New Consumer Financial Protection Bureau (CFPB) regulations to rein in the mortgage market are simple to understand and easy to follow, according to the agency's chief.
CFPB Director Richard Cordray defended the regulations at a Consumer Federation of America event on Thursday, and promised that the bureau would be “vigilant“ in enforcing the “back to basics” regulations for mortgage lenders and servicers, according to prepared remarks.
On Jan. 10, the bureau’s new mortgage rules go into effect, requiring lenders to affirm that their borrowers are able to pay back the mortgages they take out.
“These are bedrock concepts backed by our new common-sense rules,” Cordray said.
Financial institutions and lawmakers on both sides of the aisle have worried that the regulations are too onerous, especially for small banks and credit unions. The regulations' requirements could force some institutions to cut back their mortgage lending, they warn.
The CFPB has also issued regulations for mortgage servicers who collect payments and work with borrowers to pay off their loans.
On the same day the mortgage lending rules go into effect in January, servicers will also have restrictions about when they credit mortgage payments they receive, and force them to investigate any errors reported on consumers’ bills. Other rules affect the way mortgage lenders have to help distressed and delinquent borrowers.
“Our new rules will help every borrower, whether or not they struggle to make their payments, by bringing greater transparency to the market,” Cordray said.
Those, too, have become the subject of criticism from mortgage lenders that say they could make it harder to hand out housing loans.
On Thursday, Cordray fired back against those concerns.
“They amount to little more than taking the time to work directly with your customers to address their circumstances,” he said. “In short, our rule means simply that mortgage servicers must now do their jobs.”