; that these markets work in a fair, transparent, and competitive manner; and that consumers are empowered to take more control over their financial lives.  To begin with, our first major task as a brand-new agency was to address the serious problems in the mortgage market that caused the crisis in the first place.

Since opening our doors four years ago, the Consumer Bureau has been hard at work to put new rules in place to encourage common-sense, consumer-friendly business practices.  We have sought to take a balanced and measured approach to this task, mindful of the concerns of many stakeholders.  When Congress required us to finalize several substantial mortgage rules within our first eighteen months, we stepped up and got the job done.

When we put those new regulations in place, some were critical of our work.  For example, the “Ability to Repay” rule requires lenders to make sure that borrowers actually have the ability to repay their loans before extending them a mortgage.  Some enjoyed describing this rule, which was also known as the “Qualified Mortgage” or QM rule, as the “Quitting Mortgages” rule.  They made aggressive predictions that our rules would cause mortgage prices to double and would cut the volume in half.  They offered dire predictions that our rules would lead to the demise of community banks and credit unions, which would have to withdraw from the mortgage market altogether.  We never believed any of this unsupported hyperbole.

And it turns out we were right.  The rules have now been in place for the better part of two years, and none of those heated claims has come true.  In fact, recent data confirms the very opposite of the fears that were voiced by our critics.  In 2014, the first year of our new rules, mortgage originations for owner-occupied home purchases increased between 4 and 5 percent.  The upward trend appears to have accelerated over the first half of this year.  And while we saw minor consolidation in some parts of the mortgage market, there is no evidence of any mass exodus, as the doomsayers predicted.  In fact, after adjusting for merger activity, the number of lenders that reported having originated mortgages showed an increase in 2014.  And in particular, the number of community banks and credit unions that originated home-purchase mortgages last year was higher than the year before.  Let me say plainly, from my standpoint as the Director of the Consumer Financial Protection Bureau, that is great news.  It means more opportunity for more consumers, and a renewed pathway to the American dream in a mortgage market that has been strengthened by the changes we have made.

There is no reason to be surprised at this outcome, because our rules merely imposed common-sense requirements that lie at the heart of all responsible lending.  In addition, we have been taking pains to create some special rules to protect community banks and credit unions, which had amassed the lowest default rates right through the wreckage of the financial crisis.  Reasonable regulation of financial markets, which includes evenhanded oversight and enforcement of the law, should always tend to benefit the most responsible providers.  By taking on and rooting out unfair competition that gobbled up market share by driving down sound underwriting standards, the Consumer Bureau is supporting responsible lenders.  The market leaders of today are those that have remained focused on providing sustainable homeownership rather than just making a quick buck, no matter how.

At the same time, sensible regulation that includes substantial consumer protections should foster greater trust by consumers in the financial marketplace.  If people believe they will be treated fairly rather than becoming victims of predatory lending, they can develop a renewed sense of consumer confidence.  And in the past few years, as consumers have improved their own financial health and seen their home values stabilize in many parts of the country, those sentiments are gradually returning.  Steady and prepared consumers, along with sound lending, are the key ingredients in the recipe for an improved housing market.  And what that means for everyone here is that you now have the chance once again to show America what you do best:  provide excellent customer service and help put people in the right homes for the right price.

It is hard to appreciate fully what that means for so many people.  Most immediately, it means that for those who lost so much during the economic crisis, buying a house may again be within reach.  A home is the most important financial investment that many families will ever make.  At the same time, homeownership remains the sturdiest foundation for building wealth among the middle class.  Although many people intend to create a nest egg for the future, the mechanism that most reliably causes it to happen for many Americans is making the monthly payments on an amortizing mortgage.  Beyond that, as we all know very well, a house that becomes a home is much more than four walls and a roof.  Instead, it is a special place to call your own, a place to rest and feel safe, a place to raise a family and create lasting memories, a place to hold up as a source of pride and accomplishment.

The National Association of Realtors represents more than one million hard-working members – brokers, salespeople, property managers, appraisers, housing counselors, and more.  You suffered greatly during the crisis and its aftermath.  The new Consumer Bureau is here to work with you to ensure that consumers’ experience of the financial marketplace and the promise of the American Dream are one and the same.

