CFPB assistant director talks housing czar, junk fees and AI

The Consumer Financial Protection Bureau’s Assistant Director of Mortgage Markets admits there’s room to improve coordination between housing agencies, regulators and mortgage lenders and servicers.

But whether the answer is a housing czar is an open question, said Mark McArdle speaking at the National Mortgage News Digital Mortgage conference in San Diego on Tuesday.

“[When we’re making rules] we do go to the Federal Housing Administration, Department of Veteran Affairs and the Federal Housing Finance Agency to make sure that they understand how this might impact their rules…so there is coordination that occurs,” McArdle said. “The question about a housing czar is can they make all the cats go in one direction? That’s a tough job.”

In May, CEO of the Mortgage Bankers Association Bob Broeksmit said there’s a need for a national housing-policy director who could serve as an advisor to the White House and detangle pervasive “regulatory knots.” Broeksmit pointed to an “alphabet soup” of federal agencies which are introducing and passing “contradictory and unworkable policies.” 

The CFPB assistant director said on a monthly basis housing agencies do meet to share issues, but there is “no charter around it in the same way as there is on FSOC.” “FSOC has a mission to address systematic risk… perhaps we can borrow more from that,” he said.

One of the issues that requires more coordination is how fees in mortgage originations are reexamined, mortgage stakeholders, such as Broeksmit, have previously argued. The MBA’s head noted in May homeowners know early in the homebuying process that they’ll have to cover things like appraisals, credit reports, and flood certifications “because of CFPB regulations, on forms designed by the CFPB itself.”

McArdle pointed out the bureau is aware that some mortgage-related fees are required by other government entities, but that the CFPB’s goal is figuring out “how to keep costs down for borrowers.”

“My director had a great quote on this, in the speech on Monday. Just because it’s disclosed doesn’t make it not a ripoff,” the executive said.  

McArdle’s interview with National Mortgage News addressed Chopra’s comment that many fees in the origination process are not “subject to robust competition.” The assistant director noted that the regulatory watchdog wants to aid in driving prices down on several fees, particularly those that borrowers are not afforded choices. In refinances, this can apply to lender title insurance, but it also relates to credit report costs. Lenders have long decried the sharp increases in the costs of credit reports in recent years, which have risen as much as 400%.

“There’s lots of ideas being explored…the Credit Reporting Act allows a consumer to get access to their credit report. What if that was assignable, like an SAT score?” pondered McArdle. 

Regarding the use of artificial intelligence, the CFPB assistant director shared that mortgage lenders and servicers should be mindful about how and for what purposes it is deployed.

“I think the industry should think about where it makes the most sense to deploy some of this powerful new technology and where it will do the most good,” McArdle said. “Interacting with humans, especially in difficult situations like loan servicing is probably harder, but as an assistant to your loan officer or your servicer rep, absolutely.”