CFPB considers halting implementation of QM, debt collection rules

The Consumer Financial Protection Bureau is looking to delay the implementation dates of the Qualified Mortgage and debt collection rules and will resume collecting data on home loans, credit cards and prepaid cards.

Acting CFPB Director Dave Uejio wrote in a blog post late Wednesday that the CFPB needs more time to consider rules that were implemented — but have not yet gone into effect — under the Trump administration.

“I will be assessing regulatory actions taken by the previous leadership and adjusting as necessary and appropriate those not in line with our consumer protection mission and mandate,” Uejio wrote, adding that changes include ways to “explore options for preserving the status quo with respect to QM and debt collection rules.”

Bloomberg

In June, the CFPB extended the QM rule until April 2021, further delaying an exemption from strict underwriting guidelines given to Fannie Mae and Freddie Mac during the last financial crisis. The changes are not a surprise. Many had expected the CFPB under President Biden would move to delay the effective dates of several rulemakings started under former CFPB Director Kathy Kraninger, including two recent debt collection rules finalized in October and December.

The debt collection rules for the first time would restrict how often debt collectors can call borrowers, to seven calls per week, and would require collectors to provide detailed disclosures on old debts that have exceeded the statute of limitations.

To aid consumers and military veterans suffering financially from the coronavirus pandemic, Uejio also directed the bureau’s research division to resume collecting Home Mortgage Disclosure Act data that had Kraninger put on hold in March. The CFPB originally required quarterly HMDA reporting to understand when markets are under stress or in flux and some experts saw the suspension of quarterly data collection as a mistake.

The CFPB said it will also resume data collection for credit cards, small-business and clean energy loans to help better understand who is receiving credit and assess how borrowers are faring during the pandemic.

Uejio made clear that he is moving quickly to implement changes even before Rohit Chopra, President Biden’s nominee to lead the agency, is confirmed. Chopra, a commissioner at the Federal Trade Commission, also has shown an interest in small-businesses' access to credit.

“I want to make sure that we are doing all we can for the small businesses across the country that are on the brink of extinction,” Uejio wrote. “The Bureau enforces critical laws that protect small-business owners, including from harmful discrimination, in their access to and use of credit.”

Lucy Morris, a partner at Hudson Cook and former CFPB deputy enforcement director, said she "would not be surprised to see some expansive, creative approaches to small-business lending that might push the envelope of the bureau’s authority."

The CFPB under Democratic control is expected to use all of its tools — enforcement, supervision and market monitoring — to aid consumers. The Dodd-Frank Act gave the CFPB the authority to monitor financial markets for risks by gathering information and conducting research.

The CFPB can also require financial firms to file annual or special reports or to answer specific questions in writing related. It is currently analyzing several issues related to the pandemic, including foreclosures, mobile home repossessions and landlord-tenant evictions, though it is unclear whether landlord issues fall under the CFPB’s authority.

“Our agency now faces a test on whether we can, using all the tools Dodd-Frank gave us, forestall further similar economic and social catastrophes,” Uejio wrote. “In doing so, we need to sharpen our focus on the consumer experience. We were as a nation too late and too slow to respond to the warning signs in the mortgage market just over a decade ago.”