IT WAS A THROWAWAY LINE, to be sure. But there it was, an offhand remark by RICHARD CORDRAY, director of the Consumer Financial Protection Bureau (CFPB), that grabbed the attention of lenders who honestly believed their businesses would be harmed by some of the CFPB's "damaging" rules.
It came in a speech at the Brookings Institution in Washington, D.C., in mid-January, where Cordray explained the CFPB's new Owning a Home initiative and the highly controversial rate-checker tool that is supposed to let would-be borrowers look for the best loan rates available.
The CFPB director pointed out that in the year since the bureau promulgated its ability-to-pay rules, "we have not seen dramatic changes as some had feared.
"I recall seeing some rash predictions, such as that the price of mortgages would double and the volume of mortgages could be halved," he said. "But by the time these rules went into effect, lenders had already retreated from the worst sorts of lending that took us into the financial crisis. . . . Our rules put further measures in place to make sure that irresponsible lending would never be allowed to reappear."
And then he admitted, "[W]e did not anticipate that our rules would affect the broader market in an intense or abrupt fashion."
Speaking of the rate-checker tool, JOHN COUNCILMAN, president of the National Association of Mortgage Brokers (NAMB), Plano, Texas, joined David Stevens, chief executive officer of the Mortgage Bankers Association, Washington, D.C., in sharply criticizing the new tool. In a rally-the-troops message to NAMB members, Councilman said, "If a private company released this exact product, the CFPB and state regulatory authorities would have a team sent in to shut the site down."
Urging the NAMB membership to write to the bureau, Councilman, who is president of AMC Mortgage Corporation, Fort Myers, Florida, wrote, "What is perhaps most egregious is Director Cordray's statement that cautioned consumers that [mortgage lenders and brokers] have 'an important stake in selling the mortgage. . . . What is best for them is not always best for the consumer.' This statement is nothing but divisive, naive or dishonest-or all three." Councilman continued, "First, the director should know, since the CFPB issued the regulations, that the loan originator and mortgage brokerage entities cannot increase their compensation. Those are set and cannot vary per Dodd-Frank [Wall Street Reform and Consumer Protection Act] and CFPB regulation. Second, mortgage originators-whether they work for...