The Consumer Financial Protection Bureau has outlined rules under consideration that would change the way institutions charge mortgage points and fees.
The agency expects to propose the rules this summer and finalize them by January 2013.
Proposals outlined this week include requiring an interest rate reduction when borrowers pay discount points, which would include a reduction minimum. Lenders would also have to offer a no-discount-point loan option, so consumers could better compare competing offers. And, the CFPB would ban origination fees that vary with the size of the loan. Instead, creditors could only charge a flat origination fee.
“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” CFPB Director Richard Cordray said in a release. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
In addition to regulating origination points and fees, the CFPB is also considering tackling mortgage loan originators' qualifications and compensation. Loan officers would be considered originators under the rule, and all types of loan originators would have to meet current standards required of originators that work at institutions, brokerages and non-profits.
The CFPB is additionally considering reaffirming the Federal Reserve Board's rule that bans loan originators from directing consumers into higher priced loans because they could earn more money, and basing loan originator compensation on interest rates or certain other loan terms.
The bureau said it plans to engage a Small Business Review Panel that will meet with small financial services representatives to provide an overview of the proposals under consideration and a list of questions for input. The bureau said the panel will issue a report summarizing this feedback, which the CFPB will consider when formulating the proposed rules.
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