Warren, who helped create the CFPB in 2010, said the rules “will force mortgage lenders and servicers to compete by offering better rates and better customer service,” according to a Huffington Post report. “Our whole economy will be safer. Not completely safe, but with a new cop on the beat, it will be safer.”
The new rules, which take effect today, will prohibit banks from initiating a foreclosure until a borrower is at least 120 days delinquent and prohibit brokers from receiving kickbacks for convincing borrowers to take higher-cost loans, according to HuffPo.
But other rules are far more controversial. Many in the industry say that the CFPB’s Qualified Mortgage regulations will push many potential borrowers out of the market, and a 3% points-and-fees cap will stifle competition.
The CFPB itself has admitted that the QM
rule could have unintended consequences. The agency acknowledged in January 2013 in the Federal Register that in some cases when a qualified mortgage was originated, “the entire payment from creditor to broker would be captured in points and fees” in a wholesale transaction, while “the retail transaction might include no loan origination compensation at all in points and fees.” Such a situation, the CFPB admitted, “could constrict the supply of loan originators and the origination channels available to consumers to their detriment.”
While Warren acknowledged that the rules weren’t perfect, however, she said they would “make a real difference for millions of families who own, or who hope to own, their own home” and “show once again that government can fix problems,” according to HuffPo.
Sen. Elizabeth Warren is singing the praises of the Consumer Financial Protection Bureau’s new mortgage rules, saying on the Senate floor this week that the new regulations will stifle practices aimed at “tricking and trapping” borrowers.