Home / News / Government / CFPB Director Outlines Proposals for Mortgage Lending Reform
Print This Post Print This Post

CFPB Director Outlines Proposals for Mortgage Lending Reform

Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), laid out the agency's aims to reform mortgage lending standards before a Congressional subcommittee Tuesday.

[IMAGE]

""Speaking before the House Oversight and Government Reform Subcommittee on TARP, Financial Services, and Bailouts of Public and Private Programs"":http://www.consumerfinance.gov/speeches/written-testimony-of-richard-cordray-before-the-house-oversight-and-government-reform-subcommittee-on-tarp-financial-services-and-bailouts-of-public-and-private-programs/, Cordray acknowledged that although the Dodd-Frank Act has had a hand in improving most consumer lending markets, tight mortgage lending standards have kept creditworthy borrowers out of homes.

In an effort to fix these issues, Cordray said that CFPB is proposing ""clear rules of the road"" to address each stage of the mortgage process and to rebuild consumer and investor confidence.

The first step to clearing up the mortgage market, Cordray said, is to improve disclosures and help consumers better understand mortgage terms. He asserted that better disclosure will not burden lenders or undermine credit availability and that integration of federal disclosures may reduce the long-term cost of mortgage origination. These savings could be passed on to the consumer, thus making credit more affordable.

[COLUMN_BREAK]

Cordray also mentioned proposed rules designed to address the issue of fairness in mortgage servicing. He called for better communication between servicers and borrowers with rules requiring servicers to respond to allegations of error. CFPB's proposed rules would also require servicers to contact troubled borrowers with information about their options as early as possible.

Additionally, he said CFPB is finalizing rules later this year to implement a new statutory requirement that would charge lenders with making a reasonable assessment of a borrower's ability to repay a loan before providing one. Cordray explained that in implementing such a statute, CFPB would ensure that customers are not sold mortgages that they cannot afford, while those who can afford to repay loans are able to find them in the market.

While Cordray acknowledged that implementing a number of reforms may be difficult for the industry, he reaffirmed CFPB's commitment to working with lenders and lawmakers to make a smoother transition. He also announced that CFPB has reopened the comment period on its proposals so that consumers or lenders can voice their own feedback.

""We believe that consumers will have more confidence after more robust rules are in place. And we are keenly aware that potential investors are waiting to see the precise shape our rules take,"" said Cordray. ""That is why we are working to put in place rules by the deadlines that Congress set. We are committed to helping provide the mortgage market with the clarity it is seeking.""

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
x

Check Also

HUD Grants $150M to Tribal Communities for New, Affordable Housing

“Strong investments in Tribal communities help ensure residents can access much-needed safe and affordable housing,” said Secretary Marcia L. Fudge. “The funds HUD is making available will meet the challenges of today and allow Tribal communities to make innovative and vital advancements needed to prepare for the future."