Cordray defends controversial mortgage rules

by Ryan Smith29 Oct 2013

The director of the Consumer Financial Protection Bureau explained his agency's mission and defended controversial new mortgage regulations Monday at the Mortgage Bankers Association's 100th annual conference and expo.

"You know firsthand how closely ties the mortgage market is to our overall economic stability and wellbeing," Cordray said. "The credit crunch, the financial collapse and the ensuing deep recession will likely stand as the most  severe economic shift of our generation. ... Part of our mission is to ensure the recent economic meltdown does not repeat itself."

Cordray defended the CFPB's "ability to repay" and "qualified mortgage" rules, which are set to take effect in January and which some mortgage professionals fear will stifle the industry by regulating some potential buyers right out of the market. Indeed, lending risk management firm ComplianceEase reported last week that more than 20% of mortgage loans currently being made would fail to meet the QM standard.

Cordray, however, took issue with those numbers, pointing out that QM standards will be looser upon implementation, not tightening for several years.

"We estimate that more than 95% of the loans being made in the current market will be QM," he said. "Some others ... have estimated that number to be much lower (not taking into account QM expansion)."

Cordray insisted that ultimately the new regulations would benefit consumers and industry professionals.

"We believe its critical to move forward so that these rules can deliver protections for consumers," he said. "We understand that this poses a challenge for industry. ... We're all in this together, so we appreciate the urgency and the resources the mortgage industry is bringing to bear.

"Our rule making process is designed to create rules that bring tangible benefits to consumers and make the market work better," he added. "We believe that such a marketplace will be beneficial to all those involved, and will lead to long-term financial conditions that will strengthen the future of this country."

COMMENTS

  • by 2Bsquare | 10/29/2013 8:21:24 AM

    You missed a key aspect of the speech. The Director noted that the new Rules were transparent and a level playing field that would promote competitions.

    I guess his dictionary of level is different than the one the Jesuits gave me.

  • by L Carbajal | 10/29/2013 9:33:20 AM

    Washington is responsible for the mortgage melt down with their blind former policies and subsequent financial crisis. They have yet to take any responsibility for their actions. Washington IS Wall Street and they do nothing but pass the buck to WS and the banking industry right down to the brokers. Now, they make up the rules as though they are coming to the consumers rescue. I doubt any of them need a mortgage nor do they have mortgages on their homes. If they do, I'm sure they could payoff in a heartbeat.
    How about some real reforms and disallow real estate firms from owning or being affiliated with mortgage companies and broker shops. Conflict of interest much! Dodd Frank BUNK!

  • by Gary Marozi | 10/29/2013 9:57:01 AM

    The mortgage products that were offered to borrowers in the meltdown were the problem. Eliminating the no doc mortgages, stated income mortgages, and marginal credit mortgages (unless the borrower has a larger down payment) will take care of the mortgage market. Lowering the mortgage amounts and setting a compensation level for mortgage officers will not be the answer. Common sense would solve all of the problems and provide a stable market for the future. All lowering mortgage amounts will do is slow appreciation in real estate and make more borrowers hesitant to buy a home. Adjusting lenders compensation will hurt borrowers that need help obtaining financing and will channel more business to the large banks who got themselves into trouble in the first place and do not have the customer service to help the consumers.

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