A former CFPB leader is betting against the newly defined “qualified mortgage” to launch a new lending business.
Mortgage industry executives have argued that lenders won’t make loans outside strict parameters defined earlier this year by the CFPB, and lenders have worried whether they’d be able to lend outside the rules even if they wanted to due to potential legal issues.
But Raj Date, who stepped down from his position as CFPB’s deputy director earlier this year, has decided that focusing on loans outside of the qualifications will be the basis of his business, as reported by the Wall Street Journal.
Date today will announce the launch of a startup mortgage lender and business advisory firm named Fenway Summer LLC, reports say.
The company, operating out of Washington’s Georgetown neighborhood, plans to start a mortgage lending operation focusing on loans that don’t fall under qualified mortgage guidelines, which require lenders to evaluate a borrowers’ ability to pay back the loan.
Although only a fraction of mortgage lending this year would have fallen outside the qualified mortgage restrictions, Date told the WSJ he sees a business opportunity to help good, responsible people get good mortgages without relying so heavily on credit scores.
His firm will also provide strategic advice for consumer finance firms. It will not lobby the CFPB or work on compliance with the bureau’s regulations, Date said.