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The Consumer Financial Protection Bureau, by its mere name proclaims its sole purpose is to protect the consumer's interest in financial matters. But what happens when the rules and regulations designed to benefit the borrower actually harm the borrower?
As anyone in the mortgage industry is acutely aware, the mortgage industry has failed to operate on a level playing field since the early 1990s. From the moment that HUD required mortgage brokers to disclose all their fees there has been a disparity. Don't misunderstand this statement; I find no fault in a mortgage broker, or any one in a brokerage capacity that does not have to disclose their fees. Where the disparity manifests itself is when one aspect of an industry attempts to utilize the disclosure to a personal advantage at the express expense of the consumer.
In a recent court case it was acknowledged by a federal regulator that compensation from yield-spread premiums and servicing-released premiums are the same compensation. If the issue-as expressed by some U.S. senators and congressmen- is that the yield-spread premium is a hidden kickback, logic would dictate that servicing-released premiums are also a hidden kickback. Recently we are seeing a number of consumers harmed by the Federal Reserve Board's rule on mortgage originator compensation.
One might wonder how a parity conflict between banking and nonbanking might negatively impact the ability of the CFPB to...