The Consumer Financial Protection Bureau (Bureau) today published a report under section 1022(d) of the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) assessing the effectiveness of the Bureau’s Ability to Repay and Qualified Mortgage Rule and a separate report assessing the effectiveness of the Bureau’s mortgage servicing rule issued under the Real Estate Settlement Procedures Act (RESPA).
The Bureau issued the Ability to Repay and Qualified Mortgage Rule in January 2013 to implement provisions of the Dodd-Frank Act that require lenders, before making a residential mortgage loan, to make a reasonable and good faith determination based on verified and documented information that the consumer has a reasonable ability to repay the loan. The rule took effect in January 2014.
The Bureau also issued the RESPA Mortgage Servicing Rule in January 2013 to implement certain provisions of the Dodd-Frank Act imposing new obligations on mortgage servicers who are generally responsible for billing borrowers for amounts due, collecting payments, disbursing funds, and providing customer service. The rule also added new protections which the Bureau deemed appropriate or necessary to carry out the consumer protection purposes of RESPA. This rule also took effect in January 2014.
The Dodd-Frank Act requires the Bureau to conduct an assessment of each significant rule or order adopted by the Bureau and to publish a report of its assessment no later than five years after the effective date of the significant rule or order. The assessment shall address, among other relevant factors, the effectiveness of the rule in meeting the purposes and objectives of the Dodd-Frank Act and the specific goals stated by the Bureau in issuing the rule in question. The assessment shall reflect available evidence and any data that the Bureau reasonably may collect. Before publishing a report of its assessment, the Bureau shall invite public comment on recommendations for modifying, expanding, or eliminating the rule or order.
The assessment of the Ability to Repay and Qualified Mortgage Rule uses a range of data sources, including a unique data set the Bureau assembled for purposes of this assessment, to comprehensively examine the extent to which the rule has affected consumers’ access to credit and the cost of credit. The assessment of the Servicing Rule likewise uses a range of data, again including a unique data set the Bureau assembled, to thoroughly examine how the rule has affected the experiences and outcomes for consumers, with a particular focus on those who fall behind on their mortgage payments.
Pursuant to decisions Bureau leadership made in 2015 and 2016, the reports do not include a cost-benefit analysis of these rules overall or of any specific provisions of these rules, but each report does address matters relating to the costs and benefits. The Bureau is considering whether to include cost-benefit analysis in future assessments and related reports. The Bureau expects that the findings in these reports will inform stakeholders, policy makers, and the general public about developments in the mortgage market and the effects of the rules on consumers.
The issuance of these reports is not the end of the line for the Bureau. The agency is interested in hearing reactions from stakeholders to the reports’ findings and conclusions. The Bureau anticipates that continued interaction with and receipt of information from stakeholders about these rules will help inform the Bureau’s future policy decisions.