In that spirit, to improve the mortgage market we are making sure protections are put in place at every stage of the process, from shopping for a mortgage to closing on the house to paying back the loan.  As I have already noted, in January 2014, our first set of mortgage rules took effect.  They restored sensible underwriting practices (such as documenting income to ban Liar Loans) and addressed some of the worst practices by mortgage servicers.  By the way, we have heard all over the country from real estate professionals who have been frustrated – and lost countless sales – by poor practices from mortgage servicers.  We have come to understand that your interest in improving servicer performance is directly aligned with the interests of consumers, and of the Consumer Bureau.  We will continue to work with you and listen to you about how we can improve these features of the mortgage market.

After getting through the first set of new mortgage rules, we turned to another important task imposed by Congress.  We integrated and streamlined multiple forms that consumers received at the application and closing stages of the mortgage process, to make the forms easier to use and understand.  This regulation was completed almost two full years ago, but will finally take effect on October 3.  Among other things, what we call our “Know Before You Owe” mortgage disclosure rule makes it easier to shop for a mortgage.

In essence, what we have done is to replace four overlapping mortgage disclosure forms and put in their place just two forms that consumers have told us are much easier to understand.  The first form is the Loan Estimate, which provides a summary of the loan offered along with the estimated costs associated with the mortgage such as taxes and insurance and closing expenses.  The second form is the Closing Disclosure, which offers a detailed accounting of the transaction.  With a simple accounting of payments and fees, these new forms show what people are getting into – the price and key terms of their loan and how its terms could change over time.  They present the information in plain language, in a format that is easy to follow, where the costs and risks of the loan are made clear.  And right up front on the first page, shoppers can see what they want to see the most:  the loan amount, their monthly payments, taxes, insurance, other property costs, and the total cash required to close the loan.  Our consumer testing shows that when borrowers use our new forms, they will end up with a better understanding of the final terms of their mortgage before they close on the loan.

The changes we have made also are designed to make comparison shopping easier.  Our efforts here have centered on reducing the information gap between lenders, who understand mortgage pricing inside and out, and consumers, to whom the process can often feel like a mystery.  We want to encourage consumers to focus on “shopping for a mortgage” instead of just “getting a mortgage.”  Consumers have much more power than they realize to shop for the best deal.  The power to comparison shop allows them to take more control of their financial lives and make better choices that will make a difference for themselves and their families.

Homebuyers will get the Loan Estimate no more than three business days after they apply for a loan.  If they apply for loans with multiple lenders, they will receive all the information in a common format to make a direct comparison between them.  Consumers will be able to see directly and immediately who is offering them better rates or cheaper fees.  Consumers will then be better able to weigh those price differences against other factors that matter to them.

When consumers have decided on a loan, our new rules also require lenders to give them the Closing Disclosure three business days before the closing occurs.  It summarizes the final loan terms and costs and presents a detailed accounting of the transaction.  Before people arrive at the closing, they can compare this form to their Loan Estimate to see what has changed.  Our form makes that comparison very obvious, which minimizes the potential for nasty surprises such as “bait and switch” increases in rates, fees, or settlement costs.  Should the Closing Disclosure become inaccurate due to three very limited sets of changes that are especially crucial – changing the loan product (say from fixed-rate to adjustable-rate), increasing the APR beyond certain limits, or adding a prepayment penalty – consumers must be given a revised Closing Disclosure at least three days before the closing.  Some have been spreading misinformation about this point, claiming that last-minute changes based on walk-throughs or similar circumstances will cause frequent three-day delays in the closing process.  That is simply wrong.  Sellers’ credits and the like will never require a new Closing Disclosure that delays the closing date.  Only the three very limited circumstances just described relating to changes in the loan terms will require a new Closing Disclosure.  This rule will reduce paperwork, remove confusion, and make the process more transparent – all changes that will help promote home sales, not hinder them.

To further help consumers with their mortgage shopping experience, the Consumer Bureau is also developing and providing unbiased tools and resources as part of our “Know Before You Owe” mortgage initiative.  We believe knowledge is power, and that empowered consumers are good for the marketplace.

