On Sep. 9, CFPB outlined actions to spur refinancing as rates decline.
CFPB director Rohit Chopra remarked on outlook for US mortgage refinancing industry, borrower rights, reducing deceptive fees and cost, and how AI impacts lending sector.
Prepared remarks made at the National Housing Conference focused on potential for Fed to lower interest rates at Sep. 17-18 FOMC and impact to mortgage refinancing.
Related, CFPB issued Dec. 2023 cash-out refinancing and borrower profile study and Sep. 2023 residential mortgage lending activity report, see #195565 and #186258.
Refinancing Landscape and Borrower Obstacles
Chopra expects refinancing will increase modestly in the near-term, then more rapidly.
Current landscape: more than one-fifth of all mortgages subject to an interest rate over 5% as a result of Fed post-pandemic rate hikes, rates peaking 7.79% Oct. 2023.
Opposed to pandemic-era mortgage interest rate lows as low as 2.65% in Jan. 2021.
Though refinancing volumes 1H 2024 are the lowest in 30 years, potential for bounce-back in refinancing has significant implications for economic growth and homeowners.
This in mind, CFPB is concerned excessive closing costs, non-transparent disclosures re closing cost fees, requirements to take on new title policy are obstacles to refinancing.
Bureau is aware of pernicious barriers to refinancingthat include adverse ability for Black homeowners to refinance; deceptive AI in marketing, appraisal, underwriting.
CFPB Actions
CFPB is preparing for ease in interest rates, seeks to spur more mortgage refinancing.
Closely watching implementation of new mortgage technology including those utilizing AI for data analysis or automation, or claim to as a marketing hook to potential clients.
How said technologies may contribute to discrimination, collusion, other illegal activity.
Exploring changes to existing regulations to streamline refinancing process and reduce closing costs; which costs comply with federal law versus costs that are simply add-on.
Pursuing laws to accelerate shift to open banking, specific focus on mortgage industry.
Looking to finalize second part of CFPB Personal Financial Data Rights rulemaking to give consumers greater agency over their data, methods to reduce underwriting costs.
First of personal financial data rights rules, re attributes for standards setting, finalized Jun. 5 and took effect Jul. 11, 2024; also amends CFPA Section 1033, see #214873.
