Deputy Director of the CFPB Raj Date spoke to the Mortgage Bankers Association National Secondary Market Conference yesterday. Date stressed the importance of the mortgage markets and noted it is an area the CFPB is spending most of its time in; “mortgage reform is appropriately front and center on the CFPB’s agenda.”
The CFPB has stated it will study transparency, fairness, and proper financial incentives to help restore the mortgage markets. The agency has already begun work to combine two federal mortgage disclosure forms into one clear and understandable form for customers to increase transparence.
Date also noted the CFPB will be studying a series of ‘common-sense’ rules which include ideas such as servicers should give borrowers more information about what they owe every month; or should give an earlier heads-up when an adjustable rate payment is about to change; or should warn borrowers that they are going to be force-placed into a potentially expensive insurance policy. These rules are in the early stages and have not yet been fully formed.
Date also spoke of the ability-to-repay provision of the Dodd-Frank Act which requires lenders reach a good-faith determination that a mortgage borrower has a reasonable ability to repay the loan. As part of the broader ability-to-repay mandate, Congress also designated so-called “qualified mortgages,” which are structurally safer and pose lower risk for borrowers, and which are underwritten according to standards that make it reasonable to expect that borrowers have an ability to repay. Date is confident these rules will be finalized before the CFPB’s January deadline.
Read the full remarks.