In March, we released “Your Home Loan Toolkit,” which 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 the best mortgage to fit their personal circumstances.  Creditors must provide a copy to all home purchase mortgage applicants within three business days of receiving an application, which means millions of consumers will get this streamlined, plain-language document each year.  We encourage all industry participants, including the real estate professionals in this room, to provide it to potential homebuyers as early as possible in the home-buying process so they can use this information most effectively.

Another signature offering we are developing and refining for consumers is called “Owning a Home” – an online, interactive set of tools and resources to help consumers navigate the home-buying process and make sound decisions.  Right now we are greatly expanding this section of our website to help consumers shop for a mortgage and go about buying a home, from the very start of the process all the way to the closing table.  It can be found on our website at consumerfinance.gov.

While many people want to buy a home, getting their finances ready for homeownership can be a challenge.  Owning a Home helps people assess their spending, learn how to check their credit, and figure out how much they can spend on an affordable mortgage.  The site also guides them through the process of meeting with lenders and getting a prequalification or preapproval letter, helps them know what questions to ask when meeting with lenders, and assists them in gathering the paperwork they need to move forward.  Gene Koo, who serves as the head of Consumer Engagement at the Consumer Bureau, will be giving us a demo of some of these Owning a Home features here very shortly.

We also recently launched a real estate professional’s guide to our Know Before You Owe rule and our supporting tools.  This guide summarizes the key facts you need to know and provides handy tips for achieving smooth closings on time.  We encourage you to check it out on our website.

As we move forward, we will continue to look for ways to make the mortgage process easier.  This includes our work on the closing experience.  We are well aware that the sheer volume of the documents can be overwhelming to people who are generally unfamiliar with the process.  So we have been evaluating electronic closings and how improvements in technology can benefit consumers and lenders alike.  We recently conducted a pilot project which found that those who closed their mortgage using an electronic platform showed higher measures of understanding, efficiency, and feeling empowered than borrowers who used only paper forms.  Based on those results, we are strongly encouraging further industry action and innovation around “e-closings.”

The mortgage market has experienced dazzling changes in the past decade.  It has gone from being the overheated, increasingly irresponsible market that blew up the largest economy in the world, to retrenching dramatically into an overly tight and restrictive market where many good, creditworthy applicants could not qualify for reasonable loans.  Lack of effective regulation that fostered a race to the bottom in underwriting standards has now led to strong new regulations designed to protect and support both consumers and responsible businesses.  The result today is a mortgage market that is steadily recovering, with home values increasing in many areas and millions of homes emerging from their previous underwater status.  Through these sometimes bewildering changes, the National Association of Realtors has hung tough and worked toward better times ahead.  It has been a difficult decade, but you have embraced change as we have worked to make the marketplace fairer and more transparent for all Americans.  Adversity always presents a test of strength, but you have risen to the challenge.  Together we are building a more solid foundation so that you can thrive and so that families across the country can make the American Dream their reality.  At the Consumer Bureau, we salute you and thank you for doing what you do.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

CFPB Takes $39 Million Action Against Company for Deceptive Advertising

The CFPB has the authority to take action against companies engaging in deceptive practices in the consumer financial marketplace.

By Jeff Sorg, OnlineEd Blog, July 28, 2015

No Lie traffic signCFPB, Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) is reporting it took action today against Paymap Inc. and LoanCare, LLC for deceiving consumers with advertisements for a mortgage payment program that promised tens of thousands of dollars in interest savings from more frequent mortgage payments. Under the terms of the orders announced today, Paymap will return $33.4 million in fees to consumers and pay a $5 million civil penalty to the CFPB, and LoanCare will pay a $100,000 civil penalty.

“Deceptive advertising has no place in the financial marketplace,” said CFPB Director Richard Cordray. “Today’s action is delivering relief for consumers deceived by Paymap and LoanCare, and sending a clear message that these practices will not be tolerated.”

