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Report: Cordray won’t exempt small lenders from new rule

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Mortgage Professional America | 19 Nov 2013, 09:37 AM Agree 0
A new rule that would require simplified mortgage paperwork reportedly won’t include an exemption for small lenders.
  • Stan Brody | | 19 Nov 2013, 10:10 AM Agree 0
    How does disclosing in full "burden" a lender? This cumbersome part here is the simple fact that only in the eyes and mind of a bureaucrat does 33-47 pages of confusing, indecipherable documentation constitute disclosure... the true burden on the system are the, well intended, clueless people at the CFPB... WHO CANNOT EXPLAIN the disclosures to clients...
  • Sandra Henderson | | 19 Nov 2013, 10:17 AM Agree 0
    Thanks to CFPB and the Leadership for having the mind and heart to be there " for the Consumer". We need more people in positions of Authority, willing see such needs and do something about them. Everyone should be under the same rules. Overall it is a good move.
  • Rob Lurer | | 19 Nov 2013, 10:23 AM Agree 0
    I don't know how one opposes "simplified mortgage paperwork". Is there a lobby group out there for complicated mortgage paperwork?
  • Christopher Brown | | 19 Nov 2013, 10:24 AM Agree 0
    Couldn't have said it better myself. I can't wait for the geniuses behind these and other rediculous requirements to apply for a mortgage and see how many documents it takes them before their eyes glaze over. Oh and god forbid they have a cash deposit or two. I know I can't wait for the day I make my first big drug, terrorist or money laundering bust!
  • Deb | | 19 Nov 2013, 10:33 AM Agree 0
    Nothing like beating a dead horse...all of us have had ample time to get ready for the new rules going into effect in January. I understand the new rules will create lending restrictions on smaller banks...but how is that a bad thing? Many small community and regional banks didn't survive the mortgage and real estate meltdown because they were far too lenient in lending due to their personal relationships with borrowers. The old "handshake and a smile" days are long gone, and need to be in the current financial environment. And many of those banks WERE
    "responsible for the abusive mortgage practices that led to these new requirements.” Overextending a borrower is an abusive practice, as is giving them ARM's when there is no way they can pay the full P & I or balloon payments when they are due. This piece of regulation, along with all the other changes coming, are much needed to create long-term stability in the mortgage and real estate markets.

