The Consumer Financial Protection Bureau is conducting an assessment of the Ability-to-Repay/Qualified Mortgage rule (ATR/QM rule) and mortgage servicing rule with a request for recommendations and information. The Dodd-Frank Act requires the CFPB to review some of its rules within five years after they take effect to assess effectiveness. The rules being assessed were adopted in Jan. 2013 and took effect in Jan. 2014.
The CFPB is asking for comments on the assessment plan for the ATR/QM rule under the Truth in Lending Act (Regulation Z) by July 31, 2017. The comment date on the assessment plan for the mortgage servicing rule under the Real Estate Settlement Procedures Act (Regulation X) expires on July 10, 2017. The CFPB intends to issue the assessment reports by January 2019.
In the Dodd-Frank Act, Congress established new standards for mortgage lending that, among other things, required lenders to assess consumers’ ability to repay. The Dodd-Frank Act also provided for a class of “qualified mortgage” loans that cannot have certain risky product features and are presumed to comply with the ATR requirement. The ATR-QM rules require lenders to consider and verify a number of different underwriting factors, such as a mortgage applicant’s assets or income, debt load, and credit history, and make a reasonable determination that a borrower will be able to pay back the loan.
The RESPA servicing rule requires mortgage servicers to provide disclosures to borrowers related to force-placed insurance, respond to errors asserted by borrowers in a timely manner, and follow procedures related to loss mitigation applications and communications with borrowers. For example, servicers generally must acknowledge written notices of error within five days and investigate and respond to the borrower in writing within 30 days.
Specific research activities. The CFPB will examine the impact of major provisions of the ATR/QM rule on a set of consumer outcomes, including: mortgage cost; origination volumes; approval rates; and subsequent loan performance. In addition to these measurable outcomes, the bureau will also consider changes in creditors’ underwriting policies and procedures which might affect consumer outcomes.
The CFPB plans to conduct or has begun conducting several research activities in connection with the assessment of the ATR/QM rule:
- quantitative research on loan originations, rejection rates, and loan performance, using available mortgage data;
- analysis of cost of credit before and after the rule, as well as recent trends;
- interviews with creditors regarding their activities undertaken to comply with the requirements of the ATR/QM Rule; and
- consultations with government regulatory agencies, government-sponsored enterprises, and private market participants.
To assess the effectiveness of the 2013 RESPA servicing rule, the CFPB also plans to analyze a variety of metrics and data to the extent feasible. Feasibility will depend on the availability of data and the cost to obtain any new data.
Issues for comment. In particular, the CFPB invites the public, to submit the following:
- comments on the feasibility and effectiveness of the plans, as well as the outcomes, metrics, baselines, and analytical methods for assessing the rules:
- data and other factual information that may be useful;
- recommendations to improve the assessment plan, as well as data, other factual information, and sources of data that would be useful;
- data and other factual information about the benefits and costs of the rules for consumers, creditors, and other stakeholders in the mortgage industry; and about the impacts of the rules on transparency, efficiency, access, and innovation in the mortgage market;
- data and other factual information about the rules' effectiveness in meeting Dodd-Frank Act objectives; and
- recommendations for modifying, expanding, or eliminating the rules.
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