We got here one mortgage at a time

by KERRI PANCHUK

September 15th, 2011, 1:49 pm

Raj Date, special adviser to the Consumer Financial Protection Bureau, pulled the bureau into a more public role when addressing the National Constitution Center in Philadelphia on Thursday. Date told the crowd one of the CFPB's chief goals is to oversee the mortgage lending space by fleshing out and enforcing mortgage rules drafted in the Dodd-Frank Act passed in 2010. Date took over as special adviser to the Treasury secretary on the CFPB and as acting leader in the wake of Elizabeth Warren's departure in August. President Obama nominated Richard Cordray, a former Ohio state attorney general, to serve as the agency's director last month.

But with Cordray not yet confirmed by the Senate, Date is the agency's most public leader in the wake of Warren's departure. "We are the first agency accountable for making sure that consumer finance markets work for American families," Date told the Philadelphia crowd. "To carry out that mission, the law gives us a wide range of tools — from supervision, to rulemaking, to research, to financial education, to enforcement, to the ability to handle consumer complaints." He stressed that the "Know Before You Owe" campaign continues to be deeply entrenched in surveying the marketplace and analyzing feedback on sample mortgage disclosure applications.

Date stressed oversight of the mortgage space remains a top concern. "The Wall Street Reform Act requires us to tackle some tough problems with tight deadlines," Date said. "In particular, in the first stages of the bureau’s life, the law lays out a specific agenda in a specific market — mortgages. And that makes sense. First, the mortgage market is enormous. At some $10.4 trillion, it’s more than 10 times the size of the next biggest consumer lending market, and more than twice the size of the consumer deposit market." Date stressed that fixing the mortgage space will be a tough job since excessive home lending became the "epicenter of the global financial crisis." "The truth is we got into this mess one lousy mortgage at a time," he said.

CFPB - Round 4 - New TIL/GFE Form Prototypes

by Wyatt Bell | 2011/09/13 |

The CFPB has issued the 4^th round of proposed changes to the TIL/GFE combined format. These may be viewed at CFPB website: Know Before You Owe

Wyatt Bell's Blog ::

Any thoughts that "itemization" may reappear for title fees and policies have ended in the latest revisions to the proposed GFE forms.

Round4-jasmine

Round4-nandina 

Notice that items A through F have been discontinued in this version of the forms. Items A through F, which appeared in previous versions, would have corresponded with the GFE# numbering system currently in use.

It may be that the CFPB understands the enormous cost of implementing new HUD calculations and forms and is dovetailing into the current HUD 1/1A forms for minimal changes. I would expect the Department of Housing and Urban Development (HUD) to begin entering the picture with new HUD 1/1A forms which will still need revision to fit with the proposed changes.

After all the energy expended in explaining the difficulties with "non-itemization" it appears the "non-itemization" proponents have won!

Keep in mind the forms are the same. The differences are in the loan quote information. The Nandina has the lower "Estimated Cash to Close" while the Jasmine has the lower APR. If one is looking at out-of-pocket they may be tempted towards the higher cost loan which is counter-intuitive. This example has a mere $88.00 difference in "Estimated Cash to Close".

However, in the real world as the "Estimated Cash to Close" vs. the loan terms becomes wider it will be more difficult to choose. Does one pay more at settlement for less payments??

That's the problem with these prototypes. The terms are framed very simply - there's no empirical evidence that these forms will result in prospective borrower(s) choosing the most favorable loan terms! Many other factors are at play, especially since "non-itemization" hides potential advantages!

And it must also be considered that even though the Nandina APR is higher it may, indeed, turn out to be lower! The adjustment begins at the 4th year which means the interest rate could actually be lower from years 4, 5 and 6 whereas the Jasmine is stuck at 3.75% for the full 7 years. Just look at the bond market for the last 30 years - interest rates have been on a downtrend the whole way! And with The Fed stating they are holding rates at or near 0% into 2013 one could arguably go for the higher loan APR.

The APR adjustment is based upon the assumption that the initial rate will increase which is not always the case. How much refi business has been generated over the last 2 decades because rates decrease?

CFPB Changes Course with Mortgage Disclosure Consolidation

September 13th, 2011  |  by Alyssa Gerace Published in News, Reverse Mortgage

MBA Requests Meeting With Warren On RESPA And TILA