CFPB Proposes Doing Away With Points, Fees for Consumers

The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ is on a roll lately. On Wednesday ""the bureau proposed requiring that mortgage applicants receive notices of their right to free appraisals"":https://themreport.com/articles/cfpb-to-advance-rules-for-free-appraisals-2012-08-15.

On Friday, the agency offered up rules to reduce interest rates, do away with points and fees, and screen mortgage loan officers.

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In the first of a slew of new rulemaking proposals, the CFPB would require lenders to strip loans of their origination points and discount fees for certain consumers. Only those applicants unlikely to qualify for mortgage loans would be eligible to receive products with points and fees.

The second would task lenders with reducing interest fees for mortgage loans if borrowers elect to make upfront payments.

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""Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees,"" CFPB Director Richard Cordray said in a statement. ""We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them.""

A release reaffirmed several other proposals tougher on screening standards for mortgage brokers and originators.

Among those, the proposals would require background checks for loan officers and bar arbitration clauses for credit insurance practices. A release also affirms an earlier rule proposal by the Fed to block loan officers from steering borrowers into higher-priced mortgage products for reasons related to their pay.

""David Stevens"":http://www.mortgagebankers.org/DavidStevens.htm, president and CEO of the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm, applauded the rulemaking proposals as a ├â┬ó├óÔÇÜ┬¼├àÔÇ£good step├â┬ó├óÔÇÜ┬¼├é┬Ø in the right direction in a statement.

├â┬ó├óÔÇÜ┬¼├àÔÇ£Consumers benefit from a vibrant and competitive mortgage market with a diversity of players, and this rule, as it relates to loan originator qualification and screening, should ensure a level playing field for originators regardless of business model,├â┬ó├óÔÇÜ┬¼├é┬Ø he said.

According to the release, the public has until October 2012 to comment on the rules before the CFPB finalizes these in January 2013.

*Do you have an opinion about the proposals?* Give us your two cents by emailing us at [email protected].