The Consumer Financial Protection Bureau plans to issue new rules that would limit certain fees that lenders require consumers to pay when they purchase a home. Among these fees the agency hopes to ban would be a fee sometimes referred to as “origination points” that buyers pay at closing.
The agency is proposing a ban on mortgage companies from charging origination fees, which can fluctuate with a loans amount, The New York Times reports. The fees can often get confused with upfront discount points that borrowers often pay in order to obtain a lower interest rate on a loan.
The agency is also looking at implementing a new rule that would require lenders to offer a reduced interest rate when a borrower chooses to pay discount points on a loan upfront. Lenders would then be required to offer a loan option that does not include any points.
“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the consumer bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
The proposed rules will need to go up for public review and a special panel before being formally proposed this summer. The agency says that if the new rules win approval they hope the rules will take effect by January.
Source: “New Rules May Curtail Some Fees in Mortgage,” The New York Times (May 9, 2012)