CFPB Sets Sights on Predatory Lending

by 10 May 2012

(CNNMoney) -- The federal government is considering a new set of rules on mortgage origination that it says would make the process simpler and more transparent for borrowers.

The Consumer Financial Protection Bureau, created as part of the Dodd-Frank financial reform law, said Wednesday that the new rules will focus on mortgage points and fees, the current complexity of which can make it difficult for home-buyers to assess different loan offers. The rules would also include new standards for officials in charge of mortgage origination.

"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," CFPB head Richard Cordray said in a statement.

Mortgage origination is thought to have played a key role in the housing crisis, as so-called "predatory lenders" steered borrowers into complicated loans that they couldn't afford, which later went bust in large numbers. Originators are a focus of the Obama administration's mortgage crime task force, announced in January.

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COMMENTS

  • by Shelby Brannon | 5/16/2012 10:57:15 AM

    The CFPB would rather scrutinize the font size on TILA disclosures than to help consumers track down their mortgages that’ve been traded into obscurity. Certainly they were&are some bad actors in the business, as there are anywhere. But the financial crisis was not caused by consumers getting duped into bad mortgages. It was what happened after escrow: the buying and selling of those mortgages, and lumping them into junk derivatives, where the real fraud occurred.

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