Head CFPB Address LO Comp and Other Broker Issues

From Mortgage Daily: The man in charge at the federal regulator that oversees consumer financial transactions, including mortgages, participated in a webinar with mortgage brokers. He talked about the loan originator rule, integrated disclosures and licensing disparities between mortgage brokers and mortgage bankers. A rule that covers some of the concerns discussed, including appraisal issues, is expected to be finalized early next year.

Richard Cordray, director of the Consumer Financial Protection Bureau, participated in a webinar hosted by NAMB, the Association of Mortgage Professionals.

Cordray sees a resurgence in mortgage brokering.

“It’s gonna continue to be a very meaningful presence if people are gonna have broad access to loans,” the regulatory said in response to a question by NAMB’s host and President Don Frommeyer. “The wholesale broker community is going to be playing a very relevant role as part of that.

“As you’ve done for, you know, far beyond my lifetime.”

Many NAMB members asked about the loan originator rule, which Cordray answered by noting that the CFPB is assessing some aspects of the rule and some of its unintended consequences “and dial back some bits of it.”

He said that a final rule will be brought out by January 2013, though he was limited in his discussion since it is a pending rulemaking. A proposed rule is expected by this July, followed by a comment period.

“In terms of the core purpose of the rule, to ban yield spread premiums, that is something Congress dictated and that’s therefore going to hold,” he said.

Frommeyer read a question from an NAMB member that asked Cordray when the new Good Faith Estimate of Closing Costs and Truth in Lending Act disclosure will be coming out.

Acknowledging the frustrating nature of the dual-disclosure system, he said the simplified combined disclosure will be less burdensome for lenders and more helpful for borrowers — many that don’t read the dense, lengthy amount of paperwork involved in a mortgage transaction. The disclosure testing and proposing is in its “third iteration” in preparation for the July proposal.

The trade group’s members frequently asked about disparities in licensing between banks and non-banks, Frommeyer said.

“Very unlikely that we would have a standard set of licensing requirement[s] that would apply equally to banks and non-banks. They’re … different kinds of institutions, different kinds of requirements,” Cordray responded. “However … they’ll be held to a lot of the same principles and standards. There will be the rules that we adopt typically will apply both to banks and non-banks.

“So in terms of their compliance with the law, there is very much an effort to level the playing field between them.”

In response to an NAMB question about the HVCC and the appraisal situation, another CFPB official commented that the appraisal issue is part of the rulemaking process that is expected to be finalized by next January.

New rules being worked on by an interagency team that includes the CFPB address a variety of appraisal issues including compensations and standards.


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