Key facts
- Consumer and housing advocacy groups are urging the CFPB to maintain existing mortgage lending rules.
- Proposed changes could leave borrowers vulnerable to predatory practices and unaffordable loans.
- The groups oppose changes affecting the Truth in Lending Act and Real Estate Settlement Procedures Act.
- A key concern is the potential impact on the three-day window for borrowers to cancel certain mortgage transactions.
- Advocates called for improved disclosures and mandatory pre-loan counseling for reverse mortgages.
A coalition of consumer and housing advocacy organizations has urged the Consumer Financial Protection Bureau (CFPB) to preserve key mortgage borrower protections, warning that proposed changes to federal lending rules could expose consumers to predatory practices and unaffordable loans. The groups, including the National Consumer Law Center and the National Housing Law Project, submitted comments opposing alterations to the Truth in Lending Act and the Real Estate Settlement Procedures Act, which form the basis of the TILA-RESPA Integrated Disclosure rules.
These organizations argue that the current framework, developed to address consumer harm from complex mortgage transactions, should be enforced rather than weakened. Steve Sharpe, senior attorney at the National Consumer Law Center, stated, “Instead of weakening regulations, we urge the CFPB to enforce the existing TRID regulations. Any changes must serve the ultimate goal of helping borrowers access safe and affordable credit.”
A primary concern revolves around the rules governing a borrower's right to rescind certain mortgage transactions. Currently, borrowers have a three-day period to cancel a mortgage without penalty, allowing them time to review final loan terms and reconsider if they felt pressured. Andrew Pizor, also a senior attorney at the National Consumer Law Center, emphasized the importance of this protection, stating, “Mortgage transactions are too complex to digest at the closing table, at the last minute. The pre-consummation disclosures and the right of rescission complement each other. Consumers deserve to see the final loan terms before closing, and they need a chance to cancel if they have been pressured into signing. A family’s home is too important to take away these protections.”
The groups also highlighted reverse mortgages, noting the need for particular attention due to the complexity of evaluating different loan terms and payment structures. They called for enhanced reverse mortgage disclosures, informed by consumer testing and public feedback, along with mandatory pre-loan counseling. Pizor added, “Disclosure is not enough. Given the complexity of reverse mortgages, pre-loan counseling is necessary to ensure that consumers are aware of the risks and can weigh their options.”