Consumer protection agency plans mortgage process overhaul for this summer
The Consumer Financial Protection Bureau is seeking to overhaul the borrowing process for homeowners. According to the New York Times, the agency, established last year, wants to make the mortgage application process more comprehensible to borrowers.
The goal: To give consumers a “good faith estimate” of a loan’s actual costs, and to limit the amount of closing paperwork to a single disclosure form, stating the interest rate, how that rate could change over the course of the loan and how much cash is needed at closing. The overhaul would also require mortgage servicers to simplify all its information regarding services and options for buyers under foreclosure. The Bureau hopes to implement the new rules this summer, though the agency could face political opposition — as it has been a target of more conservative legislators since its inception.
“We have an overarching goal here, which is to restore trust in the consumer financial marketplace,” Richard Cordray, director of the bureau, told the Times. “I don’t think we are just a regulatory body or just an enforcement body.”
However, the road to mortgage reform may prove difficult. Big Spring, Texas’s State National Bank has already filed a lawsuit, questioning the constitutionality of the bureau based on a technicality involving the appointment of Cordray during a Congressional recess. [NYT]