MBA Warns CFPB Against Unnecessary Reforms to Mortgage Rules

MBA’s President and CEO Bob Broeksmit, CMB, released the following statement on the Consumer Financial Protection Bureau’s (CFPB) blog post Friday morning on housing costs:

“The CFPB’s blog post is baffling and reveals little understanding of how the mortgage market works or awareness of its own regulations that provide for full fee transparency and limits on what can be charged.

The fees mentioned are clearly disclosed to borrowers well before a home purchase on forms developed and prescribed by the Dodd-Frank Act and the CFPB itself. The illogical use of the term ’junk fee’ contradicts even the White House’s own definition, which cites the lack of disclosure of the fee being charged.

Any suggestion that this disclosure regime is unfair and rife with junk fees defies the CFPB’s own analysis. In 2015, the industry implemented the Bureau’s “TRID” rule, which comprehensively reformed mortgage disclosures. In 2020, the CFPB issued a report praising its own rule for improving ’consumers’ ability to locate key information, compare terms and costs between initial disclosures and final disclosures, and compare terms and costs across mortgage offers.’ 

There are CFPB-imposed limits on fees that lenders can charge, and the services covered by these fees are integral to the efficient operation of the mortgage market. These services are also required by federal statutes, the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and Fannie Mae and Freddie Mac as a condition of buying and insuring/guaranteeing a mortgage. Consumers and taxpayers benefit from services like appraisals that validate a home’s purchase price, flood hazard certifications that determine whether a home is in a risky flood zone, title insurance that protects the borrower’s ownership interest in the house being financed, and credit reports that make it possible to objectively assess a borrower’s ability to repay. 

We share the CFPB’s concern regarding rising costs of the tri-merge credit reports and other credit reporting products and urged the Bureau in late 2023 to examine the drivers of these cost increases to ensure transparency. We also share the Administration’s desire to help more Americans become homeowners. The best way to do so is with policies that build more affordable housing and encourage a robust housing market. 

MBA is eager to continue working with the Biden administration in these efforts but will vigorously oppose politically motivated proposals that only increase regulatory costs, reduce competition, or otherwise make it more difficult for Americans to get the credit necessary to achieve homeownership.”