With the electronic delivery costs, "the heavy lifting" is a one-time expense of several thousands of dollars in setting up the technology and processes. Most lenders have already done this, she says. Afterwards they charge cents on the dollar for each electronic delivery and about $5 per loan on snail mail that includes postage and clerical work. It may not seem much but builds up and becomes "a big deal for some organizations," she says. For a typical mortgage banker that generates an average of 2,000 loans a month, "it is a lot of money."
In Dowdy's view, even if at roughly 50 cents per electronic send on dated and time-stamped notifications and proof of borrower acknowledgement, direct transmission charges may be unsubstantial, additional costs may accrue if lenders add consumer education to other compliance related measures.
The CFPB is trying in earnest to make this work for customers and lenders, but now that lenders are in the implementation stage of the regulations, "we're learning how they're working and what the unintended consequences are on the borrowers," Sorenson says.
Sorenson, a veteran appraiser who happens to also be in the process of getting a home equity line of credit, says she recently received in the mail a package from Wells Fargo that included a copy of the notification documents and the AVM used on her house.
"I'm not exaggerating when I say that I threw it on my desk, but did not even pull the documents out. And it would mean something to me if I read it, but the common U.S. citizen I do not think would read it or understand it. I don't know that a typical borrower is savvy enough to look at a valuation and know if it's right or wrong. And that makes me question the cost benefits of this rule, which probably are not there."
Lenders use valuations to make loan decisions so it is right to provide the standard appraisal document to the borrower, but the new requirements are overkill, Sorenson argues. "Why should the lender be burdened with providing this information that will be living in the file for the life of the loan anyway?"
Decades ago, appraisals were typically transportable. An appraiser would go to the house to make an appraisal and the consumer would take that single appraisal and shop around to find a lender.
Gradually, this practice became less common and now it is no longer an option because of the way the CFPB structured the valuation rules, Sorenson says. An appraisal "is no longer transportable," forcing all borrowers to pay for the appraisal each time they shop for a mortgage with a different lender.
"It is one of the unintended consequences. I do not think Congress want the customer to pay more. In their zeal to protect the customer they have set the customer up for additional costs."
Kate Berry contributed to this story.