In a speech for the Consumer Bankers Association, CFPB Director Richard Cordray said that while credit was too tight, concerns that the agency’s “qualified mortgage” rule would be too onerous have proven unfounded.
“Credit is still too tight, at least in my view, but we can now look in the rear-view mirror and see that some of the undue fears people had about legal liability under the QM
rule, or market paralysis due to streamlining the mortgage disclosure forms, can be put in healthier perspective,” Cordray said. “There is ample opportunity in the mortgage market as it continues to heal, and you should be doing what you do best: serving your customers through great deals and great customer service. Homeownership still remains the most effective engine of wealth accumulation for the American middle class, and you are the ones who are making that happen and rebuilding a key marketplace that failed this country so brutally less than a decade ago.”
Cordray said that while mortgage reform in the wake of the financial crisis had been mostly positive, many lenders and consumers overreacted to the meltdown, making it harder for even deserving borrowers to get a mortgage.
“The market crash itself led to many changes, with bad actors and bad practices no longer feasible in a marketplace that had all-too-belatedly exposed the risks inherent in irresponsible and often predatory lending,” he said. “Indeed, if anything, the market meltdown produced an overreaction, marked by very tight credit and historically low levels of consumer demand and available supply. For those of us engaged in the important work of protecting consumers, these developments posed a very tricky task in implementing reforms. We were well aware of the concerns many had raised that the cost of protecting consumers would constrict the availability of credit and even drive many financial service providers out of business altogether.”
Mortgage credit is still too tight, according to the head of the Consumer Financial Protection Bureau – but don’t blame regulations.