Attention: Monica Jackson
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 200522
RE: Request For Information On Adopted Regulations and New Rulemaking Authorities
Dockett No. CFPB-2018-0011
We are writing as Independent Mortgage Bankers (IMBs) to call for consideration of previously adopted regulations.
First, the Bureau should clarify and amend the form that provides that title policy fees are to be shown as fully paid by the consumer. This is not a requirement, but a negotiated provision in purchase agreements. In fact, in some states by custom, the seller pays certain title fees.
The result of the Bureau’s current rule is a gross inflation of the true amount of closing costs that the consumer is required to pay, which directly contradicts the purpose of Reg Z. The fees to the buyer should be shown as truly charged. If the contract changes, then this is a valid change of circumstance and the consumer would have the choice to not move forward with the new contract terms. Forcing these fees to be inflated, serves no purpose.
Second, there should be an opportunity to cure the Loan Estimate within the three-day window if the changes are valid and appropriate for the loan. Currently there either is no opportunity to cure or the overall perception that it is against the rules to cure. Regardless, investors will not purchase such loans, and lenders must hold the loans on their books when most are not equipped to service loans properly, causing other issues for the consumers. (Or, such loans are sold on the “scratch and dent” market at a substantial discount of the true value of the loans.)
The Bureau should consider fixing this problem and there are several possible remedies that would continue to protect the borrower:
1. Allow the loan, but require that a commensurate amount of the lender fees be waived; and/or
2. Allow the loan with the changes, provided the new charges benefit the borrower.
In either case, the harm to consumers is non-existent. Further, the borrower is not bound by the change in fees since the borrower can choose to go to a different lender. In the end, allowing these loans to be closed and sold on the conventional market, will benefit the borrowers by having a more predictable process such that the lender can charge lower fees or a lower rate.