CFPB weighs in on mortgage origination fees

The Consumer Financial Protection Bureau (CFPB) has emerged as an entity that cannot be ignored.

Like it or not, the relatively new bureau, headed by Richard Cordray, is taking its mandate seriously. At this point in its history, Elizabeth Warren would be proud, which is of course troubling to the banking industry. Executives perked up when the bureau said it would take a fresh look at overdraft fees and bank opt-in policies.

Now comes news that the bureau wants to regulate mortgage origination fees and require banks to charge a flat fee instead of a percentage of assets fee as well as to require banks to make clear that origination fees are distinct from the points people pay to lower their mortgage rate. This has long been an issue, and Dodd-Frank actually required some reforms in this area. The CFPB proposals are one possible solution.

Industry lobbyists are not happy, however, saying the proposals add confusion as they mimic similar proposals from the Federal Reserve. I am surprised that this issue was not covered in the recent settlement between top mortgage services and the state attorneys general. It would have been much less controversial if it had been. The industry should now perhaps put forward some solutions of its own.

Overall, one issue here has to be regulatory muddle. It would be nice if the regulators could all get on the same page with their proposals.

For more:
- here's the article from the New York Times

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