Feb 10, 2015
Controversial Rate Checker Tool Tweaked
Under strong criticism from the Mortgage Bankers Association and other industry trade groups, the Consumer Financial Protection Bureau made tweaks to its controversial Rate Checker consumer tool.
But MBA President and CEO David Stevens said the tweaks do nothing to resolve “fundamental flaws” with the tool and continue to provide “misleading” information to consumers.
On January 13, the CFPB unveiled this new borrower education tool on its website (Click Here for Rate Checker) ostensibly to help consumers be better informed of rates and other costs when shopping for a home loan. CFPB said this Rate Checker tool will allow consumers to “see what interest rates people with similar financial situations have been offered.”
The tool uses a credit score, state; property location and a down payment percentage to generate an estimate for a borrower of rates available.
The website which indicates rate information for the rate checker is provided by a private firm who collect data from “actual lenders and is updated every business day.” “When the imprimatur of the government is associated with particular data, the public assumes the data are complete and accurate. However, the lenders’ rates incorporated in the tool include only a mix of large banks, regional banks and credit unions. Notably, rates from independent mortgage banks do not appear to be included in the data. Similarly, discount points, origination fees and mortgage insurance are not included, yet are a significant part of the cost of residential finance–and are critical for any website that purports to be a comprehensive borrower decision tool.”
Source: Mortgage Bankers Association