CFPB's Best Intentioned Mistake

In an effort to try to help consumers understand mortgage options when buying a home, the CFPB (Consumer Financial Protection Bureau) has created the most misleading and inaccurate tool that will do anything but help prospective home buyers.

The tool, https://www.consumerfinance.gov/owning-a-home, is located on a web page that actually gives a lot of really good advice to new home buyers. It encourages them to shop for a loan with more than one lender to make certain they are getting the best options and encourages them to use trusted service providers for the closing process, and more.

Unfortunately what they have also done is post a mortgage shopping tool that violates the mortgage disclosure requirements that they have put in place for lenders to follow in order to protect and fully disclose the full costs of a mortgage to a consumer. That's right, the very agency tasked with setting forth the policies that lenders in the US must comply with when disclosing a loan to a prospective borrower has done just the opposite on this new website "tool".

Annual percentage rates, mortgage insurance premiums for FHA, or private mortgage insurance for a Freddie Mac or Fannie Mae loan, application fees, lock terms, appraisal costs, title insurance estimates, and more are completely missing from this tool. What is of the most concern is that the CFPB has been working hard to get consumers to look beyond just the rate in order to truly understand the total costs of a mortgage and yet has just put a "tool" on their website that only discloses base rate and nothing more.

The best intentions are clear - but this was done with no consideration for the precise compliance obligations (respa/tila ) and disclosure objectives (UDAP) that this same federal agency has been trying to implement.

The CFPB should take this misleading shopping tool down and focus on providing a resource that encourages the borrower to shop more than one lender and make certain they understand the base rate and all other costs and terms. Simply put -the tool needs to be removed but the site itself should be supported for the good advice it otherwise provides.

Concerned individuals, especially those with knowledge about how misleading this really is, should email the bureau directly and state their concerns at: [email protected] with subject line rate tracker.