There is a lot of pressure on the industry to adhere to the policies of the CFPB. But what happens when those policies aren’t clear? Guess what, in this case, the CFPB should listen to the industry. For example, The Association of Mortgage Professionals has called upon both the Consumer Financial Protection Bureau (CFPB) and Federal Housing Finance Agency (FHFA) to further clarify the “Know Before You Owe” real estate disclosure forms. NAMB is asking the CFPB and FHFA to include a new line item that clearly states the guaranteed-fees (G-fees) from Fannie Mae and Freddie Mac and Loan Level Price Adjustments (LLPAs). NAMB is seeking further transparency in the mortgage process as both the G-fees and LLPAs are currently incorporated into underlying rates paid by borrowers at the closing table.
“NAMB supports the removal of LLPAs going forward because of the increase in mortgage credit quality and improved industry risk management practices,” said NAMB President Rocke Andrews, CMC, CRMS in the letter. “We ask the agencies to go a step further and require disclosure of these fees to consumers. In the alternative, provide mortgage market participants a regulatory safe harbor framework to voluntarily disclose these fees to consumers.”
In a letter dated April 28, 2016, CFPB Director Richard Cordray acknowledged complaints and concerns relating to its “Know Before You Owe” rule, also known as the TILA-RESPA Integrated Disclosure (TRID) rule, and stated its plans to seek input from industry trade groups on making updates to this federal policy.
“The CFPB should use this opportunity to disclose to the consumer the hidden tax G-fees represent,” said Andrews. “Such disclosure will help consumers understand, in certain cases, why their rate is higher than normal and help consumers make better decisions. Consumers deserve to know that a portion of the cost of financing a new home will be used to finance federal spending not directly related to homeownership.”
The CFPB has targeted a July 2016 release for the revised “Know Before You Owe” disclosure.