The CFPB found that Paymap and LoanCare violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition against deceptive acts and practices. Specifically, the Bureau found that consumers were:

  • Lured with deceptive promises of savings: Paymap made claims on its website such as, “The average customer will achieve over $33,000 in interest savings” using the Equity Accelerator Program. However, Paymap had no factual basis to support this claim. Moreover, only a tiny percentage, if any, of its customers achieved that amount of interest savings.
  • Misled about when their payments would be applied: Paymap and LoanCare told consumers in their direct mail solicitations that enrolling in the Equity Accelerator Program would change the consumers’ payoff schedule to “every 2 weeks.” Although Paymap makes more frequent withdrawals from consumers’ accounts in the Equity Accelerator Program, it does not actually make more frequent payments on consumers’ mortgages. Instead, Paymap holds the collected payments in custodial accounts, and then pays consumers’ mortgages on their original monthly schedule. Consumers are charged a transaction fee with every withdrawal. Any interest savings that consumers may achieve through the Equity Accelerator Program is because they make a higher annual mortgage payment in the program, using the same payment schedule as before enrollment.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

Consumer Advice About Shopping for a Mortgage

mortgage word cloud

Shopping for a mortgage can be overwhelming! Here’s some basic advice and a free source to help you understand the process.

(Jeff Sorg, OnlineEd)

Shopping around for a mortgage takes time and energy, but it can save you thousands of dollars. The Consumer Financial Protection Bureau, also known as the CFPB, recommends that you compare loan offers from at least three different lenders.

The Internet and newspapers are a good place to start this search for banks, credit unions, mortgage lenders and mortgage bankers. If you work with a real estate agent, you’ll also want to ask him or her for a recommendation.

After you’ve selected some lenders, you will want to ask them each to issue you a loan “pre-approval.” Pre-approval means that the lender takes a look at your finances and estimates how much you should be able to borrow, and at what interest rate. These pre-approvals will let you see what kind of loan prices each lender offers so you can compare them. You’ll want to get all of your approvals within 45 days, so as not to impact your credit score with spread out credit report requests. Lenders should not charge your for a pre-approval and issue them in hopes of securing your business.

In general, the longer it takes to repay your loan, the lower your loan payment. Most buyers choose a 30-year loan, since payments are lower; for a 15-year loan payments are typically higher than for the 30-year, but your loan is paid off in 15 years, thereby avoiding the extra interest paid for a 30-year loan. While not very common, some lenders may offer other lengths, like 20-years, 7-years , or even longer than 30-years.

Loans also come with fixed or adjustable interest rates. With a fixed-rate, your interest and monthly payment will stay the same for the entire life of the loan. With the adjustable rate, your interest rate is usually fixed for the first few years of the loan, but once this fixed rate period expires, the rate will adjust at regular, predetermined intervals based on the market. This means you will need to be prepared for your payment amount to increase. Your interest rate details will be included with the information you will receive from your lender.

There are also many different types of loan programs for different circumstances and groups. If you will make a down payment of 5% or more, ask about Fannie Mae or Freddie Mac eligible loans. These are commonly called “conventional” loans. If you are making a less than 5% down payment, check into the FHA insured loan; if you are a Veteran, you might qualify for a VA-guaranteed loan; when buying rural property, you and your purchase might qualify for a USDA sponsored loan product; and if you are a first-time home buyer with low to moderate income, there might be loans available through various state programs.

After you’ve decided on your lenders for pre-approvals and your loan type, it’s time to compare your loan offers. You’ll want to first start by comparing the basics of the loan, such as time to repay, interest rate, down payment amount, and monthly payment amount. For the adjustable rate, are the payment adjustments and interest rate capped or floating and will the interest rate go down if the market interest rate drops.

Next, you can compare the rest of the details that will affect your overall cost. Some of the things you’ll want to know will be when your payments will pay off the principal amount of the loan; does the payment include property taxes and insurance or will you pay those separately; will you be paying upfront fees/points that reduce the interest rate; and what fees and costs are included in the amount you are borrowing.

