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Cordray Seems Firm On Mortgage Rule Compliance Dates
WASHINGTON (11/8/13)--While he said he would consider recent congressional calls for a one-year mortgage regulation delay, Consumer Financial Protection Bureau Director Richard Cordray seemed resolute that those rules would become effective in January, as planned.

The CFPB Director made his remarks during a Thursday Morning Money Breakfast Briefing presented by Politico.

More than 100 U.S. House members this week urged the bureau to "defer implementation" of pending mortgage rules until Jan. 1, 2015 "in order to ensure financial institutions are able to transition their systems to be in full compliance with the rules." (See News Now Nov. 7: CUNA QM Concerns Reflected In Congressional CFPB Letter.)

The Credit Union National Association is urging the CFPB and prudential regulators, such as the National Credit Union Administration, to issue a joint statement that examiners will give covered financial institutions working in good faith to comply generally until September before they cite them for violations under these rules. CUNA is also urging the agencies to work with Congress to support a statutory delay, also until September, in the ability of consumers to sue covered institutions for alleged violations.
 
CUNA Deputy General Counsel Mary Dunn said this approach is reasonable, and will aid credit unions and others as they continue their efforts to be ready for the rules. "Also, it will not require the agency to move the compliance dates. This is important since a delay in the effective dates does not seem likely given the fact that the Dodd-Frank Act sets the time frame for compliance," Dunn added.
 
Cordray on Thursday said the CFPB's qualified mortgage (QM) regulation has already been delayed by one year beyond the Dodd-Frank Act's mandated due date, and the vast majority of institutions are ready to comply with the regulations. The longer the QM regulation is delayed, the longer other related rules such as qualified residential mortgage regulations will also be delayed, he said.

Examiners will give institutions some leeway in the early days after the QM regulation is implemented, he said. The bureau will not be looking for compliance perfection, but for a good faith effort from lenders, Cordray added.

Institutions that are making good loans should continue to make those loans whether they are QM or not, Cordray said. He noted that the pending mortgage regulations simply codify good common sense principles that many lenders have already followed for years, and that the risk difference between a QM loan and a non-QM loan is typically small.

Cordray said there is no question the mortgage market will work better once the new rules take effect. However, he said, the CFPB does not want to rest on its laurels once a rule is issued. He said the CFPB encourages the industry and individuals to provide details on how new regulations are actually impacting markets.

If rules do not work as intended the CFPB will reexamine them and attempt to fix what is wrong, he emphasized. The object is not to write a rule and defend it because the agency wrote it…The goal is to help the markets function correctly, he said.

Access to credit is an emerging issue in mortgage and other markets and access to credit will inform the way the CFPB writes rules. Overall, he said, regulations are good, but the CFPB will need to strike a balance to ensure they are not going to dry up sources of available credit.
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