Cordray’s Latest Message

CFPB Director Cordray spoke at the American Mortgage Conference on September 11, 2013, and his speech BSA Training and Banking Regulations Compliance Consulting jerod11 - Cordray's Latest Messageincluded some pretty good remarks.  I figured since I actually read and analyzed his speech, I would save you the time of doing it yourself.  Here are the key points:

By now more and more community bank lenders are realizing that the Ability-to-Repay (ATR)/Qualified Mortgage Rule (QM) is not going to be the end of the mortgage world.  It’s simply going to formalize what the majority of lenders were already doing anyway.  Director Cordray backed this up with the following comments:

we (CFPB) came to recognize that most of their traditional lending practices should not be put into question by the Ability-to-Repay rule. Especially where smaller institutions make loans that they keep in their own portfolios, they have every incentive to pay close attention to the borrower’s ability to repay the loan.

There are plenty of good loans made every year that are non-QM. For example, loans made to borrowers with considerable other assets may not meet the 43 percent debt-to-income ratio…

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. 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.

There has also been a push by the mortgage industry to get the CFPB to push back/delay the January 2014 effective dates.  According Director Cordray, that’s not going to happen:

We do not believe that the Bureau’s regulatory implementation project should slow down the implementation process at any lender or servicer. 

We believe that it is critical to move forward so that these rules can deliver the new protections intended for consumers and the certainty that the industry has been seeking. 

Let me also say that our oversight of the new mortgage rules will be sensitive to the progress made by those lenders and servicers who have been squarely focused on making good-faith efforts to come into substantial compliance on time.

That said, it does appear there will some leniency and understanding for those who go about making a “good faith” effort to implement and comply with the new rules:

Let me also say that our oversight of the new mortgage rules will be sensitive to the progress made by those lenders and servicers who have been squarely focused on making good-faith efforts to come into substantial compliance on time.

“So I got that goin’ for me, which is nice.” – Carl Spackler, Caddyshack

Published
2013/09/14
Jerod Moyer

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