WASHINGTON (9/12/13)--The comments and concerns of smaller lenders, like credit unions, were credited by Richard Cordray with helping to shape the Consumer Financial Protection Bureau's Ability-to-Repay rule.
CFPB Director Cordray said Wednesday that the Ability-to-Repay rule illustrates how the CFPB is a "data-driven" agency, which conducts research and solicits input from all stakeholders--consumer advocates, industry members, and public officials--before finalizing a rule. He was addressing the American Mortgage Conference in Raleigh, N.C.
Through information provided by smaller creditors, Cordray said, the 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. They are more immediately subject to community norms, and their underwriting standards did not deteriorate in the heady days before the financial crisis; indeed, they often lost market share to those engaged in the more irresponsible lending practices of that era.
"So we avoided a 'one-size-fits-all' approach by proposing and then finalizing specific provisions to meet the special circumstances of smaller mortgage lenders," he told his mortgage lending audience.
Even in May, the CFPB added changes to the ATR rule effective in January, changes intended to make it easier for some credit unions and other small creditors to make mortgage credit available to their communities by exempting them from some provisions of the rule.
The CFPB noted that the amendments are intended to facilitate access to credit by creating the specific exemptions and modifications to its Ability-to-Repay rule for small creditors, community development lenders, and housing stabilization programs.
Credit Union National Association President/CEO Bill Cheney, who was contacted by Cordray personally before the amendments were announced, thanked the director for being responsive to concerns raised by CUNA, the state credit union leagues, and credit unions.