According to a study conducted by the CFPB, nearly half of all consumers do not shop around before purchasing a mortgage.  "This means," Richard Cordray told an audience at the Brookings Institute, "they seriously considered only a single lender or broker before making their decision." 

In a speech in which he stressed the importance of "Changing the culture how people get their mortgages," Cordray, Director of the Consumer Financial Protection Bureau (CFPB), said his agency's recent National Survey of Mortgage Borrowers, conducted in conjunction with the Federal Housing Finance Agency, also found that most consumers put substantial effort into considering other housing needs.  "They routinely weigh the most basic questions about which house to buy, such as where they want to live, and how many bedrooms or bathrooms they think they will need.  But they do not seem to be as careful or as confident in weighing the economic aspects of the mortgage decision, such as what down payment they can afford or what mortgage terms fit their unique financial needs."  The Director said that almost nobody buys a house after looking at just one and the same should be true when buyers consider their mortgage options. 

The CFPB survey also found that consumers are getting much of their mortgage information from sources that have a vested interest in the outcome.  Seventy percent said they relied on their lender or broker "a lot" for their loan against the 20 percent who relied on websites and 2 percent on housing counselors.  Cordray said that while lenders and brokers can certainly provide important information, consumers should realize that their business is selling mortgages and that lenders and brokers have different business models and make money in different ways.  Thus it is important for a borrower to get information from several before making a decision.  This does not affect an individual's ability to qualify for a mortgage, he said.  It is a myth that a lot of lender inquiries to credit bureaus damage a credit score. 

An important and interesting finding from the survey Cordray said, was that consumers with more confidence in their knowledge about the mortgage process were more likely to shop.  This was especially true when it came to information about available interest rates.

New mortgage regulations limit various risky product features but mortgages can still be hard for consumers to understand, he said.  They need to know about key components such as term and type, different interest rate structures, conventional versus FHA or VA, and how fees can vary.

One effort to change the culture is the new mortgage disclosures which go into effect this summer.  These, he said, will help consumers understand their options, choose the best deal they can, and avoid costly mistakes at the closing table.  CFPB will also be bringing out a new more consumer-friendly edition of the booklet people receive when they apply for a mortgage.

While shopping can occur at different points in the homebuying process Cordray said consumers are well advised to cast a wide net early on.  They should research the options first then meet with lenders and ask questions about their products.  It is vital that consumers wait until they receive official loan offers from multiple lenders before making a final selection.  Also, those official loan offers will soon be presented on the agency's new disclosure form.  "Finding the best deal depends on comparing the available offers, which may vary based not only on the interest rates but also on other costs and terms," the director said.

Another step in changing the culture, Cordray said, is a new interactive toolkit designed to help consumers as they shop for a mortgage.   "Owning a Home" which is now available on the CFPB website, is designed" to give consumers the information and confidence they need to get the best deal."  

The toolkit includes a guide to loan options and a closing checklist, written in plain language. It explains the differences between rates types, helps with the calculations about how much loan the borrower can afford, and answers questions that can arise throughout the mortgage process. 

The kit also contains a Rate Checker, a tool currently in beta release that helps consumers understand what interest rates may be available to them.  Borrowers can plug in their credit scores, location, and other information and the program uses lenders internal rate sheets to inform them of the rates currently being offered to other borrowers like them.  Many websites, Corday said, offer information on rates being offered to borrowers that meet their top criteria.  When borrowers then go to the lender and are quoted surprisingly different rates they are left confused and uncertain about whether the rates make sense. 

Those proprietary websites often require personal information to provide rate quotes and this information is then used for marketing purposes.  CFPB's toolkit has "no hidden agendas" Cordray said, and the agency does not retain any personal identifying information.  "It simply enables consumers to have more of the information they need to be savvy shoppers and get the best deals they can."

The toolkit also offers an understanding of how lower rates translate into dollars saved which again makes it to compare different interest rates and to see how much they will cost. 

CFPB, its director said, is working to reduce the information gap between lenders and consumers.  The former knows the mortgage pricing inside and out, the latter can often feel it is a mystery.  "We need to change the process from one of 'getting a mortgage' to one of 'shopping for a mortgage' Consumers have much more power than they may realize.  They can use that power to take control of their financial outcomes."