Skip to main content

CFPB Reviewing Mortgage Loan Originator Rules

Keith Griffin
Mar 13, 2023
CFPB (Consumer Financial Protection Bureau) logo set on a grey bg

Consumer watchdog seeks public input on anti-competitive practices.

The Consumer Financial Protection Bureau is conducting a mandated review of mortgage loan originator rules, part of the Truth in Lending Act’s Regulation Z. The CFPB said the review is mandated every 10 years.

In a statement, the consumer watchdog said it is requesting the public’s input on the economic impact of the mortgage loan originator rules on small mortgage companies. The CFPB may use the feedback received to inform potential changes to the rules.

The mortgage loan originator rules cover individuals or companies that are paid to arrange, negotiate, or obtain mortgage credit for their customers. Mortgage lending companies, mortgage brokers, and loan officers may be considered loan originators. The rules prohibit dual compensation and steering practices that do not benefit borrowers, as well as prohibit compensating loan originators based on the terms of a mortgage transaction.

Before the rules, loan originators did not have to act in the best interests of clients, the CFPB said. "They could even be paid to steer homebuyers toward more expensive mortgages. For example, a loan originator acting as a mortgage broker could receive greater compensation from a lender for locking a homebuyer into a mortgage with a higher interest rate than the interest rate offered by another lender," the agency said in a statement.

Congressional Republicans, meanwhile, say the CFPB is “ripe for reform.” The GOP House members have laid out a series of proposals aimed at completely revamping the agency’s structure and rulemaking process. Republicans also want to change the way the agency is funded for greater Congressional oversight.

A separate bill would convert the CFPB into a five person commission, eliminating the director and deputy director positions. This would mirror the structures of the Federal Trade and Federal Communications commissions. 

Additionally, Republicans want to require the CFPB to identify metrics used to determine problems, and solutions, including metrics determining the “measurement of changes regarding consumer access to, and the cost of, consumer financial products and services.” The bill would also require the CFPB to strengthen “private sector participation in markets, without government interference or subsidies, to increase competition and enhance consumer choice.

Mar 13, 2023
U.S. 2nd Circuit Appeals Court Rules CFPB Constitutional

Decision comes as Supreme Court prepares to review 5th Circuit Court's opposite ruling on the bureau.

Mar 23, 2023
ICE, Black Knight Officially Respond To FTC Bid To Block Merger

Companies say planned sale of Black Knight's Empower LOS resolves any antitrust concerns.

Fed OKs 9th Rate Hike In 12 Months

Boosts federal funds rate by another 25 basis points.

MISMO Seeks Comment On iLAD 2.3.0

The Industry Loan Application Dataset is the standard for exchanging loan application information.

HUD Eliminating Fair Housing Act Rule That Never Took Effect

Department to rescind 2020 rule that court injunction halted.

MISMO Names David Coleman As President

Coleman has more than 25 years of mortgage industry experience.