How CFPB protects Borrowers in Real Estate. Common Questions Answered.

Randy Gilbert, J.D.

Chief Happiness Officer

Florida’s Title Insurance Company

[email protected]

(954) 500-Title (8485)

 

History of the CFPB. It started with professor Elizabeth Warren, who taught and specialized in bankruptcy. Yes, the same Elizabeth Warren who became a US Senator and sought the Democratic nomination for President. She called for the creation of a new independent federal agency to focus on regulating consumer financial products targeted at American households like credit cards and mortgages to name a few.[1]   Her goal was to: move away from legal jargon, be more coherent and consumer-oriented, and have financial products reviewed under one (1) single independent agency. Her timing was just right because, in 2010, the subprime mortgage market collapsed, $10 Trillion in household wealth was wiped out, and in that aftermath Obama’s administration asked Congress to establish an agency to ensure consumer protection. [2]

 

So What is the CFPB?   The Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB) as an independent financial regulator within the Federal Reserve System.[3] It moved 18 existing federal statutes to the CFPB to administer including the Truth-In-Lending Act, Fair Credit Reporting Act, and the Fair Debt Collection Practices Act and vested the CFPB with potent investigative and enforcement powers including seeking restitution, disgorgement, injunctive relief, and civil penalties of up to a $1Million a day! The CFPB pursues unfair, deceptive, or abusive acts or practices; Writes rules; Supervises companies; Enforces laws outlawing consumer finance discrimination; Gives financial education; and Monitors new risks to consumers.[4] In the past 10 years, the CFPB obtained $11 Billion in penalties ($1 Billion from Wells Fargo for charging too much for mortgage interest rate-lock extensions, and adding insurance costs and fees into auto loans).[5]

 

CFPB is the watchdog for: (1) Mortgage Companies; (2) Credit Reporting; (3) Personal Loans; (4) Debt Collection; (5) Credit Repair Services; (6) Personal Consumer Reports; (7) Credit Cards; (8) Pre-paid Cards; (9) Checking Accounts; (10) Savings Accounts; (11) Vehicle Loans; (12) Leases; (13) Student Loans; (14) Payday loans; (15) Title Loans; (16) Money Transfers; (17) Virtual Currency; (18) Check Cashing; (19) Currency Exchange; (20) Cashier’s/ Traveler’s checks; and (21) Debt Settlement.[6] Complaints can be filed against companies and individuals with CFPB online, and the CFPB can be called at (855) 411-CFPB (2372) for more information.

 

Is the CFPB a valid Agency or has it been Abolished? On June 29, 2020, the United States Supreme Court decided Seila Law, LLC v. Consumer Financial Protection Bureau, putting the CFPB in the hotseat of whether it would be dismantled. The case revolved around a law firm providing debt-related legal services was issued a subpoena from the CFPB in order to investigate the firm’s business practices, the law firm refused to comply, objecting that the CFPB’s entire existence was unconstitutional as its structure violated the Separation of Powers. The Supremes agreed in part, but offered a resolution to fix the CFPB’s ill-formed structure stating,

“In organizing the CFPB, Congress deviated from the structure of nearly every other independent administrative agency in our history. Instead of placing the agency under the leadership of a board with multiple members, Congress pro­vided that the CFPB would be led by a single Director, who serves for a longer term than the President (i.e. 5 years) and cannot be removed by the President except for inefficiency, neglect, or malfeasance. The CFPB Director has no boss, peers, or voters to report to.” … “Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control. We therefore hold that the structure of the CFPB violates the separation of powers. … The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.”

 

Questions answered by the CFPB as it pertains to Real Estate. Remembering that the CFPB is consumer oriented, so it has a wealth of information. The following questions have been answered by the CFPB as common questions that occur in real estate transaction but unfortunately their website is not well organized by topic. I have re-organized them for easy reference as it pertains to obtaining a loan for real estate transactions:

 

(01)     SHOPPING FOR LOANS

• What are Florida’s average Interest Rates for mortgages?
• Questions to ask mortgage brokers?

 

(02)     INCOME VERIFICATION

• Can a Lender require me to provide W-2’s or Pay Stubs?
• Can a creditor ask whether my or my co-signer’s income comes from alimony, child support, or separate maintenance payments?
• Can a Lender or broker refuse to consider alimony and child support as part of my income?
• Can a Lender or broker refuse to consider my or my co-signer’s part time income or retirement income (e.g. annuity, pension, or other retirement benefit)?

