Ever Wonder Why The Mortgage Process Gets More Complicated?

July 18th, 2012

I know it is difficult to understand why the mortgage process gets more complicated. And I know its curious why the number of loan disclosures you have to sign just keeps growing. When I started in the mortgage business in 1986 I bet there were only 12-15 pages of loan disclosures. That ballooned to around 30-35 pages up until 2008. Then the financial world seemed to implode in 2008, and the Feds took over Fannie Mae and Freddie Mac, and the number of disclosures you get now must be over 50. And now we have the Consumer Financial Protection Bureau’s latest action. Get ready for more disclosures, and more cost, and more complication.

The Consumer Financial Protection Bureau (CFPB) has written up a doozy about some disclosures that fall under the RESPA/Truth in Lending Act (TILA). The 1100 page proposed rule (yes, I said 1100) will take some time to digest I imagine. And I am guessing it will create more disclosures of stuff we need to tell the consumer, and it will create more layers of compliance, which creates more cost, which gets passed onto the consumer.

It has been 14 months since the CFPB released its first round of proposed integrated mortgage forms, and recently, the agency released its 1100 page proposed rule that combines the final proposal for those disclosures and the new requirements as detailed in the Dodd-Frank Act, along with extensive guidance regarding compliance with those requirements. In releasing the proposed rule, the CFPB noted that it has engaged in extensive consumer and industry research and public outreach for more than a year in crafting the new regulations and the new forms. Wow. I am stupefied. Does anyone really think any of this will help protect the consumer? Does the consumer really need any more protecting in the mortgage industry?

There are numerous regulators to complain to about improper mortgage practices. You can take your business elsewhere. You can choose to initiate a lawsuit against a lender. You can complain via Yelp, Angie’s List and numerous other websites that rank service providers. Did we really, truly, honestly need another 1100 pages of oversight? Really?

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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2 Responses to “Ever Wonder Why The Mortgage Process Gets More Complicated?”

  1. Clearly more regulation is needed to require mortgage lenders to be more accurate with their numbers in the face of continuing misrepresentation, exaggeration, and over and under estimating costs to consumers. For example, the 1,100 page regulation you referred to is actually only 1,099 pages long! :).

    Integrated Mortgage Disclosures under Real Estate Settlement Procedures Act (Reg X) and Truth In Lending Act (Reg Z)

    http://www.regulations.gov/#!documentDetail;D=CFPB-2012-0028-0001

    Seriously, of the several hundred clients we have helped buy and sell homes since I got into this business in 1990, only one got their complete loan documents and read them in advance of the settlement. Most buyers are overwhelmed by the paperwork – sixty plus pages of purchase contract is typical. Add to that the mortgage financial documentation and disclosures, closing documents, inspection reports, follow up emails, and the infinity of calls, negotiations and contacts. Most buyers wisely rely on their real estate and mortgage experts for trusted advice, and give a cursory review to the documents.

    It is time to should shift some of the burden to borrowers, and require an examination of fitness to purchase. An exam is required for a drivers license, and to obtain any professional license – how much more important is being a fiscally responsible borrower! The exam would require an understanding of the forms you sign and the impact of the financing arrangements you are making for yourself. No, wait, never mind, educating consumers would require another whole level of regulation.

  2. brianm says:

    Hi Jeff. I am a free market guy myself. I think human beings are smarter than the government is aware of. I get more grilling, doubt and questions from a smart consumer; that any regulator could ever get to the bottom of. 1099 pages, or 1100 pages, will do nothing but make things more complicated for all, without any benefit.

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