WASHINGTON — Lending groups are demanding the Consumer Financial Protection Bureau take down its mortgage rate calculator, arguing it is providing misleading information to consumers.

The agency launched the calculator in a beta version on Jan. 12, alongside a report that found nearly half of consumers surveyed do not shop around before applying for a mortgage. CFPB officials have said their rate checker is meant to offer "unbiased" information on average mortgage rates by state, and do not tell consumers what lender to use, as some other online calculators do. 

But industry groups argue the calculator is flawed, presenting consumers with incomplete information about local mortgage rates. They note it lacks details on critical elements of a mortgage, like points and fees and mortgage insurance, which some other online calculators show.

"It is virtually impossible to get an automated tool out there to be precisely accurate," said David Stevens, president and chief executive of the Mortgage Bankers Association. "This [CFPB] tool is precisely inaccurate and that should not be tolerated by a bureau that promotes full disclosures."

Lenders' concerns about the rate checker were reignited recently when a lawmaker questioned CFPB Director Richard Cordray on why the agency put out a mortgage rate calculator before completing other rules to help the market, like regulations governing mortgages for manufactured housing.

"It's really muddying the waters," said Rep. Stephen Fincher, R-Tennessee, during a House Financial Services' oversight subcommittee hearing on March 3. "Why is it ahead of this effort? The bureau posted an incomplete and imprecise rate checker to help consumers when it's not accurate. Where are you getting that information and why did you do it prematurely?"

Cordray argued that the rate checker "actually is quite accurate," saying it is updated daily and is not out of line with the information provided by other sites, including Google.

"Google is different than the CFPB," Fincher replied.

Stevens said the CFPB "didn't previously run it by experts in the industry."

"They could have pointed their mistakes out and saved them embarrassment but the fact that they've been circling the wagons is almost more embarrassing," he said.

Mortgage calculators vary wildly in terms of search criteria and options available to those who use them. Consumer groups, who support the CFPB's effort, agree the agency's calculator needs additional information, including data on points and fees, brokerage fees and mortgage insurance.

"We think that having an APR reflects more things that the consumer will have to pay so it's more cognizant of the charges they should expect and more inclusive for better measurements," said Yana Miles, policy counsel at the Center for Responsible Lending. "We don't believe the CFPB should take the tool down but we also think they can make some improvements to make it more clear."

Cordray acknowledged during the hearing that the agency was looking at suggestions made by outside parties, including adding an annual percentage rate estimator.

"And these are all things that have been suggested to us, particularly by MBA, and we're looking at and thinking about" it, he said.

A spokesman for the CFPB said it plans to update the rate checker as part of an overall upgrade to its "Owning a Home" toolkit later this year. The spokesman also noted that the rate checker was never meant to be the consumer's only source of rate shopping.

"The Rate Checker is not a substitute for shopping, and the site explains that interest is only one of many costs associated with a mortgage," said Sam Gilford, a spokesman for the CFPB. "The tool gives consumers information about what interest rates they may be offered, and shows consumers that in many cases the range of rates in a given area may vary significantly."

American Banker looked at the average rate given for every state on the CFPB's calculator based on the loan and consumer traits that the search function has pre-set. As of Monday, all but 12 states had the same average rate of 4.1% and even the outlying states hovered around 4%.

Those rates were a few basis points higher than the rates on bankrate.com based on the same criteria. But bankrate.com also has additional functions so the consumer can sort by points and fees, for example. Some lenders said that, so far, the CFPB's rate calculator is in-line with actual rates offered by lenders.

 "At first, we were very concerned that it was going to be a site where the CFPB would be polling lenders and putting [individual] lender's rates" like other sites do, said Joe Nunsiata, chairman at FBC Mortgage in Florida. "In Florida, most lenders offer at or below that 4.1% average" so the CFPB's rate checker "is really pretty neutral and, for us, a non-event."

Still, some banking groups said the CFPB should stick to its job of educating consumers and implementing its mandates, not offering a flawed calculator.

"We certainly appreciate the bureau's efforts at trying to make the information available to consumers. They do have quite a lot of tools and existing avenues to do so and they need to perfect what they should be doing rather than engaging in other ventures," said Rod Alba, vice president of mortgage finance at the American Bankers Association. "To go into this extracurricular activity outside of the law in order to engage in consumer education is going to get a lot of people nervous because the law already engages in so much."

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