Shopping for a mortgage can be overwhelming, at first. But once you get used to the process, you’ll be able to recognize differences between lenders. If you get overwhelmed by the process or would just like to educate yourself, you can also receive free help about shopping for a mortgage by calling the Consumer Financial Protection Bureau at 1-855-411-CFPB and speaking with a representative who can connect you to a HUD-approved housing counselor.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on July 1, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

CFPB Publishes Consumer Complaint Narratives About Financial Companies

complaint keyThe Consumer Financial Protection Bureau (CFPB) has published its enhanced public-facing consumer complaint database

 (Jeff Sorg, OnlineEd) – In June 2012, the CFPB launched its Consumer Complaint Database, which is the nation’s largest public collection of consumer financial complaints.

In March 2015, the Bureau finalized a policy to empower consumers to publicly share their stories when they submit complaints to the Bureau. Since the Bureau launched this feature, more than half of consumers submitting complaints to the CFPB website have “opted in” to share their accounts of what happened.

As of June 1, 2015, the Bureau has handled more than 627,000 complaints, with mortgages and debt collection being the most frequent topics.

Now, the Consumer Financial Protection Bureau (CFPB) is live with an enhanced public-facing consumer complaint database, which includes for the first time over 7,700 consumer accounts of problems they are facing with financial companies concerning mortgages, bank accounts, credit cards, debt collection, and more.

View the complaint database.

The CFPB Consumer Complaint Database is designed to allow users to explore the information, spotlight particular practices and problems, and gain valuable insights. Specifically, users can:

  • Search for specific product names or features: Users can now search consumer narratives for product names or features such as the brand name of a credit card or a mortgage feature.
  • Highlight specific company practices and problems: Users can search for terms in consumer accounts of what happened such as “lost paperwork,” “foreclosure scam,” or “robo-signing.”
  • Break down information by state: Users can sort complaints by state and zip code to spotlight local trends and information.

View the complaint database.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on June 29, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

CFPB Releases Second Update Of Exam Procedures For Mortgage Rules

(CFPB – WASHINGTON, D.C.) On August 15, 2013 the Consumer Financial Protection Bureau (CFPB) released a second update to its exam procedures in connection with the new mortgage regulations issued in January 2013. The interim exam procedures offer valuable guidance to financial institutions and mortgage companies on what the CFPB will be looking for as the rules become effective.

“We are committed to transparency around our examination process,” said CFPB Director Richard Cordray. “So we have worked hard to provide industry with advance notice of what we will be expecting. That, in turn, will improve compliance and benefit consumers.”

The CFPB issued several new regulations reforming the mortgage market in January 2013. Many of the new rules were directed by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules cover the various stages of a consumer’s mortgage experience, from shopping for a loan to paying it off. Most of the CFPB’s new rules go into effect in January 2014.

Today’s updates cover the Ability-to-Repay/Qualified Mortgages, high-cost mortgages, and appraisals for higher-priced mortgage loans, as well as new amendments related to the escrows rule. The updates also cover recent changes to credit card rules. With today’s release, the exam procedures now cover the Bureau’s mortgage origination rules issued through May 29, 2013, and mortgage servicing rules issued through July 10, 2013.

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Today’s release of exam procedures will help financial institutions and mortgage companies understand and prepare for how they will be examined for CFPB rules that, among other things:

  • Require lenders to evaluate a borrower’s ability to pay back the loan: Under the Ability-to-Repay rule, lenders must look at a consumer’s financial information and verify its accuracy. Lenders then must evaluate the information and conclude that the borrower can repay the loan. Lenders may not base their evaluation of a consumer’s ability to repay on teaser rates. They must determine the consumer’s ability to repay both the principal and the interest over the long term − not just during an introductory period when the rate may be lower.
  • Ban or limit certain points, fees, and risky features: Both the rule on Ability-to-Repay and the rule on high-cost mortgages ban or limit certain points, fees, and risky features. Under the Ability-to-Repay rule, a Qualified Mortgage is subject to limitations on points and fees and cannot have loan features such as terms that exceed 30 years or interest-only payments. Under the high-cost mortgages rule, balloon payments and fees for modifying loans are generally banned.
  • Require servicers to provide monthly statements and disclosures: Mortgage servicers must provide regular statements which include: the amount and due date of the next payment; a breakdown of payments by principal, interest, fees, and escrow; and recent transaction activity. For most adjustable-rate mortgages, they must also provide disclosures before the first interest rate adjustment, and before interest rate adjustments alter the payment amount.
  • Restrict dual-tracking: Under the Bureau’s rule on mortgage servicing, dual-tracking – when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure – is restricted. Servicers cannot start a foreclosure proceeding if a borrower has already submitted a complete application for a loan modification or other alternative to foreclosure and that application is still pending review.
  • Require access to servicing personnel and a fair review process: Mortgage servicers must have policies and procedures in place to provide delinquent borrowers with direct, easy, ongoing access to employees responsible for helping them. If a foreclosure seems likely, the servicer must consider all alternatives available from the mortgage owners or investors to help the borrower retain the home.
  • Require creditors use a licensed or certified appraiser: The interagency rule from January 2013 on appraisal requirements for higher-priced mortgage loans requires that creditors use a licensed or certified appraiser to prepare a written appraisal report based on a physical inspection of the interior of the property. The rule also requires creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

