The CFPB on Friday proposed a rule that would require lenders to offer a no-point, no-fee mortgage loan option so consumers could more easily compare loans with various combinations of points, fees and interest rates. Lenders also would be required to reduce interest rates when consumers elect to pay upfront points or fees.
Under Dodd-Frank, mortgages that require the payment of upfront points and fees are generally banned. However, the CFPB proposal used the bureau’s exception authority to allow creditors to continue to offer such loans, as long as they also make available the no-fee, no-point alternative.
The CFPB had considered allowing a flat origination fee but dropped the idea after listening to consumer and industry experts, including ABA.
The proposed rule also would set qualifications and screen standards for mortgage-loan originators; prohibit paying steering incentives to originators; and place restrictions on arbitration clauses and the financing of credit insurance. The comment deadline on the proposed rule is Oct. 16.
Read the CFPB's announcement.
Read the CFPB's summary of the proposed rule.
Read the proposed rule.