CFPB Warns of Mortgage Platform ‘Double Dealing’ as Rates Climb

The Consumer Financial Protection Bureau is warning Americans about “double dealing” by mortgage comparison-shopping platforms.

“Companies operating these digital platforms appear to shoppers as if they provide objective lender comparisons, but may illegally refer people to only those lenders paying referral fees,” the bureau said in a news release Tuesday (Feb. 7).

Shoppers could end up with lower quality lenders or paying thousands extra in interest or closing costs when they use a lender that’s not the best option for their needs, the CFPB said.

The bureau has issued an advisory opinion that shows how companies violate the Real Estate Settlement Procedures Act (RESPA) when they steer consumers to lenders using biased tactics instead of providing objective information.

For example, some platforms have inputs or formulas that are manipulated to produce comparison options favoring higher-paying or preferred providers, such as a provider in which the platform owner has a financial stake.

“Given the rise in mortgage interest rates, it is even more important for homebuyers to shop and compare loan offers,” said CFPB Director Rohit Chopra. “We are working to ensure that online platforms are not manipulating their search results in order to coerce kickbacks from lenders.”

As PYMNTS noted recently, the impact of inflation on housing affordability has put the dream of owning a home further out of reach for consumers.

The PYMNTS study “Consumer Inflation Sentiment: Rising Housing Costs Deflate Economic Optimism,” showed many people with a somewhat grim resignation when it comes to housing, with the number of consumers who said homeownership is achievable falling by almost a quarter (24%) in the past year.

That means a projected 18 million U.S. consumers have abandoned the dream of owning a house over the last two years.

“Currently, 23% of non-owners think buying a house is within reach, yet 30% believed the same in January 2021,” the study said. “Thirty-five percent of Gen Z consumers believed purchasing a home for themselves was within reach in 2021, while just 29% do now.”

This situation has set the stage for a number of solutions to provide relief for struggling homebuyers and renters.

In a bid to help renters improve their credit history, Fannie Mae released its Multifamily Positive Rent Payment Reporting program in September. It lets eligible landlords share rent payment information with the three major credit bureaus across a vendor network incorporated into renters’ credit profiles.

“This program has the potential to significantly positively impact on-time renters who live in a multifamily home, as these payments aren’t always included in credit scores,” PYMNTS noted.

And real estate startup Bilt, which processes $3 billion in rent payments annually, offers a credit card that converts those payments into points toward a down payment on a home.