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Posts Tagged ‘Consumer Financial Protection Bureau’

Why the CFPB’s Qualified Mortgage Rule Misses the Mark

This post grows out of two working papers (downloadable here and here) I’ve written with Joshua Mitts, a former student of mine who is now working at Sullivan & Cromwell.

Why the CFPB’s Qualified Mortgage Rule Misses the Mark
Ian Ayres & Joshua Mitts

Last Friday, the Consumer Financial Protection Bureau’s “qualified mortgage” rule went into effect.  This rule is designed to put an end to the risky lending practices that led to the financial crisis.  But a simpler rule could better assure borrowers’ ability to repay and simultaneously create greater repayment flexibility.

The purpose of the QM rule is to help assure that borrowers have sufficient monthly income to make their required mortgage payments, lessening the risk of large-scale defaults like those experienced after 2008. The rule creates a lender safe harbor for qualifying mortgages.  Lenders can still make non-qualifying loans, but must instead meet more onerous multi-factored underwriting standards. Qualifying loans reduce the risk that lenders will be held liable under Dodd-Frank for failing to make a “reasonable, good faith determination of a consumer’s ability to repay.” 


And the Financial Institution Most Likely to Be Late Responding to a Consumer Complaint Is . . .

One day last spring, I saw in a Google alert that the Consumer Financial Protection Bureau (CFPB) had announced that it was for the first time making public a consumer complaint database.  At the time, I was teaching a course in Empirical Law & Economics at Yale and decided to call an audible.  I came into class that day and projected the raw data (which you can see for yourself by clicking here) and asked the class how we might make use of the information.

With incredible dispatch, Jeff Lingwall and Sonia Steinway merged the complaint data with other datasets and together we started to put together an initial draft analyzing the complaint information.  When the CFPB made the database public, they actively encouraged “the public, including consumers, analysts, developers, data scientists, civic hackers, and companies that serve consumers, to analyze, augment, and build on the public database to develop ways for consumers to access the complaint data or mash it up with other public data sets.”  This paper is our attempt to respond to the Bureau’s call to action.


Appoint and Nominate: How to Fill the Vacancy Atop the CFPB

Last week, I published an op-ed in the Washington Post suggesting an “appoint and nominate” method by which President Obama could make a recess appointment of Elizabeth Warren to the Consumer Financial Protection Bureau, while still respecting the Senate’s confirmation process. I suggested that the president “should make a recess appointment of Elizabeth Warren and simultaneously nominate Sarah Raskin for the same position.”