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CFPB announces leadership additions and changes

Posted in CFPB People

Last Friday, the CFPB announced the following additions to its senior leadership team:

  • Leandra English will serve as the CFPB’s Deputy Chief Operating Officer.  Ms. English previously served as a senior advisor and chief of staff to the Office of Management and Budget’s Deputy Director of Management.  Before joining the OMB, Ms. English helped to launch the CFPB, working in a number of senior leadership roles including deputy chief of staff.
  • Agnes Bundy Scanlan will serve as the CFPB’s Northeast Regional Director of Supervision Examinations.  Mrs. Bundy Scanlan previously worked as a senior risk advisor at Treliant Risk Advisors and as the Chief Compliance Officer at TD Bank.
  • Jeffrey Sumberg will serve as the CFPB’s Chief Human Capital Officer.  Mr. Sumberg  previously worked as a senior leader in the human capital practice of Deloitte Consulting and as a senior executive with the U.S. Office of Personnel Management where he directed human capital programs.

In its announcement, the CFPB confirmed that Anthony Alexis will become the CFPB’s Assistant Director of Enforcement.  Mr. Alexis previously served as Acting Assistant Director of Enforcement and replaces Kent Markus, who will become Senior Counsel to CFPB Deputy Director Steven Antonakes.   (Our previous report about these changes incorrectly stated that Mr. Alexis’s new title would be Director of Enforcement.  While the CFPB’s announcement indicates that his title will be Assistant Director of Enforcement, he will continue to lead the CFPB’s Office of Enforcement.)

CFPB finalizes amendments to TILA/RESPA integrated disclosures rule and loan originator rule

Posted in CFPB Rulemaking, Mortgages, TILA / RESPA

On Tuesday, January 20, the CFPB promulgated its first final rule of 2015, a series of minor amendments to the TILA/RESPA integrated disclosures (TRID) rule.  The substantive changes to the TRID rule are (1) an extension of the time period to issue a revised Loan Estimate when an interest rate moves from floating to locked, and (2) a provision for disclosing that a creditor has reserved its right to issue a revised Loan Estimate for loans funding new construction.

As originally adopted, the TRID rule required creditors to provide a revised Loan Estimate the very same day that a consumer locked a floating rate.  This differed from the general requirement under the TRID rule, which required creditors to issue a revised Loan Estimate no later than three business days after learning of a change that necessitated a revision.

The industry advised the CFPB that the requirement to issue a revised Loan Estimate on the date of the rate lock would not only present significant operational burdens, but also would result in changes to lock-in policies that would be adverse to consumers.  In short, creditors would have to set deadlines to lock rates very early in the day if a revised Loan Estimate had to be issued on the date of the lock.

When the CFPB proposed in October 2014 to revise the time frame, it proposed to require creditors to issue a revised Loan Estimate no later than the business day after the consumer locked the rate.  The industry advised the CFPB the time frame still would present operational burdens and result in unfavorable changes to lock-in policies.  In the end, the CFPB amended the TRID rule to allow three business days for creditors to prepare and provide a revised Loan Estimate when the rate moves from floating to locked.

The second of two substantive amendments to the TRID rule applies only in the context of loans for new home construction where consummation is expected to occur at least 60 days after the creditor issues the initial Loan Estimate.  With respect to these loans, the TRID rule permits a creditor to reserve the right to issue a revised Loan Estimate any time prior to 60 days before consummation, as long as the creditor includes a statement to this effect in the Loan Estimate.  For most loans, however, the Loan Estimate will be a standard form that cannot be revised except as expressly permitted by the TRID rule; the original TRID rule did not provide for where in the Loan Estimate such a statement could be included.  As indicated in the preamble to the October 2014 proposed rule, the Bureau’s failure to provide a space for this statement in the original TRID rule was an oversight.  The amendment allows for the statement to be included in the “Other Considerations” section on page 3 of the Loan Estimate.

The final rule also includes a conforming change to the loan originator provisions in Regulation Z section 1026.36.  Among various requirements, the loan originator provisions require certain loan originator identification information (name and NMLSR ID) to be included in specified loan documents.  When the CFPB originally adopted the requirement, it decided not to require that the information be included in the existing TILA and RESPA disclosures.  The CFPB knew that the existing disclosures would soon be replaced by the disclosures under the TRID rule, and it decided not to require that the existing disclosures be modified to provide for the disclosure of this information.  The conforming change revises the disclosure requirement to provide for the loan originator identification information to be included in the disclosures under the TRID rule.