The CFPB is sharing with industry what it will be looking for in its examinations under the new rules by updating the applicable sections of the exam procedure manuals for the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). These documents are intended for use by CFPB examiners in examining the mortgage companies and other financial institutions subject to the new regulations.

The CFPB is committed to ensuring that the mortgage industry complies with the new consumer protections. Throughout 2013, the CFPB has been working for a smooth transition. It has published plain-language guides. It plans to educate the public about their protections under the new rules. The CFPB is also coordinating with other federal government regulators that also conduct examinations of mortgage companies and financial institutions to ensure all regulators have a shared understanding of the CFPB’s new rules.

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 The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

OnlineEd is a provider of mortgage and real estate continuing and pre-license education and developer of InlineEd a compliance and learning management tracking system for the mortgage industry.

CFPB Issues Proposed Modifications to Mortgage Rules

CONSUMER FINANCIAL PROTECTION BUREAU ISSUES PROPOSED MODIFICATIONS TO MORTGAGE RULES

Proposal Would Resolve Implementation Issues and Clear Way for Better Consumer Protections

 (CFPB, WASHINGTON, D.C.)  Today the Consumer Financial Protection Bureau (CFPB) proposed clarifications and some narrow revisions to its January 2013 mortgage rules. The proposal issued today would resolve questions that have been identified during the implementation process and would help the rules deliver their intended value for consumers.

“When we published our mortgage rules, we pledged to be attentive to issues that arose through the implementation process,” said CFPB Director Richard Cordray. “Today’s proposal revises and clarifies certain aspects of our rules to ease implementation and to pave the way for more effective consumer protections in the marketplace.”

The CFPB finalized several mortgage rules in January 2013 that are addressed by today’s proposal. The Ability-to-Repay rule protects consumers from irresponsible mortgage lending by requiring that lenders make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans. The mortgage servicing rules established strong protections for homeowners facing foreclosure, and the loan originator compensation rules address certain practices that incentivized steering borrowers into risky and/or high-cost loans. The CFPB also finalized rules that strengthened consumer protections for high-cost mortgages, and instituted a requirement that escrow accounts be established for a minimum of five years for certain higher-priced mortgage loans.

The proposal issued today involves clarifications and some narrow revisions to those mortgage rules. Among other things, today’s proposal would:

  • Outline procedures for obtaining follow-up information on loss-mitigation applications: According to the CFPB’s servicing rule, within five days of receipt of a loss mitigation application, a servicer must acknowledge receipt of the application and inform the borrower whether it deems the application complete or incomplete. If incomplete, the servicer must identify for the borrower what is needed to complete it. The proposal would outline procedures for servicers to follow, if, after conducting an initial review and sending the notice to the borrower, they discover that they do not have the information needed to complete an assessment.

o   The proposal clarifies that servicers are required to seek the additional information from the borrower if they cannot complete the assessment without it.

o   The proposal also requires that servicers ensure that the borrower does not lose certain protections under the rule, such as a foreclosure ban during the first 120 days of delinquency, until the borrower has had a reasonable time to supply the needed documents or information.

