The CFPB should drop the current debt-to-income ratio cap and the so-called GSE patch from the qualified-mortgage definition, the Urban Institute recommends. The CFPB is required by statute to review the ability-to-repay rule, which includes the QM definition, and issue a final report on its findings by Jan. 10, 2019. One of the most important elements of the review could be the fate of the “GSE patch,” which is set to expire in January 2021, or on the day ...

Almost 10 months into Acting Director Mick Mulvaney’s tenure at the CFPB, the bureau filed its first new lawsuit. The CFPB last week filed charges against Future Income Payments (FIP), Irvine, CA, in federal district court in the Central District of California. The bureau alleged that FIP’s pension-advance products were loans with interest rates “that are substantially higher than credit card interest rates,” according to the complaint, which also names the company's owner ...

CFPB Updates Model Disclosures Under Fair Credit Reporting Act . The CFPB last week issued an interim final rule updating two model disclosures to reflect changes made to the FCRA by the recent Dodd-Frank reform act.The Economic Growth, Regulatory Relief, and Consumer Protection Act, which became law in May, requires nationwide consumer reporting agencies to provide “national security freezes” free of charge to consumers. The [Includes three briefs] ...

The Consumer Financial Protection Bureau should remove the cap on debt-to-income ratios that applies to certain qualified mortgages, according to a proposal by the Housing Finance Policy Center. Such a move could boost non-agency lending, according to industry analysts. The CFPB is currently assessing whether changes are needed for QM standards, including potentially addressing the so-called government-sponsored enterprise patch. The patch allows mortgages with DTI ratios ...

The Securities and Exchange Commission levied $16.3 million in penalties against Moody’s Investors Service last week to settle charges involving internal control failures and failures to clearly define and consistently apply credit rating symbols. The bulk of the fine relates to more than 650 non-agency mortgage-backed security ratings issued between 2010 and 2013 that subsequently had to be corrected. Sens. Mark Warner, D-VA, and Mike Rounds ... [Includes four briefs]

The Urban Institute advocates dropping the debt-to-income cap for qualified mortgages to level the playing field between the government-sponsored enterprises and the private market.

The CFPB in the Trump era is likely to abandon or limit the use of the disparate-impact theory in enforcing fair lending laws, said attorneys. “Given the lack of ‘effects’ language in [the Equal Credit Opportunity Act] and the [CFPB’s] stated focus on enforcing statutes as they are written, we expect that they will determine that ECOA does not support a disparate-impact theory,” said Jeffrey Naimon, a partner at Buckley Sandler. Under the disparate-impact theory ...

A top CFPB official in charge of protecting student borrowers stepped down from the agency in late August, blaming the leadership of Acting Director Mick Mulvaney. Seth Frotman, who was the student loan ombudsman at the agency, said in his letter of resignation the current leadership of the bureau has “turned its back on young people and their financial futures.” He added: “The bureau is now content doing the bare minimum for [consumers] while simultaneously ...

The CFPB late last week issued a rule to clarify partial HMDA exemptions for small financial institutions ushered in under the Dodd-Frank reform act. The Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law in May, exempts depositories – including credit unions – that originated fewer than 500 closed-end mortgages or 500 open-end lines of credit in each of the two preceding calendar years from certain expanded reporting ...

Sens. Mark Warner, D-VA, and Mike Rounds, R-SD, in late August introduced bipartisan legislation amending the CFPB’s ability-to-repay rule to expand financing options for self-employed mortgage borrowers. The CFPB’s qualified-mortgage rules have relatively strict requirements which make it difficult for borrowers who don’t have traditional income sources to obtain mortgage credit. But the Self-Employed Mortgage Access Act of 2018 would expand ...