January 2015

CFPB Director Richard Cordray Announces "Know Before You Owe" Mortgage Initiative

3 min

On January 13, 2015, the Consumer Financial Protection Bureau (CFPB or Bureau) Director Richard Cordray spoke at the Brookings Institution in Washington, DC where he announced a new Bureau program called Owning a Home, which builds on the Bureau's ongoing "Know Before You Owe" initiative. The new program, as Cordray explained, responds to recently compiled data from the National Survey of Mortgage Borrowers report, indicating that consumers rarely shop for a mortgage and may have difficulty weighing the economic aspects of the decision to get a mortgage. Cordray also noted findings that show a lack of consumer confidence, coupled with the complexities of evaluating a mortgage loan as key factors preventing consumer engagement.

The Owning a Home initiative will begin this summer. Director Cordray stated that the Bureau will also be introducing a new, more consumer-friendly edition of the mortgage application booklet. The Owning a Home initiative will also include a tool that will allow consumers to determine likely interest rates offered in their geographic area and tied to their specific credit score.

Director Cordray explained that the CFPB has worked to restore consumer confidence in the mortgage market in the wake of the financial crisis. This includes new mortgage rules such as the Ability to Repay Rule or Qualified Mortgage Rule (QM Rule) and the new Owning a Home initiative.
In addition, Cordray addressed some other issues.

Consumer Complaint Database:

Director Cordray acknowledged the criticism of the Bureau's consumer complaint tool, in particular its public posting of consumer complaints and anecdotes. He noted that the consumer complaint function was mandated by Congress through the Dodd-Frank Act, and is becoming an increasingly important source of information for the Bureau, companies, and consumers. In particular, he stated that the CFPB looks to consumer complaints to guide and focus its enforcement efforts.

Transparency and Feedback:

Cordray stated that the Bureau works to be accessible and transparent. Further, he noted that the Bureau responds to concerns and feedback regarding its rules in practice – for example, through its adjustments to the mortgage rules.

Arbitration Clauses in Consumer Finance:

Cordray stated that the Bureau's finalized study of arbitration clauses in consumer finance agreements, mandated by the Dodd-Frank Act, will be forthcoming in the "fairly near future."

Mortgage Servicing:

Cordray highlighted the Bureau's continued focus on mortgage servicing, noting that the CFPB has set out uniform rules and will continue its supervisory and enforcement efforts in this area, as well.

Student Loan Debt and First-Time Homebuyers:

Director Cordray noted his concern that student loan burdens may be contributing to the slower rate at which the housing market is recovering after the financial crisis.