The Consumer Financial Protection Bureau is beginning to flex its muscles in 2012. In addition to various research and enforcement initiatives, the CFPB is placing a great deal of emphasis on the design of customer communications throughout the financial product lifecycle. Taking careful aim at the mortgage industry that was at the heart of much of the worlds current financial woes, the CFPB has engaged outside experts to create prototype designs codenamed “Butternut” and “Hemlock” (I tend to lean toward Butternut even before viewing the prototypes which are currently available for comment) as part of the “Know Before You Owe” initiative.
Richard Cordray, Director of the CFPB has indicated that the new rules to be proposed by July of this year will include requirements for consumers to be notified months in advance of any interest rate adjustment to their mortgage. In a speech at the National Association of Attorneys General Annual Meeting in Washinton D.C., he described the need to fix the mortgate market as an urgent priority and discussed potential new disclosures that sound similar to the credit card statement redesign requirements created by the CARD Act. Morgtgage servicers may be required to redesign notices, bills and statements to disclose the borrowers new monthly payment amount (in advance of increase), available options to avoid the rate increase (refinancing or term-change options) and, if the CFPB holds with previous approaches, there will be a “Plain Language” provision as well.
Once the proposed mortgage rules are made available for comment, I would expect the CFPB to look at similar changes for the Student Loan process and potentially look at a CARD Act Part Deux response to feedback on the success of initial CARD Act provisions. The changing regulations can be seen as a burden or as an opportunity to upgrade customer communications and make them do more. There are tremendous opportunities to improve lending, and overall banking, communications. Mortgates are just one little piece of the customer experience opportunity.
Elizabeth Gooding is the editor of the Insight Forums blog and president of Gooding Communications Group www.GoodComm.net
