The American Bankers Association has sent a letter to the CFPB urging it to take down from its website its new mortgage interest rate calculator tool. The CFPB launched the new tool earlier this month, in conjunction with its highly publicized report that found nearly half of consumers do not shop among multiple lenders before applying for a mortgage loan.
The CFPB’s “Rate Checker” tool allows a consumer to enter information about his or her location, credit profile, desired loan amount, and collateral value. Pairing this information with data from financial institutions (via a private research firm), the Rate Checker purports to display the prevailing interest rates for which the consumer may qualify, as well as the number of financial institutions offering those rates to consumers with the consumer’s profile.
The ABA believes the tool should be removed and reconsidered based on its concerns which include the following:
- The calculator is not an adequate shopping comparison tool for consumers because the interest rate figure it provides excludes significant transactional costs and interest prepayments in the form of points.
- There is a high potential for inaccuracy because the calculator does not include a broad enough sample of lenders to generate an accurate rate in any one area or locality.
- It is uncertain whether the CFPB has the quality control safeguards in place to guarantee the reliability and integrity of the reported data.
- The pricing yielded by the tool is questionable because it is unclear if the pricing factors employed in the calculator are weighed in a fashion that is representative of lender underwriting standards across all markets and industry segments.
- The calculator currently allows options for only three loan types and overlooks various types of products that allow for customized lending in which community banks often specialize.
- The calculations generated by the tool will appear to consumers as officially sanctioned prices, and possibly as interest rate caps, and consumers will incorrectly perceive them as entitlements of the interest rates they ought to be receiving.
- The CFPB did not provide an opportunity for comment on the tool, thereby undermining the credibility of the project.