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CFPB proposes rules to bring greater accountability to mortgage market

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  • Time4change | | 27 Aug 2012, 02:47 PM Agree 0
    CFPB = Waste of taxpayer assets and added confusion for consumers.
  • William Matz | | 28 Aug 2012, 01:59 PM Agree 0
    All of these proposals are dabbling around the edges. There are two overriding issues. The first is that there needs to be accountability for ALL originators, banks included (the "level playing field"). So long as banks can employ anyone as an originator (outside of convicted child molestors) without regard to technical competency or financial literacy and have no (e.g. fiduciary) duty to the borrower, there will be no overall improvement in the system.

    The second issue affects all originators. Mortgages need to be planned in the contextof an overall financial plan. Unless originators have legitimate financial credentials, they cannot recognize and communicate to the other financial advisors (attys, CPAs,CFP, insurance agents, etc.) the planning possiblities to ensure that borrowers get the right program and rate for their situation.

    While technical competence in mortgages is necessary, by itself that does not allow the originator to communicate with the other advisors, whose knowledge of mortgages is only enough to be dangerous. Therefore, the biggest change will come if originators have a basic familiarity with financial planning, insurance, securities, tax law, and estate planning. Not that they need to be experts, but they need to be able to point out mortgage options to borrowers and the other advisors to help implement. an overall financial plan.

    E.g. What good does it do a borrower to compare four lenders pricing on a 30-year fixed, if the best program for his plan is a 10/1 i.o.? In 2002-3, how many borrowers were told that by paying points at an historic low point in rates they could get 20 & 30-yr fixed jumbo rates in the 4's and 3's, ten years ago? The key to better originations is for originators to become true financial advisors, not just sales agents.
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