By Gregg Stockdale, 1st Valley Credit Union
The CFPB’s 10-step solution to home loan woes meets BANANARAMA with THE FUN BOY THREE in: “It ain’t what you do it’s the way that you do it!”
Recently Director Cordray of the CFPB outlined the woes consumers faced in having their mortgage serviced (or not serviced, as it turned out) during the recent run-up of mortgage lending. He highlighted issues all the way back to 2004. After highlighting the new rules he stated:
“All of the protections just outlined mean that struggling homeowners will not be kept in the dark about where they stand in the loan modification process or the foreclosure process. They cannot be forced to roll this rock up the hill only to see it roll down again, repeatedly. People are entitled to be treated with respect, dignity, and fairness.
Mortgage servicers that choose to be indifferent to the plight of consumers will now be subject to these mandatory rules, which are backed by the full supervisory and enforcement authority that Congress has conferred upon the new Consumer Bureau. Importantly, those authorities now extend to the entire servicing market, not just to banks and other chartered institutions. We will be vigilant about enforcing these rules.
One exception we are making is for smaller institutions, such as community banks and credit unions, which service small numbers of mortgages. They are exempt from certain requirements. By all accounts, they do this work very well, with a high-touch customer-service model that is deserving of strong support.”
PAY CLOSE ATTENTION TO THE LAST PARAGRAPH! That little gem is the result of our years of serving members first. Years of doing what’s best for the members. Years of being a sound and viable substitute for the programs of the “let’s make money for me first” folks out there. Years of: “the way we do it”.
It is also the result of credit unions speaking up about how we differ from the banks. The CFPB may not fully understand our model, but they have a good grip on our basic truths and past deeds.
Understand this as well:
- The CFPB just finished their first year with a busy agenda. The next years are going to be even more intense. With the election over, the CFPB is assured of at least 4 more years of operation.
- The CFPB has stated in the past they are looking for individual input. Our model of having CUNA, NAFCU, etc. reply for us will not work here. And, we were slow on the uptake. There are only 3 current items open for comment. There are over 50 items that have already been closed. The proposals and outcomes you see now are from items put out for comment a year ago.
- We cannot wait for the trades to take up our case, and we can’t expect to try to correct items already acted on after they are released. We need to individually get in front of this train, not watch it pass by.
OK, my opinion here. Something has been bothering me about the CFPB. The tone and structuring of their comments sound almost as if the consumer is ALWAYS the victim, ALWAYS taken advantage of, and ALWAYS blameless. Is it just me, or did you see people clambering to “get approved”, obtain the lowest rate RIGHT NOW, and in general just want the loan from you, or they would go somewhere else to obtain what they wanted (or my favorite phrase “ the loan they DESERVED”)? It seems to me the consumers were driving the ship and their horizon of interest was only as far as loan funding. I find it funny the CFBP is relying so much on giving the consumer notices. Like that’s going to fix everything! Didn’t we give them a notice requiring insurance on the house at time of funding? Didn’t the proof in insurance come in prior to funding? Didn’t their insurance agent try and collect the funds to continue insurance (they sent us notices as well!)? Didn’t the borrower know they didn’t fund the insurance? How many consumers actually read what was presented to them by the lender? Most were more interested in when the 1st payment was due and how much was it.
Many consumers chose the easy route. They wanted to either flip the house or viewed it as an ATM. Case in point – A motorcycle dealer down the road from our office couldn’t grow their shop fast enough in the early 90’s. The source of their business… excess equity in homes used to buy “toys”.
I applaud the CFPB for reigning in the abuses that consumers were subject to from shady providers, but I’m wondering when they will wake up to the fact that much of this was brought on by the consumer themselves?