They are meant to halt the risky lending practiced that helped usher in the Great Recession, CFPB director Richard Cordray said during a speech at the American Bankers Association Annual Convention in New Orleans.
Since the first of the rules were unveiled earlier this year, the CFPB had taken pains to explain them to lenders, he said.
“It would have been a classic governmental approach for us to say, once the mortgage rules were published, ‘Well, that’s your problem now,’” Cordray told the bankers.
“We could have said we have plenty of other things to do – which is true – and so we will not see you again until our examination teams arrive to gauge whether you are getting it right or we bring an enforcement action contending that you did not get it right,” he said. “We could have left you entirely on your own.”
Rather, Cordray said, the agency had worked intensively with the industry in an effort to make sure the upcoming rollout of the new rules will go smoothly. The agency has issued “plain language” versions of the complex regulations, posted video guidance and held meeting with major market players.
Industry concerns have led to tweaks to the language of the rules, and the CFPB, along with other financial regulators that oversee the financial sector, published detailed examination procedures for the rules six months before they were to take effect, so their expectations wouldn’t catch lenders by surprise.
“Let me also assure you that our oversight of the new mortgage rules in the early months will be sensitive to the progress made by institutions that have been squarely focused on making good-faith efforts to come into substantial compliance on time,” he told the bankers.