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Assessing our rules: Our reports on the Ability to Repay and Qualified Mortgage Rule and the RESPA Mortgage Servicing Rule

Today, I am pleased to announce we have published two reports assessing significant CFPB rules: The first assesses the effectiveness of our Ability to Repay and Qualified Mortgage Rule. The second assesses the effectiveness of the Mortgage Servicing Rule we issued under the Real Estate Settlement Procedures Act (RESPA).

For each of our significant rules or orders, section 1022(d) of the Dodd-Frank Act requires the Bureau to conduct an assessment addressing, among other relevant factors, the effectiveness of the rule or order in meeting the purposes and objectives of title X of the Dodd-Frank Act and the specific goals stated by the Bureau. Section 1022(d) further provides that an assessment shall reflect available evidence and any data we reasonably may collect. It also requires us to publish a report of that assessment no later than five years after each rule or order’s effective date.

This somewhat unique statutory requirement places a responsibility on the Bureau to take a hard look at each significant rule we issue and evaluate whether the rule is achieving its intended objectives, as well as title X’s purposes and objectives, or whether it is having unintended consequences with respect to those purposes and objectives. I see this as a valuable opportunity to assure that public policy is being pursued in an efficient and effective manner and to facilitate making evidence-based decisions in the future on whether changes are needed.

The Bureau issued the Ability to Repay and Qualified Mortgage Rule in January 2013 to implement provisions of the Dodd-Frank Act. Those provisions require lenders, before making a residential mortgage loan, to make a reasonable and good faith determination 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 CFPB’s Office of Research took the lead in conducting our assessments of these rules. Our researchers began work over two years ago in identifying the questions that needed to be asked and in exploring the available data sources to answer those questions. Bureau researchers then developed and solicited public comment on research plans.

The researchers determined that the effects of the rules could be studied to an extent through public and commercially-available data, and, in the case of the Ability to Repay and Qualified Mortgage Rule, with the National Mortgage Database, which the Bureau developed in collaboration with the Federal Housing Finance Agency. The CFPB also obtained a unique dataset comprised of deidentified, loan-level data from a number of servicers for the assessment of the servicing rule and a separate dataset of deidentified application-level data from a number of creditors for the ATR-QM assessment. Our researchers also supplemented those data, including with (among other things) results from a survey conducted by the Conference of State Bank Supervisors; by surveying lenders, housing counselors, and legal aid attorneys; by conducting structured interviews with a number of servicers; and careful review of public comments received in response to Bureau requests for information.

I am confident that these reports provide numerous useful findings and insights for stakeholders, policy makers, and the general public about developments in the mortgage market and the effects of the rules on consumers, creditors and servicers.

The issuance of these reports is not the end of the line for the Bureau. I am committed to assuring that the Bureau uses lessons drawn from the assessments to inform our approach to future assessments and future rulemakings.  We are interested in hearing reactions from stakeholders to the reports’ methodologies, findings, and conclusions. The Bureau anticipates that continued interaction with stakeholders will help inform our future assessments as well as future policy decisions.

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