  • Sheila S | | 19 Nov 2013, 10:56 AM Agree 0
    OYE. "Simplified paperwork" in the eyes of a lender and a bureaucrat (who can cry "we did not know" but likely really has an ulterior motive) are two different things. Have you seen how simplified the paperwork has become with the 250+? new financial laws that have "simplified" things to "protect consumers"? While I definitely agree that it was necessary to implement some level of oversight and detail, to avoid the mess created by the loose lending guidelines and lack of oversight prior, the politicians have used "consumer protection" as a guise to pad the pocketbooks of their lobbying friends. The big banks are the ones benefiting from the new rules and they definitely do whatever they can to attempt to scare the small lenders into joining forces with them in the name of "protection" (too much competition for the big banks with the lower overhead...making the big bankers look bad by offering lower prices and better service). If consumers could really see with transparency how the lower income borrowers are being forced away from the small lenders who care, into the large lenders who can make whatever they want doing their mortgages and who do not care, they would be livid. It is SO not about simplifying paperwork and disclosing properly. Most consumers these days know to use a lender they trust and to make sure they have proper disclosures. Not opposed to disclosing more. Just avoid the other 50 pages of legislation that goes along with it to "simplify" things and further the agenda of the politicians and their lobbyist friends. I know lobbyists who are (literally) ashamed!
  • Paul | | 19 Nov 2013, 10:57 AM Agree 0
    The problem withthe new rules are 2 fold. One theare not fair. the disclosures are different for small brokersthan the are for the baks who created the mortgage problems. And secondly most of what i have seen the real world does not in any way help a borrower. Would be great if they implemented essy to read disclosures. MOst borrowers cat getpast 4 pages much less 60..
  • John | | 19 Nov 2013, 11:09 AM Agree 0
    Don't be naive. This pile of new documents and regulations only hinder the process and will have a negative effect on the availability of Mortgage money. Typical Governement over-regulations. You have to be really foolish to believe that this is going to help anyone but the bureaucrats in Washington. Remember, this article pertains to small lenders, not the big banks. The small lenders fill a need but will be crippled by all the over-regulation.
  • Paul | | 19 Nov 2013, 11:20 AM Agree 0
    The real problem in the mortgage industry and our economic atmosphere as a whole is that the education system in the United States and abroad, as well as willingly ignorant parents, have failed our children. I'm shocked to see the complete and utter cluelessness when middle-aged and young folks come to inquire about real estate and mortgages. WHY!?!?! I talk to parents and educators alike who say that there is NO CURRICULUM within our schools that provides even a shred of worthy, basic mortgage and financing guidance for our children. And yet when the time comes, this monstrous financial decision will most certainly affect them for the rest of their financial lives either for better or worse. At the end of the day, while we are to be counselors to some degree, the onus is on the BORROWER to know WHAT they're signing, WHY, and to WHAT END!!! And if not for themselves, at least for the future of their families. All the rules and regulations in the world that these bureaucrats vomit upon us and ram down our throats will not fix the systemic issue of blissful ignorance. If the borrower does not understand, they should not sign, PERIOD! As a consummate professional in one of the most potentially satisfying industries on the planet, I'm tired of being blamed for the demise of lazy fools. I take issue with the comment "overextending a borrower is an abusive practice". WHAT!?!?! Since when does a lender overextend a borrower!?!?! Ultimately, whose decision is it to sign up for a life-altering debt?? I've never held a gun to a borrower's head nor have I coerced a borrower to sign something that I felt would harm them in the long run. Those that have done so should rightfully be punished, but the borrower is at fault too. If a human being cannot do a simple "within means" budget or get help to create one, there's no way in hell he or she should be financing a home. The honest should not be yoked with the burden of undue regulation so as to prop up the dishonest to keep them in business. Nor should we have our incomes decided by an inexperienced bureaucrat!
  • rick | | 19 Nov 2013, 11:28 AM Agree 0
    It is interesting reading the commentary above. You can pretty much determine who is a mortgage professional with the experience of trying to comply with what has now become a over regulated "gotcha" compliance mentality as compared to the non mortggae person who has no idea how complicated the regulations have become and that "every lender" is guilty for what happened in the melt dow. Also, has anyone ever heard a single government representative yet point a finger at themselves for assisitng in the meldown when you had to be hiding under a rock not to see what was coming?
  • Deb | | 19 Nov 2013, 11:44 AM Agree 0
    I have worked in mortgage lending, both for a broker and for a bank, and can tell you that at least two banks I'm personally aware of DID overextend borrowers by giving them mortgages on income properties when they didn't have reserves or income independent of the rental income to cover the mortgage. Of course the borrower bears responsibility too, but the bank should never have approved the applications. As a broker, I saw a lot of dishonesty and gaming to benefit the broker, not the borrower. I realize that many of those broker shops are rightfully out of business now, but the rules needed changing because of their dishonesty and unethical behavior. And yes, the government bears responsibility-a LOT of responsibility-for not listening to the warnings issued as early as 2000. I am very well aware of the complications that have arisen, and just like the Patriot Act has tightened restrictions on ALL citizens because of a few illegal actions, so too these regulations are only fair if they include EVERY institution and lender, not just a select group. There has been ample notice of the new regulations, and as with most other businesses, you either follow the rules or close up shop.
  • Ron Henderson | | 19 Nov 2013, 11:50 AM Agree 0
    Good probability this means another couple pages added to already bulky file. Simplified doesn't necessarily correlate with fewer. Plus the attorneys still need the substantial legalese in place... even if it's in the fine print...
  • MJ | | 19 Nov 2013, 12:17 PM Agree 0
    It seems to me that if they would just simplify the original documents, it would eliminate the need for additional paperwork to explain them.
  • Mark | | 19 Nov 2013, 12:22 PM Agree 0
    Small banks did not cause the mortgage crisis, greed from large corporations did. Small banks should be exempt if they keep the mortgage on their books, not for sale. This will add more paperwork which will not be read by almost all consumers. The more paperwork you have, the less consumers will read and understand.
  • Paul | | 19 Nov 2013, 12:44 PM Agree 0
    Feel inclined to say one more thing before I step off my soapbox and get back to WORK. BTW, I do not intend to denigrate anyone here. I do respect each of you and your vantagepoint. Simply stating my fervent opinion.