The balance of the final rule is comprised of non-substantive corrections to the TRID rule.  The amendments, including the single addition to the loan originator rule, will become effective on the same date as the TRID rule—August 1, 2015.

FTC continues to press concerns about credit report accuracy in follow-up report

Posted in Credit Reports

A follow-up report on credit report accuracy issued this week by the Federal Trade Commission is likely to be cited by the CFPB as additional support for the CFPB’s concerns about inaccurate credit reporting.  In December 2014, that concern resulted in the CFPB’s imposition of a new requirement on major consumer reporting  agencies to provide regular “accuracy reports” that identify furnishers with the largest number of consumer disputes.

The FTC’s report is a follow-up to its 2012 study in which approximately 1,000 consumers reviewed for accuracy their three credits reports from the three major nationwide CRAs.  Study participants who initiated a dispute with a CRA were provided with new credit reports and credit scores after completion of the FCRA dispute process.  The new credit reports were then compared to the old reports to assess whether the CRAs had modified the reports in response to the disputes.  In the follow-up study, the FTC looked at the “reinsertion rate,” meaning the frequency with which previously removed negative information reappeared on a credit report.  It also looked at whether consumers continued to allege inaccuracies after the CRA verified the disputed information as accurate, whether consumers recalled receiving notifications from the CRA when information was not modified, and whether consumers planned to continue their disputes.  (The FTC uses the term “unresolved dispute” to refer to a dispute in which the CRA disagreed with the consumer’s alleged inaccuracy.  While the FTC acknowledges that it “recognize[s] these disputes are only potentially unresolved from the consumer perspective,” use of the term “unresolved” creates an implication that the CRA can be faulted for not completing the dispute process.)

The FTC study indicates that its contractor interviewed 121 (or 68%) of the 179 participants in the main study with unresolved disputes.  The FTC states that it “performed some basic statistical analyses to show that the follow-up interview sample of consumers is generally representative of the type of disputes filed by the population of participants in the main study.”  Based on the follow-up interviews, the FTC made the following findings:

  •  Of the 121 consumers who had at least one unresolved dispute, 37 consumers (31%) stated that they now accepted the original information as correct, thus accepting the decision of the CRA.
  • 84 consumers (almost 70%) still believed that at least one piece of previously disputed information was inaccurate.  Of those 84 consumers, 38 consumers (45%) planned to continue their dispute(s), 42 consumers (50%) planned to abandon their dispute(s), and 4 consumers (5%) were undecided.
  • The most common reason given for abandoning the dispute process was that consumers felt that the inaccurate information was not important or the consumer was not interested in pursuing the matter (40%).  For another 23% of the unresolved and abandoned disputes, the consumers indicated that they did not have enough time to continue the dispute.
  • Of the 121 consumers who had at least one unresolved dispute,  49 consumers (40%) stated that they did not receive a notification from the CRA that the item was not changed.  Of the 56 consumers who stated they received a notification, over half (29 consumers) stated that no explanation was provided by the CRA for the lack of modification.  (The FTC acknowledges “the possibility” that some portion of the consumers who claimed they were not notified “in actuality may not remember receiving the notice or may have thrown away the notice as ‘junk mail’.”  It also acknowledges that the notification received by some of the consumers claiming they did not receive an explanation “may have officially included an explanation.”)
  • Of the 202 consumers who received modifications during the original dispute process and whose reports were redrawn a year later, 2 consumers (1%) each had one previously removed negative information item reappear on their credit report.  While acknowledging that it found reinsertion to be “relatively rare,” the FTC nevertheless comments that the “continued presence of the reinsertion issue suggests that consumers, the CRAs, and policymakers must remain vigilant regarding the reappearance of negative information.”

The FTC states that although its follow-up findings are “interesting,” it is not currently recommending any specific legislative action on credit report accuracy “due to the relatively small number of consumers who participated in the follow-up interview.”  However, the FTC still concludes that the study’s findings justify the following recommendations:

  • CRAs should review and improve the dispute results notification process to ensure that notices and explanation of investigation results are provided to consumers.
  • CRAs should continue to explore efforts to educate consumers regarding their rights to review their credit reports and dispute inaccurate information.
  • Consumers should continue to examine their credit reports annually and follow the FCRA dispute process when inaccuracies are identified

House Financial Services Committee approves oversight plan; Committee chair gets new subpoena authority

Posted in CFPB General

The House Financial Services Committee voted unanimously today to approve the Committee’s oversight plan for the 114th Congress.