  • Facilitate servicers’ offering of short-term forbearance plans: The proposal would make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. For example, under the proposal, a servicer could provide a two-month forbearance to a borrower who is suffering a short-term hardship.
  • Facilitate lending in rural or underserved areas: Some of the Bureau’s mortgage rules contain provisions applicable to certain small creditors that operate predominantly in “rural” or “underserved” areas. The Bureau recently announced that it would reexamine the definitions of rural or underserved over the next two years. Today’s proposal would clarify how existing definitions may apply while that reexamination process is underway for purposes of two exceptions under the existing rules.

o   The proposal would extend an exception to a ban on high-cost mortgages featuring balloon payments – large, lump sum payments usually due at the end of the loan – to small creditors that do not operate predominantly in rural or underserved counties so long as the loans meet certain restrictions.

o   The proposal would revise an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans for small creditors who operate predominantly in rural or underserved areas and that also meet other criteria. To prevent creditors from losing eligibility for the exemption in 2014 due to changes in which counties are defined as rural, the proposal would extend availability to small creditors that qualified in any of the previous three calendar years.

  • Make clarifications about financing of credit insurance premiums: The Dodd-Frank Act prohibition on creditors financing credit insurance premiums in connection with certain mortgage transactions was adopted in the Bureau’s loan originator compensation rule. Questions have arisen during the regulatory implementation process concerning the application of that prohibition. Today’s proposal seeks to answer those questions.

o   The proposal would clarify what constitutes financing of credit insurance premiums by a creditor – particularly as the rule applies to “level” or “levelized” premiums, where the monthly premium is the same each month rather than decreasing along with the loan balance.

o   The proposal would provide guidance on when credit insurance premiums are considered to be calculated and paid on a monthly basis for purposes of an exclusion from the statutory prohibition.

  •  Clarify the definition of a loan originator: Under the CFPB’s new rules, persons classified as loan originators are required to meet qualification requirements, and are also subject to certain restrictions on compensation practices. Creditors and loan originators have expressed concern that tellers or other administrative staff could be unintentionally classified as loan originators for engaging in routine customer service activities. Today’s proposal would clarify the circumstances under which a loan originator’s or creditor’s administrative staff acts as loan originators.
  • Clarify the points and fees thresholds for manufactured housing employees:  For retailers of manufactured homes and their employees, the proposal would clarify what compensation must be counted toward certain thresholds for points and fees under the ability-to-repay and high-cost mortgage rules.
  • Revise effective dates of Loan Originator rule and ban on financing of credit insurance: Currently, the 2013 Loan Originator Compensation Final Rule is scheduled to take effect on January 10, 2014.

o   The CFPB is seeking comment on whether to change the effective date to January 1, 2014 for portions of the loan originator rule. The Bureau believes that having the rule take effect at the beginning of a calendar year may help compliance since compensation plans, training, and licensing and registration are often structured on an annual basis.

o   The Bureau is also seeking comment on whether to adjust the effective date for the ban on financing credit insurance. The Bureau had previously delayed that date in order to provide additional guidance on the issues discussed above, and is now seeking comment on whether the rule should take effect on January 10, 2014, or earlier in light of how much time creditors would need to adjust billing practices.

 The CFPB is committed to assisting with the mortgage industry’s compliance with the new consumer protections. Throughout 2013, the CFPB has been working for a smooth transition. In addition to clarifying critical questions about the new mortgage rules, the Bureau has also published plain-language guides for each rule and some interim examination procedures. The CFPB also plans to educate the public about their protections under the rules.

The Bureau recently published a new Regulatory Implementation web page, which consolidates all of the new 2013 mortgage rules and related implementation materials, and can be found here:http://www.consumerfinance.gov/regulatory-implementation

 Comments on today’s proposal must be received on or before July 22, 2013.

A copy of today’s proposal can be found at: http://files.consumerfinance.gov/f/201306_cfpb_proposed-modifications_mortgage-rules.pdf

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 The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov. For more information about OnlineEd, visit www.OnlineEd.com. For more information about mortgage compliance, visit www.InlineEd.com.

