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."

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