By Amber Cushman – Compliance Attorney, DocuTech Corporation
On October 28, 2013, Richard Cordray addressed the Mortgage Bankers Association at their annual convention in Washington, DC, and he explained the agency’s mission and goals to promote “fair, transparent, and competitive markets”. He stressed the agency’s desire to “assure evenhanded oversight of consumer financial markets and to prevent bad practices from taking root.” To this end, the CFPB has promulgated regulations to help implement the Dodd Frank Wall Street Reform and Consumer Protection Act.
Cordray provided an overview of some of the more important new regulations, including the Ability-to-Repay Rule, Qualified Mortgage Rule, and new servicing regulations. He emphasized the regulations’ purpose, which is to prevent another economic crisis like the one that the nation is facing and slowly recovering from. The new regulations are intended to promote consumers’ access to credit, ensure consumers get mortgages they can afford to pay back, and create a fairer, more effective process for troubled borrowers faced with the prospect of losing their homes. To this end, Cordray said the CFPB is “committed to open, inclusive, transparent decision-making.” He cited the Bureau’s efforts to conduct research and solicit input from stakeholders in the mortgage industry before finalizing their rules.
In his explanation of the QM Rule, Cordray estimated “that more than 95 percent of the mortgage loans being made in the current market will be Qualified Mortgages”. While not all mortgages fall within the QM safe harbor, Cordray reassured lenders who make non-QM loans based on sound underwriting standards that their lending models will not be negatively affected by the new rules. He also offered assurances that the QM rule will deliver predictable legal protections, but that the rules “left little room for legal challenges to whether a given mortgage is a QM.”
He told lenders that the CFPB 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.” While the CFPB may be sensitive to lenders’ good-faith efforts, plaintiffs’ attorneys will likely be less sensitive to such good-faith efforts, and lenders should ensure their compliance departments are prepared to be fully compliant by January 2014. Cordray offered some sympathy toward the burden lenders will face in preparing for the new regulations: “We understand this poses a challenge for industry, just as the writing of such a substantial set of mortgage rules by last January posed a significant challenge for our new agency.”
DocuTech Corporation is committed to providing lenders with mortgage documentation solutions that comply in all respects with the new rules proposed by the CFPB. For more details on DocuTech’s implementation plans, please review the articles posted on our website at www.docutechcorp.com/compliance.