The plan provides that the Committee intends to continue its close examination of the implementation of Dodd-Frank by the financial regulators.  With regard to the CFPB in particular, the Committee intends to oversee the CFPB’s regulatory, supervisory, enforcement and other activities, the effect of such activities on regulated entities and consumers, and the CFPB’s collaboration with other regulators.  The Committee also intends to examine the CFPB’s governance structure and funding.

Specific issues on which the Committee intends to focus include:

  • Mortgages: the Committee plans to closely review the rulemaking by the CFPB and other agencies and monitor the coordination and implementation of such rules and their impact on the cost and availability of credit
  • Credit scores and credit reports: the Committee plans to monitor related issues
  • Access to financial services: the Committee plans to examine ways to expand access to mainstream financial products among traditionally underserved segments of the U.S. population
  • Operation Choke Point“: the Committee plans to conduct oversight of the Justice Department, financial regulators and other agencies relating to this initiative
  • Discrimination in lending: the Committee plans to examine the effectiveness of regulators’ fair lending oversight and enforcement efforts
  • Diversity in financial services: the Committee plans to continue to monitor federal regulators’ efforts to implement Dodd-Frank diversity requirements
  • Improper disclosure of personally identifiable information: the Committee plans to evaluate best practices for protecting the security and confidentiality of such information and examine how data breaches are disclosed to consumers
  • Payment systems innovations/mobile payments: the Committee plans to review government and private sector efforts to achieve greater innovations and efficiencies in the payments systems
  • Payment cards: the Committee plans to monitor payment card industry practices

In carrying out the Committee’s plans, its chairperson, currently Republican Congressman Jeb Hensarling, will be able to use his new authority to issue subpoenas.  According to a Politico report, the Committee voted 31-21 last week to amend its rules to give the chairperson unilateral authority to issue subpoenas without the need for a vote from other Committee members.  A further amendment provides that the chairperson will give the ranking member written notice  at least 48 hours in advance of authorizing and issuing a subpoena, except when “exigent circumstances” exist.

Other rules changes include shorter opening statements at hearings and the option for both parties to give certain Committee members additional time to question hearing witnesses beyond a five-minute limit.

 

ABA criticizes CFPB study on high-cost credit extended to servicemembers

Posted in Military Issues

The American Bankers Association has sent a letter to the Department of Defense “to alert the Department to shortcomings” in the CFPB’s study entitled “The extension of high-cost credit to servicemembers and their families” and the CFPB’s comment letter endorsing the DoD’s proposed revisions to its Military Loan Act regulations (which included the study as an appendix).  In December 2014, the ABA and four other trade groups jointly submitted a comment letter to the DoD on the proposal.  In its follow up letter, the ABA notes that the CFPB’s study was publicly released after the due date for comments on the proposal and was “therefore unavailable for reference and comment by the public.”

Labeling the CFPB’s study “incomplete and flawed,” the ABA urges the DoD not to rely on the CFPB’s comment letter or study “to extend the MLA rule’s coverage to insured depository institution products like DAPs [meaning deposit advance products], credit cards, or other mainstream consumer financial products that have not been demonstrated to cause the kinds of problems for servicemembers and their spouses and dependents that were targeted by the MLA.”  According to the ABA, the study on which the CFPB “bases its advocacy for the adoption of a Department proposal does not meet the Bureau’s own evidence-based standard that it would apply to its own rule-making.  In other words, the Department should not adopt changes to the MLA regulations on the basis of a deficient administrative record from the Bureau that would not pass muster under the Bureau’s own regulatory obligations under the Dodd-Frank Act.”

The primary focus of the ABA’s criticism is the section of the study devoted to DAPs.  The ABA makes the following key comments:

  • The ABA observes that the CFPB’s comment letter asserts that there is a differential exposure of military families to DAPs when compared to the population at large, and thus “intimat[es] that this differential warrants covering military families’ usage of DAPs under the MLA.”  The ABA notes that, in fact, the study pointed out in footnote 11 that whatever differential penetration the CFPB calculated had not been evaluated against other explanatory variables that might eliminate the statistical significance of such a superficial penetration number and warned that this percentage “does not mean that being a servicemember makes a person more likely to use deposit advance products.”  The ABA states that the CFPB ignored this important point in its comment letter.
  • The ABA comments that it is disappointing that the study “publishes such an innuendo when the Bureau has within reach the information and capability of testing such explanatory variables.  However, rather than supply the Department with a thorough analysis that would provide a probative basis for considering differential treatment of DAPs under the MLA, the Bureau fails to meet its responsibility to inform authoritatively the Department as part of its consultative role.”  The ABA urges the DoD “to take no action in connection with the supposed differential exposure of military personnel and their spouses and dependents to DAPs until the Department is able to pursue and obtain the explanatory analysis identified by but missing from” the CFPB’s study.
  • The ABA notes that the CFPB’s comment letter endorses MLA coverage of DAPs without addressing the merits of DAPs or making explicit whether the CFPB is excluding the product from sevicemember choice alone or considers the product ill-advised for all consumers.  The ABA observes that the CFPB “has spent the better part of two years studying payday loans and other small dollar short-term consumer credit such as DAPs and we understand it is on the verge of initiating a rule-making in this area that will cover all consumers.”  The ABA urges the DoD, in considering the CFPB’s comment letter, to “take into account that the Bureau has hardly begun its own formal and public consideration of the merits of DAPs, so any Bureau views should be considered at most preliminary hypotheses, untested yet by full and adequate research and public consideration.”

Ballard Spahr submits amicus brief in Inclusive Communities

Posted in Fair Credit

The U.S. Supreme Court is scheduled to hear oral argument tomorrow, January 21st, in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., the case presenting the issue whether disparate-impact claims are cognizable under the Fair Housing Act.

Ballard Spahr attorneys have written an amicus brief submitted by the Houston Housing Authority (HHA).  HHA develops and operates affordable housing developments and provides related services to more than 58,000 low-income residents of Houston, Texas.  The HHA amicus brief supports the petitioners’ position that disparate-impact claims are not cognizable under the FHA.  It argues that the FHA does not contain effects-based language and that the FHA’s legislative history does not demonstrate that Congress intended the FHA to proscribe adverse effects.

HHA filed its brief in support of the petitioners because use of the disparate-impact theory of liability has prevented HHA, and similarly-situated affordable housing developers and operators, from carrying out their mission to use federal programs to develop affordable housing for Houston residents and to invest in low-income communities.  HHA’s brief asserts that the disparate-impact theory of liability frustrates the purpose of the FHA by severely retarding the development of affordable housing and stymying investments in under-served communities.

Diversity reports at two federal agencies offer glimpse of regulatory review under impending Dodd-Frank diversity standards

Posted in Diversity and Inclusion

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), signed by President Obama in 2010 in response to the financial crisis, includes a provision intended to remedy racial and gender discrepancies at federal financial regulatory agencies and private financial institutions.  Section 342 of Dodd-Frank directs each of the federal financial regulatory agencies to create an Office of Minority and Women Inclusion (OMWI) to oversee diversity efforts at the agencies, and further, to develop standards for assessing diversity policies and practices at regulated financial entities.  In October 2013, six federal agencies proposed joint diversity standards for public comment.  Final standards could be issued in the near future.

Two reports recently issued by the Offices of Inspector General at the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) may provide some insight on the impending final standards.  (FDIC Report; OCC Report).  The House Financial Services Committee requested the reviews of the FDIC and OCC in response to a 2013 Government Accountability Office report on diversity, which concluded that very little had changed from 2007 to 2013 at federal financial agencies, despite the diversity provisions of Dodd-Frank.  Committee members questioned whether agency practices were systemically disadvantageous to women and minorities.

The reviews focused in part on agency demographics, personnel practices, and efforts to increase diversity.  The Inspectors also assessed the impact of the newly-established OMWIs on agency policies and diversity efforts.  In both reviews, the Inspectors compared the resulting data to that of the national civilian labor force.  Despite the fact that the FDIC and OCC had taken measures to promote diversity as directed by Dodd-Frank, both reports concluded that more could be done.

In particular, the FDIC report highlighted a lack of Hispanics and women throughout the agency and in senior executive positions.  Noting that female and minority representation at the FDIC remained relatively static since 2008, the Inspector discussed ongoing challenges to the agency’s efforts to increase diversity in the overall workforce.  Many of these challenges are socioeconomic and thus beyond the agency’s control, such as low turnover of existing managers and executives, competition from the private sector for diverse candidates, and limited representation of minorities and women in certain parts of the country or in certain occupations.  After identifying several areas for improvement, the Inspector offered specific recommendations relating to recruiting and workforce engagement, reliability of diversity data, and diversity policies.