CFPB Releases Exam Procedures for New Mortgage Rules

(CFPB – WASHINGTON, D.C.) — On June 4, 2013, The Consumer Financial Protection Bureau (CFPB) published the first update to its exam procedures for the new mortgage regulations it issued in January 2013. The exam procedures offer financial institutions and mortgage companies valuable guidance on what the CFPB will be looking for as the rules become effective. The new regulations include those on appraisals, escrow accounts, and compensation and qualifications for loan originators.

“The CFPB recognizes that the easier we make it for financial institutions and mortgage companies to follow the new regulations, the better off consumers will be,” said CFPB Director Richard Cordray. “By releasing details of what our examiners will be looking for well in advance of the effective date of most of the rules, we are giving industry more time to adjust.” Consumer Financial Protection Bureau logo

In January, the CFPB issued numerous new regulations reforming the mortgage market, many of which were directed by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules cover many stages of a consumer’s mortgage experience, from shopping for a loan to paying it off. Most of the CFPB’s new rules go into effect in January 2014.

Today’s release of exam procedures will help financial institutions and mortgage companies understand how they will be examined for CFPB rules that:

  • Set qualification and screening standards for loan originators: A loan originator must be ethical and knowledgeable. They will need to: meet character, fitness, and financial responsibility requirements; pass criminal background checks; and complete appropriate training.
  • Prohibit steering incentives: Compensation for a loan originator generally cannot vary with the loan terms. A broker or loan officer cannot get paid more if the consumer takes a loan with a higher interest rate, a prepayment penalty, or higher fees.
  • Prohibit “dual compensation:” A loan originator cannot get paid by both the consumer and another person such as the creditor.
  • Protect borrowers of higher-priced mortgage loans: The required duration of an escrow account on higher-priced mortgage loans extends from a minimum of one year to a minimum of five years.
  • Prohibit the waiver of consumer rights: It is prohibited to bar consumers in their mortgage or home equity loan or related agreements from bringing a claim in court in connection with any alleged violation of federal law.
  • Prohibit mandatory arbitration: Mandatory arbitration of disputes related to mortgage loans is generally prohibited for mortgage and home equity loans.
  • Require lenders provide appraisal reports and valuations: Mortgage lenders will need to provide applicants with free copies of all appraisals and other written valuations developed in connection with certain mortgage loan applications.
  • Prohibit single premium credit insurance: Creditors will be prohibited from financing certain credit insurance premiums in connection with certain mortgage loans.

The CFPB is sharing with industry what it will be looking for in its examinations under the new rules by updating the applicable sections of the exam procedure manuals for two laws – the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA). These documents are intended for use by CFPB examiners and the financial institutions and mortgage companies subject to the new regulations. They are the first round of updates for what will likely be multiple updates.

The CFPB is committed to the mortgage industry’s compliance with the new consumer protections. Throughout 2013, the CFPB has been working for a smooth transition. It has published plain-language guides. It plans to educate the public about their protections under the new rules. And it plans to publish additional interim examination procedures. Within the next several months, the CFPB will publish its first round of exam procedures for the Ability-to-Repay and mortgage servicing rules.

The CFPB is coordinating with other federal government regulators that also conduct examinations of mortgage companies and financial institutions to ensure all regulators have a shared understanding of the CFPB’s new rules. This multi-agency effort includes the interagency development of exam procedures. For example, the TILA procedures released today are based on the approved Federal Financial Institutions Examination Council procedures. This interagency effort helps promote a consistent regulatory experience for industry.

OnlineEd SM LogoThe Interim TILA Examination Procedures can be found at: http://files.consumerfinance.gov/f/201306_cfpb_laws-and-regulations_tila-combined-june-2013.pdf

OnlineEd SM LogoThe Interim ECOA Examination Procedures can be found at: http://files.consumerfinance.gov/f/201306_cfpb_laws-and-regulations_ecoa-combined-june-2013.pdf

 

Once these and other exam procedures have been updated with the new mortgage rule requirements, the CFPB will incorporate all amended sections, including the TILA and ECOA sections, into its general supervision and examination manual.

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov. For more information about OnlineEd® please visit www.onlineed.com. For more information about the OnlineEd®  mortgage industry compliance management and education solution, InlineEd,  please visit www.inlineed.com.