A group of 118 members of Congress wrote a letter to Consumer Financial Protection Bureau Director Richard Cordray requesting a delay of the new mortgage rules set to take effect at the start of next year under the Dodd-Frank Act.
“The mortgage rules released in January combined with the amendments released in May and September present financial institutions with over 4,000 pages of new regulations that they must be in compliance by January 2014,” said their letter, dated Nov. 5.
“This task is especially difficult for community financial institutions that may only have one or two compliance officers. Furthermore, many financial institutions rely on software systems for managing their operations.”
Their letter specifically mentioned the “Ability to Repay” rule and the “Qualified Mortgage Standards.” The “Ability to Repay” rule implements parts of the Dodd-Frank Act, which require creditors to make a reasonable determination that a consumer is able to repay a mortgage loan before extending credit.
“The agencies do not anticipate that a creditor’s decision to offer only Qualified Mortgages would, absent other factors, elevate a supervised institution’s fair lending risk,” said a guidance issued last month by five regulators. “There are several ways to satisfy the Ability-to-Repay Rule, including making responsibly underwritten loans that are not Qualified Mortgages.”
The members of Congress, including Rep. Pete King (R-N.Y.) and Bob Goodlatte (R-Va.), said they have heard from community financial institutions that their systems will not be in place before the January 2014 deadline.
The members warned Cordray that there could be “significant distortions” in the mortgage market impacting the availability of credit for consumers.
“We urge you to defer implementation of these rules until January 1, 2015 in order ensure financial institutions are able to transition their systems to be in full compliance with the rules,” said the letter.
The group of House members requested a response from Cordray by December 1.