The Consumer Financial Protection Bureau has proposed rules thatwould dictate to mortgage lenders the type of loans they would berequired to make available to borrowers, in an effort to helpconsumers more easily compare loan offers.
|The proposed rules, on which the CFPB is seeking comment throughOct. 16 and would finalize by January, would require lenders tomake available to borrowers a mortgage without discount points or origination points or fees,unless the borrower is unlikely to qualify for such a loan.
|The no points or fees option would help consumers decide whetherthey would receive an adequate reduction in monthly loan paymentsin exchange for the choice of making upfront payments, the bureausaid Friday.
|“Consumers have a hard time comparing loans when they aredealing with a bewildering array of points and fees,” said CFPBDirector Richard Cordray. “We want to provide consumers withclearer options and enable them to choose the loan that theybelieve is right for them.”
|The proposed rule would also require lenders to provide aminimum interest rate reduction when borrowers pay upfront pointsor fees.
|The CFPB is proposing changes that would require mortgage loanoriginators to meet character, fitness and financial responsibilitystandards, pass criminal background checks and meet new trainingrequirements.
|The proposed change would bring consistency to originatorstandards, which currently are subject to different rules dependingupon the type of lending institution, the CFPB said.
|Finally, the proposed rules would implement Dodd-Frank Act provisions that ban paying loan originatorsbased upon interest rates or loan terms, and prohibit includingmandatory arbitration clauses in loan documents and increasing loanamounts to cover credit insurance premiums for both mortgages andhome equity loans.
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