The OCC fared somewhat better under review.  The report noted that the OCC’s diversity initiatives—which included enhanced diversity tracking, outreach, and employee networking—resulted in the agency achieving overall workforce numbers that closely aligned with the national civilian labor force.  However, the report also pointed out that these numbers did not translate across the entire organization, with representation of minorities and women at supervisory and senior-level positions falling well below that of the agency’s workforce as a whole.

These reports may offer insights into how the agencies will approach diversity issues for regulated entities under the final diversity standards for regulated entities.  While these standards were expected before year-end 2014, their issuance has been delayed.  Financial institutions and publicly traded companies subject to the standards can expect increased regulatory scrutiny of their diversity policies and procedures once the final standards are issued.  Ballard Spahr’s Diversity Practice already is assisting financial institution clients with compliance measures.

CFPB seeking new members for advisory groups

Posted in CFPB General

The CFPB has published a notice in the Federal Register announcing that it is seeking applications from persons interested in becoming members of its Consumer Advisory Board, Community Bank Advisory Council, or Credit Union Advisory Council.  Appointments to the Board are typically for three years and appointments to the Councils are typically for two years.

Membership in the Board is open to persons with expertise in consumer protection, financial services, community development, fair lending and civil rights, and consumer financial products or services, and representatives of depository institutions that primarily serve underserved communities, and representatives of communities that have been significantly impacted by higher-priced mortgage loans.  The notice indicates that “expertise” depends, in part, on “the constituency, interests, or industry sector the nominee seeks to represent, and where appropriate shall include significant expertise as a direct service provider to consumers.”  Dodd-Frank directs the CFPB to seek Board members who represent the interests of industry and consumers.

Membership in the Community Bank Advisory Council is open to individuals (1) with similar expertise or who represent community banks that primarily serve underserved communities or communities that have been significantly impacted by higher-priced mortgage loans, and (2) who are current employees of banks and thrifts with total assets of $10 billion or less that are not affiliates of depository institutions or credit unions with total assets of more than $10 billion.

Membership in the Credit Union Advisory Council is also open to individuals (1) with similar expertise or who represent credit unions that primarily serve underserved communities or communities that have been significantly impacted by higher-priced mortgage loans,  and (2) who are current employees of credit unions with total assets of $10 billion or less that are not affiliates of depository institutions or credit unions with total assets of more than $10 billion.

The CFPB states that it has a special interest in ensuring that women, minority groups and individuals with disabilities are adequately represented on the Board and Councils.  It further states that because it also has a special interest in establishing a Board that is represented by diverse viewpoints and constituencies, the CFPB encourages applications for Board membership from candidates who represent U.S. geographic diversity and the interests of special populations identified in Dodd-Frank such as servicemembers and older Americans.

An individual must submit a complete application package on or before February 28, 2015 to be considered for membership.  The CFPB expects to announce new members in August 2015.

ABA urges OIG to expand scope of consumer complaint database audit

Posted in CFPB General

The American Bankers Association (ABA) has sent a letter to the Office of the Inspector General (OIG) urging it to expand two of its ongoing CFPB projects: an audit of the CFPB’s public consumer complaint database and a security control review of the CFPB’s DT complaints database (which supports the public consumer complaint database).

In its letter, the ABA makes the following key points:

  • To avoid the CFPB from becoming an “official purveyor of unsubstantiated, and potentially false, information,” the ABA encourages the OIG audit to evaluate the controls in place to ensure the accuracy of individual complaint data.  More specifically, the ABA believes the OIG should look at the degree to which published complaint data relates  to a legal or regulatory violation or a bank practice or policy failure, as opposed to a more generalized expression of consumer frustration or anger.  The ABA observes that “CFPB investigators and examiners evaluate complaints regularly to test their substantive validity and make conclusions about whether a law or regulation has been violated or a bank practice needs to be addressed” and distinguish among complaints that indicate provider violations and those that are unfounded.  The ABA urges the OIG to compare these supervisory evaluations with the data posted on the database.
  • Noting the CFPB’s proposal to expand the public database to include the publishing of consumer complaint narratives, the ABA wants the OIG’s review of the effectiveness of “controls over the accuracy and completeness of the public complaint database” to include “the effectiveness of proposed controls – or the lack thereof – to promote the objectivity, reliability, and utility of the consumer narratives the Bureau may publish.”  The ABA believes the OIG audit should also review CFPB testing, if any, “to evaluate whether consumers can glean salient information from complaint narratives that have been stripped of personal information and relevant attachments, such as account statements or other personal financial records (due to their confidential nature).”
  • The ABA urges the OIG to expand the scope of its security control review of the CFPB’s DT complaints database to include the risks presented by the proposal to publish complaint narratives.  The ABA believes that the security audit should encompass test results of the “scrubbing standard and methodology” to be used to remove personal information from complaint narratives and company responses as well as the consumer
    opt-in process described in the proposal.  The ABA also wants the OIG to look into the sufficiency of consumer response staffing levels, and the adequacy of their training, “to ensure the accuracy and security of a database that may include consumer narratives.”  The ABA notes that should the CFPB consider outsourcing the redaction process or other complaint handling, the OIG would need to audit the CFPB’s third-party risk management controls and capabilities, as well as the independent contractors procedures and controls, “to guarantee that the handling of the considerable volume of personally sensitive financial information by a third-party will meet data quality and security standards.”

 

 

CFPB report explores consumers’ mortgage shopping experience

Posted in CFPB General, Mortgages, Research, TILA / RESPA

In a report released on January 13, 2015, the CFPB announced that nearly half of consumers do not shop among multiple lenders before applying for a mortgage loan.  Even fewer—about one of every four—submit multiple applications to gauge the best deal, the Bureau says.

The report is the first to harness data gathered by the National Survey of Mortgage Borrowers, an ongoing research effort funded jointly by the Bureau and the Federal Housing Finance Agency (FHFA).  Its findings rely on responses gathered from roughly 1,900 consumers who took out home-purchase mortgages in 2013.

Among its salient points, the report concludes that the vast majority of consumers—about 70 percent—gather information about mortgage loans primarily from lenders and brokers.  Not surprisingly, the report expresses concern that these parties may not offer the most objective information, given their interest in closing the transaction.  In conjunction with the report’s publication, the CFPB announced steps that aim to provide another avenue for consumers to gather information about available mortgage products.  These steps are discussed below.

The report also concludes that consumers who identify as “unfamiliar” with the basic features of mortgage loans are less likely to shop around for the best deal, and that factors not related to cost, like a lender’s reputation and proximity of a branch office, are important to a significant minority of mortgage borrowers.

Though likely no surprise to the industry, the data and their attendant conclusions suggest that the new TILA/RESPA integrated disclosures, set to be implemented in August 2015, may not, by themselves, sufficiently address consumers’ failure to shop the mortgage market.  Federal regulatory efforts traditionally have focused on encouraging consumers to shop for mortgage loans through an easier, more streamlined loan application process.  The reality emphasized by the report, however, is that to the extent a consumer shops around for a mortgage, the shopping typically ends when the consumer submits a loan application.  Thus, prior efforts have targeted the wrong point in the process.  The report demonstrates that the CFPB is attempting to address this issue.

Alongside the report, the CFPB has rolled out a new landing page called the “Owning a Home Toolkit” within its existing website.  The toolkit includes factsheets to get potential homebuyers started shopping for a mortgage loan and checklists to prepare borrowers for a closing.  The toolkit’s brass ring, though, is its “Rate Checker” tool, which the Bureau disclaims is still in beta testing.  The Rate Checker allows a consumer to enter information about his or her location, credit profile, desired loan amount, and collateral value.  Pairing this information with daily-updated data from financial institutions (via a private research firm), the Rate Checker displays the prevailing interest rates for which the consumer may qualify, as well as the number of financial institutions offering those rates to consumers with the consumer’s profile.  Though wildly simplified and, at this point, a little clunky, this tool could provide potential borrowers with useful information about typical products in the mortgage market, and, toward the Bureau’s goal, it could help consumers better assess terms offered once they apply for a loan.  The concern, of course, is that consumers may unduly rely on information produced by the tool, which does not account for the full scope of consumers’ risk profiles.

At the end of the report, the CFPB notes that the current analysis did not evaluate the extent to which more shopping by consumers improves mortgage outcomes, such as better loan terms and fewer delinquencies and foreclosures.  The CFPB advises that the National Mortgage Database project (which is part of the CFPB’s joint endeavor with the FHFA) hopes to develop a much better understanding of consumer shopping behavior and how it affects mortgage outcomes.