New Consumer Financial Protection Bureau Rules will Help Protect Consumers
By Cal Haupt, president and CEO of Southeast Mortgage
Earlier this month, the Consumer Financial Protection Bureau (CFPB) announced their proposed rules to protect homeowners and increase mortgage servicer accountability. The CFPB asked consumers, a Small Business Review Panel and mortgage industry professionals for their input while developing their proposed rules. The public has 60 days, until October 16, 2012, to review and provide their comments.
In May, I wrote about the uneven playing fieldfor mortgage loan originators (MLOs).Under the current rules, Bank and Savings Bank MLOs must be only registered with the Nationwide Mortgage Licensing System. But MLOs that aren’t employed at an FDIC insured bank or savings and loan must comply with more stringent rules that provide additional protection for consumers.
MLOs at businesses like Southeast Mortgage must qualify for a state license, a process that includes a background check, passing state and national exams, 20 hours of pre-licensing education, eight hours of continuing education a year, and Character and Fitness Requirements: All loan originators would be subject to the same standards for character, fitness, and financial responsibility. Consumers should feel confident that they are working with an MLO that are responsible in their own financial matters. Southeast Mortgage MLOs complies with current and proposed rules.
Inequity in consumer protection between Bank and Non-Bank MLO requirements could be solved by the proposed rules. The CFPB proposed rules to implement Dodd-Frank Act requirements that all MLOs be fully qualified. This proposal benefits all businesses in the mortgage industry as well as the consumer. With all MLOs subject to character and fitness requirements, criminal background checks and training requirements, the consumer can be confident any originator they work with will be ethical and knowledgeable.
In June, I applauded the CFPB’s efforts to combine the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one easy-to-understand form. The new form is open for public comments until November 6, 2012. You can view the proposed document here.
The CFPB is continuing efforts to help demystify the mortgage industry. The newly proposed rules include a requirement that lenders make a no-point, no-fee loan option available to consumers. Comparing loans can be difficult for consumers, who don’t fully understand the different combinations of points, fees and interest rates. This new option simplifies the process for consumers by helping those buying or refinancing better compare offers.
We’ll be making our own comments to the CFPB. If you’d like to make a comment, or learn more about what the CFPB does, please visit http://www.consumerfinance.gov/notice-and-comment/.