CFPB Director Richard Cordray said last week at the American Mortgage Conference that the agency is working to address industry concerns related to its new mortgage servicing and ability-to-repay rules.
“Before we finalize our rules, we conduct research and solicit input from all stakeholders – consumer advocates, industry members, and public officials,” Cordray said. “The best decisions will be those that are best informed. There is no question that our processes, including the many meetings we took and the broad input that we received, led to more informed and better outcomes on these mortgage rules.”
Cordray said input by community banks and credit unions led the agency to issue exemptions for small creditors to avoid a “one-size-fits-all” approach. He also said that while the agency’s rule covers most loans made in the market, “there are plenty of good” non-covered loans made every year.
“Lenders that have long upheld such standards have little to fear from the Ability-to-Repay rule; the strong performance of their loans demonstrates the care they have taken in underwriting to borrowers who have the ability to repay,” Cordray said. “Nothing about their traditional lending model has changed, and they should continue to offer the same kinds of mortgages to borrowers whom they evaluate as posing reasonable credit risk – whether or not they meet the criteria to be classified as qualified mortgages.”
Cordray said that as the agency seeks to implement the rules, it will engage with industry participants in a “joint enterprise” to ensure smooth implementation.
“We believe that the Bureau’s responsibility for the rules we promulgate does not end with simply finalizing a set of regulations,” Cordray said. “It is not good enough for us to take the view that once these new rules are published, our work is then done and we can say to financial institutions that ‘it’s your problem now.’ If the whole point of our regulations is to protect consumers and promote fair, transparent, and competitive markets, then we should care about how well the rules are understood and implemented, how operational issues can be more easily addressed, and the amount of effort required.”