Sam Gendusa January 7, 2013

In an interview with HousingWire, Richard Andreano, a partner at Ballard Spahr, said that it is possible the Consumer Financial Protection Bureau (CFPB) could announce new rules that would affect a number of financial products, most notably Qualified Mortgages, as early as January 9th.

The CFPB, established in 2011 as part of the Dodd Frank Wall Street Reform, exists to govern the markets for financial products and services. So when the CFPB speaks, everyone in the financial industry listens. And in this case, the CFPB may be installing wholesale changes that actually alter or eliminate the product offerings some banks, lenders, and servicers currently sell.

However, according to Andreano, this doesn’t need to set off alarm bells across the country immediately, because those in charge of implementing these new rules understand that it will take time for the industry to adjust and have figured that into the plan, leaving a year for organizations to get into compliance with the new rules.

Still, at the end of the year things could look very different than they are now, with the new rules possibly forcing some smaller banks out of certain products offerings, including Qualified Mortgages. You see, the rules that expected to be announced in January include ability-to-repay (qualified mortgage), loan originator compensation, servicing practices, appraisals, high-cost mortgages and escrow issues. And if the new rules require lenders and servicers to absorb more risk than they feel comfortable with, they may opt to drop the product offering all together. Of course, smaller establishments carry higher risk in the first place, so these rules may just be the straw that broke the camel’s back for them. We will just have to see how it plays out.

Andreano says that he based his January 9th prediction, which is in line with the industry consensus, partly on the fact that the CFPB has already scheduled public hearings on January 10th and 17th to collect feedback for the new rules. However, when the rules are announced, it is also believed that they may have an “interim final” tag applied to them, which would make them binding as final rules, but subject to change at a later date.

The main takeaway here is that “the times, they are a-changing’” for the financial industry, and that you need to stay on top of these changes in regards to how they affect you.

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