    Capitalism demands trust, trust demands truth, and truth demands knowledge. All i'm going to say is that yes, oversight is needed, but not tyranny. Not tyranny that says "I'm going to limit your income because I know what's best FOR you" or... "I'm going to determine what is or isn't risky FOR you" or even more aptly... "I'm going to orchestrate an unfair playing field wherein the small business model gets obliterated"

    The skeleton or bones of lending theory is simple. After a thorough vetting... the lender should assess the risk and convey it CLEARLY to the borrower. If the lender is willing to accept that risk for a price that the borrower is willing to pay, so be it. At that moment, borrowers must then make a decision as to whether it is good or bad for them. If they don't understand they should seek trusted counsel and gain knowledge to aid in the decision. If they still don't understand, either don't it or roll the dice. The decision is patently up to them as I said... for better or worse. The responsibility at that point is wholly and completely on the borrower's shoulders and consequences whether good or bad cannot and should not be transferred to anyone other than themselves. We already have, AND HAVE HAD FOR YEARS, copious regulation requiring disclosure. Beyond that, I personally do NOT see any room whatsoever in this particular business process for further rogue government intervention via more ridiculous rules and paperwork that only hinders what is really a simple process.
  • Are we safe yet? | | 19 Nov 2013, 01:12 PM Agree 0
    Buying a home is a big deal. If you need a nanny because you’re too lazy to learn about the process, you shouldn’t be buying a home.
  • NSA Ninja | | 19 Nov 2013, 01:17 PM Agree 0
    I love all the comments from the peanut gallery. For those who don't actually know what CFPB-simplification means, ask someone who works with ever-more confused consumers on a daily basis. Ask a mortgage officer or a recent borrower how the "new & improved", 3-page Good Faith Estimate compares with the old, 1-page GFE that contained more important details than the new, 3-page disclosure does. A regulatory behemoth, staffed with government employees who have zero experience in consumer finance & lending, cannot simplify that which they do not understand. Period.
  • NoSpinJustTheFacts | | 19 Nov 2013, 02:53 PM Agree 0
    Cordray continues his unrestrained mafia style bureaucracy. His hunger for power continues to haunt consumers. His calls for flat fee were proposed in the mortgage industry in April 2012. The consumer advocates as well as mortgage industry quickly identified this DISPARATE IMPACT policy. The CFPB incompetence was exposed and public exposure ended the flat fee financing SCAM.

    Time for consumer advocates and the automobile industry to expose Cordray's power grab and shut down the anti-consumer flat fee nonsense. The poorest consumers would be subsidizing the cost of larger auto mortgages.

    Wake up America. Cordray is anti-consumer and obsessed with power. Not surprising from a man steeped in politics of legal power. Look under the hood and you will see a man lacking integrity in respecting the power politically handed to him.
  • Paul | | 19 Nov 2013, 03:15 PM Agree 0
    NSA Ninja.... Peanut Gallery??? Unnecessary comment.
  • NSA Ninja | | 19 Nov 2013, 04:10 PM Agree 0
    Your opinion is noted, Paul. There are many things unnecessary in this world: 13,789 pages of regulations created by the 848-page Dodd-Frank Act come to mind immediately.

    Those who blindly support feel-good political rhetoric or a CFPB rule that they have not read, just because it is described as one that "simplifies" mortgage disclosures, aren't considering all that should be considered by responsible adults in a rational conversation. If this group of under-informed souls does not fully understand or care about the negative impact that virtually all CFPB regulations have had on consumers thus far, then, yes, I will accurately categorize their comments as belonging to the peanut gallery. Intelligent people should understand the topics they discuss and comment upon, else learn from business owners and others who have first-hand, real world experience with the mountain of harmful regulations that the CFPB continues to pile upon us on a regular basis.

    http://www.davispolkportal.com/infographic/july2013infographic.html

    Even Barney Frank has admitted that the law bearing his namesake has produced multiple, unintended and negative consequences for small business owners and consumers alike.

