Mortgage Compliance Regs Overkill?

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CFPB and Mortgage Compliance
CFPB and Mortgage Compliance

Going from a wide open mortgage industry that had virtually no regulation and that was referred to as the “wild wild west” to a highly government regulated industry is bound to have its share of growing pains.  The mortgage world has seen far more than it’s share of growing pains.  Once we got through the majority of the changes and the smoke cleared, I for one was in favor of this new world.  The new regs protect consumers (or at least try to) and they narrow down the number of lenders out there taking advantage of unsuspecting consumers.

Have we gone too far?  Yes – but what is the other option?  In a world that is anything but perfect the other option is not going far enough.  Pick your preference.  Where do you draw the compliance line these days?  The CFPB – who is now in charge of enforcing RESPA guidelines (has been since July 2011) and whose mission is to protect consumers – is on the hunt to sniff out industry violations large and small.

CFPB Watching it All

The CFPB is looking in every drawer and under every door mat for a violation or even just the relative of a violation if you catch my drift.  Try this on for size – the CFPB is now stating that lenders CANNOT list minimum credit score requirements on their websites and marketing materials.  They say it is misleading.  In my humble opinion leaving a minimum credit score as a mystery is misleading.  So how can the CFPB say it’s misleading or better yet “discouraging.”  Their claim is that a consumer may see a minimum credit score and:

1. Not apply due to the fact that they think their credit scores may be lower than they really are
2. Not apply knowing they have a low credit score however a loan officer may have been able to help them improve their credit

If you keep an open mind (and look fairly at both sides) it is possible to see the CFPB’s point of view.  It is fair to make an argument for either side.  In the end, the CFPB’s argument holds a lot more weight than mine so we bow to the almighty mortgage police and stay out of pin stripe jumpsuits.

By Jeremy House

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