CFPB plans to review qualified mortgage, CARD Act rules

Rohit Chopra, the director of the Consumer Financial Protection Bureau, said the bureau plans to conduct a review of the "qualified mortgage" rule and credit card rules. 

In a blog post on Friday, Chopra announced that the bureau will take a fresh look at Trump-era changes to underwriting standards in the QM rule and two long-standing credit card rules. 

“Many of these rules have now been tested in the marketplace for many years and are in need of a fresh look,” Chopra wrote.

Even though average mortgage rates have surged to nearly 6%, Chopra said he wants the CFPB to spur streamlined modifications and refinancings in the mortgage market.

The CFPB also said it plans to examine aspects of the QM rule’s “seasoning” provisions that allow some delinquent loans to gain QM status, considered the gold standard of mortgage underwriting.

The QM rule was rejiggered in 2020 under former CFPB Director Kathy Kraninger, a Trump appointee, who eliminated its main component — a 43% debt-to-income ratio limit  — and replaced it with a pricing threshold. 

The reconsideration of the QM rule likely comes as a surprise given that mortgage lenders and consumer advocates backed Kraninger’s QM rule. Former acting CFPB Director Dave Uejio had previously delayed the compliance date of the QM rule until October 2022.

The CFPB is also looking to identify “potential enhancements and changes to business practices” for compliance with rules related to the Fair Credit Reporting Act( FCRA). The FCRA requires accurate reporting of information to the credit bureaus. 

Card issuers are under increased pressure to report payment information to the three major credit bureaus.

Chopra also reiterated that the CFPB plans to revisit the Credit Card Accountability Responsibility and Disclosure Act, known as the CARD Act, as part of an effort to reduce credit card fees pegged to inflation. 

In the blog post, Chopra listed the CFPB’s rulemaking priorities that include implementing sections 1033 and 1071 of the Dodd-Frank Act plus other long-standing Congressional directives to create rules for finance Property Assessed Clean Energy loans.

He wrote that the CFPB wants rules that are simple, easy to understand and easy to enforce.

“The CFPB aspires to more clearly communicate the agency’s expectations in simple and straight-forward terms, which will produce more durable guidance and rules, in addition to numerous other benefits,” Chopra wrote. “Simple bright-lines advantage law-abiding companies and disadvantage law breakers.”