The use of smartphones and tablets has already made one of the mortgage disclosures being proposed by Consumer Financial Protection Agency obsolete, and a trade group is calling on the new regulator to adapt the form to today’s technology.
In May, the CFPB sought input from lenders on a new disclosure that combines the Good Faith Estimate required under the Real Estate Settlement Procedures Act with the federal Truth in Lending Act disclosure.
More than 24,000 comments were received.
The agency then modified the disclosures and subsequently began testing a prototype in New Mexico.
In a letter Monday to Rajeev Date, special advisor to the Secretary of the Treasury for the CFPB, the Consumer Mortgage Coalition called on the regulator to update its objectives.
“The prototypes may not be well suited for the ways in which consumer shopping is adapting to modern technology,” the Washington, D.C.-based group said. “Recently, software available on mobile web access devices such as smartphones and tablets has streamlined the home and mortgage shopping process.”
The group explained that when the effort to streamline the disclosures began in 1995, today’s technology didn’t exist. But technology has moved much more rapidly than policymakers and regulations.
According to the CMC, prospective borrowers are using mobile devices to find information on homes for sale and on loan products.
Mortgage information available on the devices includes current rates, payment amounts and estimated property taxes and insurance. Consumers can also receive competing quotes from multiple lenders.
The trade group says that the amount of available loan information on smartphones and will only continue to rapidly increase.
By the time a consumer receives the proposed loan estimate, he or she has already completed the loan shopping process.
“Given this reality, it does not appear that the loan estimate disclosure will be used as a shopping tool because the consumer will have finished shopping by the time they apply for a loan,” the letter said. “Therefore, we would encourage the CFPB to recognize the technology tools that are available today and focus its disclosure project on streamlining the disclosures that are needed once the consumer applies for a loan, rather than trying to use the Loan Estimate disclosure as a shopping tool.”
