New mortgage rules raise privacy concerns
By Jeff Lazerson
What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take.
Rate news summary
From Freddie Mac’s weekly survey: The 15-year fixed rate improved, averaging 3.18 percent, two basis points better than last week’s 3.20 percent. The 30-year fixed actually worsened this week, averaging 3.93 percent and down one basis point from last week’s 3.92 percent.
The Mortgage Bankers Association reported a decrease in loan application volume of almost 3 percent from the previous week.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $424,100 loan, last year’s rate of 3.43 percent and payment of $1,888 was $120 less than this week’s payment of $2,008.
What I see: Locally, well qualified borrowers can get the following fixed-rate mortgages at one point cost: A 15-year at 2.75 percent, a 30-year at 3.625 percent, a 15-year agency high-balance ($424,100 to $636,150) at 3.0 percent, a 30-year agency high-balance at 3.75 percent, a 15-year jumbo (over $636,150) at 3.5 percent and a 30-year jumbo at 3.75 percent.
What I think: Right up there with protections like DUI checkpoints and airport body scanners, the Consumer Financial Protection Bureau came out with its expansive mortgage file personal data dumping proposal in 2015 under the Home Mortgage Disclosure Act, or HMDA.
It’s all about you. Originally scheduled to start Jan. 1, 2018, lenders are going to have to report a treasure trove of information, everything from your age, credit score, parcel number, property value, detailed loan terms, fees paid, and more.
Marketers, identity thieves, hackers, your neighbors, Big Brother and others may learn that much more about you.
The CFPB argues this will help to show whether financial institutions are serving the needs of their communities. It also will help public officials in making public sector investments and assist in identifying discriminatory lending patterns.
The American Bankers Association is against the new HMDA rule, citing concerns about costs, liability for inaccuracies and privacy concerns, said Rob Alba, senior vice president.
It’s unclear if the data will be masked from public view.
If someone wants to find out about you, isn’t the information already out there?
“I think the risk is already there. This makes it easier,” said Pete Mills, senior vice president at the Mortgage Bankers Association.
No matter what, it’s fair to assume that hackers are going to spill this information into public view regardless of any CFPB information masking.
How can updated HMDA benefit you?
When Dodd Frank came out and with it, the genesis of the CFPB, it leveled the playing field for consumers against bait-and-switch loan quotes as well as giving consumers equal access to competing loan offers.
The grocery store pricing model for mortgages evolved from there. If you have the same credit characteristics, you get the same good deal that the next guy gets.
Or, so you think.
Pricing exceptions are all the rage. Working with a private banker because you have lots of wealth? Come on down. We’ll give you a better deal.
Or, go to the loan branch that allows the company to kick in money for a “better than everyone else gets” deal under the guise of price matching. We’ll do it.
Now that non-qualified mortgages are back (a cousin to the old subprime loans), discretionary pricing by some lenders is on the rise. Desperate borrowers get the “treatment.” We’ll give you the loan but we are going to charge you above and beyond.
Pricing equality within individual lenders and fair competition in your community of lenders is a societal good that may just save you or your neighbor from a higher likelihood of foreclosure and its awful cascading effect on neighborhood prices.
As for your privacy concerns, get your mortgage done before this new rule kicks in.
Jeff Lazerson - Mortgage Columnist since 2011