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Lending

CFPB Director Richard Cordray just told off the House Financial Services Committee

Yes, he has friends in manufactured housing

January 28, 2014

Consumer Financial Protection Bureau Director Richard Cordray appeared before the House Financial Services Committee this morning for his Semi-Annual Grilling (I mean Report) before Congress. 

Those of you who remember controversial CFPB hearings from the past are in for a real treat.

So bring out the popcorn, folks, Congressional battles with the CFPB are always heated and centered around the most controversial subjects, such as the CFPB’s crappy headquarters, the bureau’s expensive renovations — and whether or not Richard Cordray really has friends living in manufactured homes. Yes, this came up.

For the record, Cordray does have friends living in manufactured homes, and the Bureau director was not amused with some of the panel's line of questioning. The discussion lingered on manufactured housing for a bit too long, angering the CFPB chief.

At one point, the normally cool and confident Cordray grew upset over a round of questioning over the alleged impact CFPB rules are having on manufactured housing.

Apparently the director mentioned the rules are not an attack on manufactured housing, and that he’s sensitive to individuals in manufactured housing since he has friends and family living in such arrangements.  

But that didn’t stop members of the Congressional panel from suggesting that the director and his "one-size-fits-all" approach to lending rules and his comments are condescending to the manufactured housing community. And that’s where it all began.

Cordray fired back, telling the House Panel, “These are some of the most offensive questions I have ever heard coming from this Committee." (Cordray may want to look back at some of the hearings various Congressional panels held with Elizabeth Warren a few years ago). But I digress.

Cordray also aggressively pushed back at suggestions that the Bureau may be collecting consumer data for campaign purposes. After those assertions were made, he shot back saying the allegations were completely unfounded and based on no evidence. He also advised that his agency is focused on protecting consumer data and continues to discuss better ways to protect information.

The director also was forced to rehash the Bureau’s own housing issues. In short, renovations for the CFPB's headquarters remain a headache and are now costing taxpayers millions of dollars more. A local Washington paper has the full story.

The takeway from today’s hearing: the House Financial Services Committee is clearly divided between housing and finance experts and clowns who are good at delaying relevant discussion to hammer the CFPB on irrelevant subjects. After all, they just offloaded new mortgage rules on the market. How is that process going? Anyone?

So what relevant mortgage finance topics were covered?

As far as the Qualified Mortgage rule goes, Cordray gave the panelists a better idea of who fits within the QM credit box and shared a willingness to be more flexible if the market shows a need for change.

"There are three main boxes," the director noted at one point. Any loan that has a debt-to-income ratio of 43% or less is a QM loan, he said, along with any mortgage that qualifies to be acquired by the government-sponsored enterprises. The third credit box is for small-to-smaller creditors – covering community banks – giving them a pass if they sell to the GSEs or keep the loans in portfolio.

Perhaps the biggest news nugget for the mortgage market was Cordray’s admission that the Bureau continues to monitor QM and its impact on lending markets. For lenders who want to see changes, there is always some hope if a relevant need surfaces and catches the CFPB's attention. After all, that is how smaller creditors got their exception last year.

Cordray said he will continue to monitor "whether we are drawing all the lines in exactly the right places." He admitted that if issues come up that are relevant, the Bureau is open to considering more changes.

So there you go. Nothing is concrete about QM. Changes could happen if the credit box proves too insurmountable or restrictive in unnecessary ways. Probably one of the only helpful tips coming from today's hearing.

But the rest was amusing nevertheless. Keep being entertaining, House Financial Services Committee.

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