The Consumer Financial Protection Bureau (CFPB) is intensifying its efforts to curb what it sees as the proliferation of "junk fees" in the mortgage industry. These fees, often undisclosed, according to regulators, have been a growing concern for consumers.
At the heart of the matter is the issue of mortgage fees and their impact on the overall cost of owning a home, as well as their potential to strain household finances. The CFPB, as the primary enforcer of the Fair Debt Collection Practices Act (FDCPA), in a blog post and an amicus brief said it is committed to safeguarding consumers from unfair practices, including those employed by mortgage servicers who often act as debt collectors.
The Mortgage Bankers Association called the CFPB blog post "baffling."
In a statement, MBA CEO Bob Broeksmit said it "reveals little understanding of how the mortgage market works or awareness of its own regulations that provide for full fee transparency and limits on what can be charged.
“The fees mentioned are clearly disclosed to borrowers well before a home purchase on forms developed and prescribed by the Dodd-Frank Act and the CFPB itself. The illogical use of the term ’junk fee’ contradicts even the White House’s own definition, which cites the lack of disclosure of the fee being charged."
Greg Sher, managing director of NFM Lending, said in a LinkedIn post that the mortgage industry can't be blamed for the housing crisis.
"It's no more fair to look at the mortgage industry for housing's blunders, than it is to point to the Biden administration for their failure to deliver on their housing mandates laid out during the last election cycle. There are factors largely out of everyone's control that have caused housing's slump," Sher wrote. "Why can't the administration, Consumer Financial Protection Bureau and Mortgage Bankers Association work in unison to find solutions? It can be done!"
The CFPB's blog post stems from the amicus brief it filed in the U.S. Court of Appeals for the Eleventh Circuit to support borrowers in their fight against these fees.
They believe the case against Ocwen Loan Servicing highlights the broader issue of transparency and fairness in the mortgage industry. While mortgage companies argue that fees are disclosed upfront and necessary for the efficient operation of the market, consumer advocates contend that undisclosed fees can drive up costs and hinder access to homeownership.
The CFPB asserts that such fees run afoul of the FDCPA, which prohibits debt collectors from imposing fees that borrowers did not agree to initially, unless explicitly permitted by law.
The Broeksmit said that "In 2015, the industry implemented the Bureau’s “TRID” rule, which comprehensively reformed mortgage disclosures. In 2020, the CFPB issued a report praising its own rule for improving consumers’ ability to locate key information, compare terms and costs between initial disclosures and final disclosures, and compare terms and costs across mortgage offers."
He argues that fees are essential for complying with federal statutes and ensuring the integrity of the mortgage process.
