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It has only been a day since the Consumer Financial Protection Bureau released its qualified mortgage rule, and the official word from industry trade groups is a sense of cautious optimism prevails.
But optimism is not exactly pouring from every aspect of the industry, at least not if you look at the CFPB's website, where the comments section under Richard Cordray's QM announcement is riddled with the type of direct comments usually scrubbed from press releases.
The CFPB director used his online announcement to tell the story of a man named Henry who received a $500,000 loan while making less than $50,000 a year. Cordray's article on QM and Henry led to a fair amount of feedback that shows ongoing reticence about the bureau's mission even with QM finally on the table.
It also shows a fundamental disagreement over whether an agency can solve all of the issues that led to the mortgage market meltdown.
Here is just a sampling of online feedback to Cordray's announcement.
-- Unfortunately, you lose significant credibility on these issues when you write about straw man "Henry" and his story. The title of your new regulation "Protecting consumers from irresponsible mortgage lending" should've probably also included "and protecting consumers like Henry from himself".
-- In the conversation with Henry, I wonder is Mr. Cordray told Henry that if these Qualified Mortgage Rules were in place he would have never received his Half a Million Dollar Loan.
-- What the CFPB seeks to do with overly-restrictive, ill-conceived regulation emanating from the Washington bubble of narcissism could be solved with a simple mandate that high school students give up just one of their feel-good, squishy, meaningless "social studies" classes and replace it with a course in how money works. Seriously, Mr. Cordray. More regulation issued by people who have zero understanding of the inner-workings of an industry isn't the answer.
-- If banks weren't allowed to sell their sell pieces of mortgages like they were securities, the problem would solve itself. Henry is not the problem. Banks that create mortgages then sell them off in pieces, that's the problem. If they kept the loans they made, you better believe they would start making better loans.
-- Expecting the average borrower to understand the ins and outs of complex financial products is like expecting a patient to understand the ins and outs of open-heart surgery. Put the blame where it belongs - on the people who bent over backwards to convince everyone these loans were affordable.