 

(03)     SPOUSE AND DEPENDENTS

• Can lender or broker ask me about my current or former spouse?
• Can Lender or broker require my spouse to co-sign?
• Can a lender or broker require someone else to co-sign for me?
• Can a lender ask about my children or dependents?

 

(04)     MILITARY

• What closing costs do VA’s not have to pay for?
• What if my lender does not offer VA loans?

 

(05)     DISCRIMINATION

• A mortgage lender gave me a higher interest rate than I should have gotten based on my creditworthiness. What can I do if I think the lender discriminated against me?
• What constitutes discrimination by a lender or broker if I am borrowing as a business?
• Can a broker or lender consider my age as too young?
• Can a Broker or lender consider my age as too old?
• Can a lender ask about my race, color, religion, national origin or sex?
• Can a lender ask about my marital status?
• Can a lender ask if I am not a citizen?
• Can a lender ask if I am receiving public assistance?

 

(06)     DOCUMENTS I CAN EXPECT

• What documents should I get before closing?
• Can I get copies of the loan documents I will be signing beforehand?

 

(07)     LOAN ESTIMATES

• What does a sample Loan Estimate look like?
• What if I did not receive a Loan Estimate within 3 business days of submitting a mortgage loan application?
• Can my final mortgage costs increase from what was on my Loan Estimate?
• What if I get a revised Loan Estimate with higher costs?

 

(08)     CLOSING DISCLOSURES

• What does a sample Closing Disclosure look like?
• When do I get a Closing Disclosure?
• What if I did not get a Closing Disclosure 3 business days before my closing?

 

(09)     TRID (TILA-RESPA INTEGRATED DISCLOSURE rule)

• After the initial Closing Disclosure is provided, If there are any changes to the disclosed terms, does the creditor have to provide a corrected Closing Disclosure at least 3 business days before the closing?
• What about if the rate (APR) goes down?
• When must the Loan Estimate be provided?
• Can a creditor insist on being provided with more than the six (6) pieces of information before providing a Loan Estimate?
• Can a creditor insist on being provided verifying documents before providing a Loan Estimate?
• Is the requirement to provide a Loan Estimate triggered if the consumer submits the six (6) pieces of information in order to receive a pre-approval or pre-qualification letter?
• Can a creditor require the consumer sign and return the Loan Estimate or Closing Disclosure?

 

(10)     DIFFERING MORTGAGE TERMS

• What if the terms of my mortgage loan at closing are not what I was promised beforehand?
• What if my rate or fees change between m loan estimate and my closing disclosure?

 

(11)     LIMITATION ON FEES, POINTS, AND RECURRING CHARGES

• Is there a cap on upfront fees and points a lender can charge?
• How much can my mortgage lender make me pay each month for insurance and taxes (the escrow)?
• When can I stop paying PMI (Purchase Mortgage Insurance)?
• Can the Lender charge me for forced place homeowner’s insurance?

 

(12)     APPRAISALS

• Am I entitled to a copy of my home appraisal from my mortgage broker?
• Can I be charged for the appraisal by my mortgage broker?
• Can I be charged a copy fee for the appraisal by my mortgage broker?

 

(13)     TITLE COMPANIES

• Can I be forced to use a certain title company?

 

(14)     RIGHT TO RESCIND MY LOAN APPLICATION

• How long do I have to rescind my Loan Application if I am:
• Buying a home and when does it start?
• Refinancing a home and when does it start?
• Getting a HELOC or Second mortgage?
• What if I was never provided with the right to rescind my mortgage loan?
• Can I waive my rescission rights?

 

(15)     MORTGAGE SERVICER

• What if the servicer says they never received my mortgage payment?
• What if the servicer charges me a late fee even though I timely mailed the payment?
• What if the servicer refuses to accept my payment?
• What does my servicer have to do to help me avoid foreclosure?

 

(16)     MORTGAGED PROPERTY THAT IS TRANSFERRED AFTER PURCHASE

• Can I continue to make mortgage payment on Real Estate acquired by: Inheritance; Legal separation or divorce; Transfer to a living trust; Transfers from parents before the parent dies; Joint Tenancy with Right of Survivorship?

 

DISCLAIMER: Not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney.   FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ^®

 

[1] Seila Law, LLC v. Consumer Financial Protection Bureau Pg. 8

[2] Seila Law, LLC v. Consumer Financial Protection Bureau Pg. 8

[3] Seila Law, LLC v. Consumer Financial Protection Bureau Pg. 9

[4] The Bureau.

[5] Wells Fargo Hit With $1 Billion In Fines Over Home And Auto Loan Abuses

[6] CFPB Complaint.