Cordray: CFPB Focused on E-Closing, Reducing Paperwork

Mortgage & Real Estate









The Consumer Financial Protection Bureau remains committed to working with the financial services industry to improve the mortgage closing experience for consumers through the use of technology, CFPB director Richard Cordray said.

Cordray spoke to a credit union audience here as part of NAFCU’s Congressional Caucus, calling the current mortgage closing system “information overload” that is “counterproductive, because it causes consumers to zone out and sign documents” without understanding many of the details of what may be the largest financial decision of their lives, he said.

With that in mind, the CFPB has been working to, as Cordray put it, reduce “the visual tyranny of the stack of closing documents” with an e-closing pilot program announced earlier this year. Although the bureau only has authority over a few of the documents included in the stack of docs required to close on a mortgage, he said the agency is working with other agencies and financial service providers to determine how those documents can be reduced or eliminated.

That is all in line with the bureau’s next big project on mortgage disclosure forms, taking effect in August 2015. As part of his remarks, he provided an update on the mortgage regs and “Know Before You Owe” forms the bureau has been working on.

Among the disclosure requirements the bureau is working to reduce are redundant TILA and good-faith estimate forms into simpler statements that more easily explain monthly payments, interest rate and more.

The pilot program taking place later this year – which includes credit union participants BECU and Mountain America CU – “will explore how increased technology at closing will increase consumer engagement and save everyone’s time and money,” said Cordray.

“We see these forms as beneficial to the industry as well as to consumers,” he added. “We’re trying to reduce paperwork and make it possible for good, honest businesses like most credit unions to compete on fair terms. Consumers won’t be bamboozled by tricky tactics, and will be able to see and understand [mortgage loans] for what they are.

He added that implementation of the new rule will require significant changes to business operations and technology platforms, which may require cooperation with vendor partners, so CUs should continue to focus on the August 2015 deadline for implementation.

Cordray urged CUs to visit the CFPB’s website for more information on this and other subjects. He added that the bureau will provide a checklist within the next few months to help FIs prepare for the August deadline, and will be sharing materials with NCUA, including making public common exam guidelines and procedures so that institutions can know what to expect in advance of the new rules.

“The goal we share is that everyone will be ready to implement the new disclosure system come August 2015,” he said.

In addition to its work with FIs, Cordray said that the CFPB continues to work on creating educational modules for its website that consumers can use for big financial decisions such as buying a home and paying for college. Its website currently has a module on college, with other modules on the way “as fast as we’re satisfied that they’re ready.”

Cordray stressed that he believes the bureau and credit unions fundamentally view the world in the same way, and said that both are working to create more educated consumers who are in strong positions to make good decisions about their finances.

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