Mortgage companies have to deliver accurate fee estimates under strengthened consumer protections that will be enforced starting May 1. The revised regulations went into effect in January, but the feds gave lenders four months to debug their cost-estimating systems.
Last week I interviewed a mortgage banker who complained about the rules, which he says were written to punish bad guys who already have been driven out of the mortgage industry and are back to selling used cars. I said I understood that he was annoyed -- but, I asked, how do the rules affect consumers? Suddenly he had praise for the new regulations. Very good for consumers, he said. On balance, he thinks the new regs offer an improvement over the system that was in place before.
I was reminded of that interview when I read Joshua Green's description of his loan closing yesterday morning. It was his first closing since 2003.
"In 2003, I remember poring over lenders' estimates for hours trying to spot the junk fees and figure out which deal was best," he writes. "This time the key factors -- interest rate, lender fees, etc. -- were easy to spot because the forms were identical." It took him three minutes to identify the best deal.
This improvement was brought forth through regulation, not through market competition.