    If my opinions and comments are out of line for this forum, I'm quite certain that a moderator will regulate them accordingly. If my descriptive term for the under-informed, commenting collective offends you, Paul, it shouldn't. I am primarily & substantially more concerned about my valued borrowers and their unfettered access to the widest variety of beneficial mortgage products, with the least amount of unnecessary, confusing reams of federal disclosures, than I am myself or the easily-offended, lesser-informed commentators posting here.
  • Sue | | 20 Nov 2013, 09:32 AM Agree 0
    While I agree that there were definately some changes needed in the shark infested lending waters, I agree with Mark regarding the fact that the small lenders were not at the base of the problems. Small Banks and Credit Unions were not bailed out with billions of dollars. The money hungry banks are the ones who have muddied the waters for consumers and thus caused the CFPB to pounce on every aspect of lending be it mortgage or credit cards. Credit Unions are not for profit with no paid board of directors or stockholders. Credit Unions are there for their members. The more difficult the CFPB makes it for small credit unions to keep up with constant changes and ever increasing micromanagement, the higher chance of them having to end the lending programs that are vital to their members.
  • Kath | | 20 Nov 2013, 11:16 AM Agree 0
    I just read the new documents and I think they are great! Why on earth would a small Lender not want to use them? Do they actually enjoy explaining the disconnect between TIL's and GFE's? And explaining why the borrowers have to sign a second set of the same darned things at closing? These are pretty simple and make sense. Fewer forms printed, less papers to sign. What's not to like?
  • Tom P. | | 20 Nov 2013, 12:35 PM Agree 0
    The CFPB is nothing more than a Front - a little Dog & Pony Show since the New World of Housing and Mortgages was Green Lighted, firstly with the Formation of the NMLS a few back in 2008. ALL of the New Laws and Regs stepping stones. The key players have sights set on a much higher End Game; Read All you can about the Federal Reserve. How it was formed, over 100 yrs ago. Who its board members were and Are now (clues)! For starters - The Fed is a Private Company and Not a branch of the Government. Most if not All of the real Money decisions come from The 1% of Ultra Wealthy of the NWO. Stealing our Homes by Creating falsely AAA Rated Mortgage Backed Liar Loan/no income doc MBS paper, to create Pools of Bad Bonds to sell in Global marketplace - that ended up Bankrupting some small Countries and a Few Large (Greece) one's too. And Now making it twice as hard to Buy/Own a home again.......it is All part of their much bigger plans. Tyranny is alive and well here in America!
  • Sheila S | | 20 Nov 2013, 01:07 PM Agree 0
    So true Tom. Scary stuff. The Creature From Jekyll Island is a book on the creation of the federal reserve (only the most recent central bank). The federal reserve (setting monetary policy for the entire country and affecting the world? HEELLLLOOO!) is a PRIVATE COMPANY owned by some of the wealthiest individuals... most people have NO idea. I have been in finance for over 20 years and had NO idea myself until recently. WOW.
  • Tom P | | 20 Nov 2013, 02:42 PM Agree 0
    Yes, Sheila, very scary stuff indeed! Our Industry, Realtors included, NEED to shift their concerns to less worrying about how these policy changes are affecting their Incomes and try to wrap their grey matter around the Bigger picture. This has been in play for decades - an agenda the super rich have had for years. They've seemed to have perfected it in recent years though, starting with 9/11 on into the Mortgage Meltdown/Great Recession. All the Central Banks (ours changed name to Federal Reserve to sound like it was Part of our Gov, what a ruse) of the Major Countries around the World working together too, is scariest part! We All Need to Educate ourselves or we're going to wake up one day and say, WTF happened to Freedoms in America. I'm not talking about just ability to buy a home either......and like you said Sheila, seems like too many of us are way behind the curve of knowledge cuz few talk about anything more than how new policies and laws are taking food off their tables. If we all don't "catch up" soon they're gonna take away more than just the food......
  • Iddy | | 21 Nov 2013, 01:25 PM Agree 0
    Brokers and Bank have made a lot of home owners homless in America, people have lost Credit being, they will have to wait for 10 years to start again, too late may be dead of have heart attack due to stress.
  • Kath | | 21 Nov 2013, 04:53 PM Agree 0
    Sorry Ninja. Ms Peanut Gallery was talking about the new forms. They are soooo much better than the new and not at all omproved GFE. And it includes TIL info, thus eliminating that dreadfully confusing and outdated form. Small brokers that have complained for years of an uneven playing field should either rejoice now that everyone is in it together equally (hint of sarcasm there) or ponder the saying "be careful what you wish for". Now as for the forms: huge improvement!!!!!
  • gheinecke | | 26 Nov 2013, 09:12 AM Agree 0
    Do you work for a bank or you working as a small business owner? The area that you work in and do mortgages will really determine whether or not you are going to survive all this paperwork nonsense. Fact is if you are doing mortgages for 300k 400k and higher the reward is greater. Those that are trying to get a mortgage for 60k will see their homes depreciate to nothing because no one will want to finance these. Make 3%, pay a processor, a mortgage officer have a small discrepancy on an appraisal for which the banks hide behind third party companies that many have interests in and there you have it----the mortgage costs you money with liability. No reward for the risk!! Great job bureaucrats or is it bureau rats!!
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