CFPB has changed mortgage industry
It was only a few short years ago that consumers suddenly felt the explosive effect of the collapse of the U.S. economy.
It was the “Boom!” heard round the world, and also the start of major changes to legislation and oversight of the American financial industry. As a result of the crisis, one huge step taken was passage of The Dodd-Frank Wall Street Reform and Consumer Protection Act — more commonly known as simply the “Dodd-Frank Act.”
That Act established a consumer watchdog agency known as the Consumer Financial Protection Bureau, the goal of which is to eliminate unfair, deceptive, or abusive lending practices across industries while simultaneously empowering consumers to take more control of their economic lives.
In January 2012, the president appointed Richard Cordray as director of the CFPB, and since that time the agency has taken major strides toward achieving those goals in many areas, including mortgage lending.
Since those changes began going into effect, it’s become common to see splashy headlines complaining that the CFPB has “too much” oversight, or is causing problems for the financial industries. But according to Rick Piette, owner of Premier Mortgage Lending in Las Vegas, “The key to it all is found right in the latter half of that statement: “causing problems for the financial industries.”
“On the other hand, it’s rare to find an instance where an American consumer has taken an issue with the CFPB’s practices. Why? Because these reforms are actually producing the desired effect: consumers are more empowered, better informed, and are finally receiving fair mortgage lending services,” he adds.
“In truth, the CFPB has changed the playing field in the mortgage industry, and one very clear result is this: Mortgage lenders are no longer all alike. Now, different laws govern mortgage brokers than those that apply to mortgage banks or mortgage bankers.
And while the titles may seem similar, this is what makes them very different: The rates and fees they are legally allowed to charge are not governed the same — and that can give borrowers a huge advantage.
Critical components of the CFPB’s role include encouraging borrowers to shop around for the best mortgage loan, and then providing guidance on how to easily compare the cost of those loans. Because of this — and the different laws that govern lenders — one thing consumers are discovering is that the best deal is often found by working with a mortgage broker.
“Before these new CFPB regulations went into effect, many mortgage lenders — including myself — had a business decision to make,” Piette said. “Should I continue as a mortgage broker, which would restrict my company’s earnings? Or switch to being a mortgage banker, where I could charge borrowers more money that I didn’t even have to disclose to them?
“For me, it was an easy choice. Because by remaining a mortgage broker, I realized I could actually achieve two important things.
“One, as I listened to what the CFPB was trying to tell lenders, it was clear that maintaining my status as a broker would be advantageous to Premier Mortgage Lending. I would not generate as much income as a mortgage bank or banker on each loan but I knew that borrowers would certainly prefer to pay less money for the exact same loan,” Piette said.
“But just as important to me was the ability to be completely up-front and transparent with my customers. We don’t have any hidden fees, or bury additional costs somewhere in the loan documents because we literally are prohibited by law from doing so; and that’s a conscious decision we made. So when buyers compare our traditional loans to other lenders, they discover that we are ultra-competitively priced because we charge no fees at all.”
For more information, visit KnowBeforeYouOweNevada.com to see the “Home Loans 101” informational videos. Or call the company at 702-485-6600, or online at www.PremierMortgageLending.com.
Premier Mortgage Lending, NMLS No. 393282, is at 701 N. Green Valley Parkway, No. 125 in Henderson. The full-service lender is a member of the Las Vegas and Boulder City chambers of commerce, Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association of Realtors.
