Arkansas Republican French Hill voiced support this week of the House Financial Services Committee's attempts to weaken the CFPB, attacking the constitutionality of Cordray’s position as well as taking aim at the ‘ability to repay rule’ (ATR) for mortgage lenders.
Hill said that ATR has made it far more difficult for low or middle income borrowers to buy a home and killed the mortgage businesses of community banks.
The rule as written by the CFPB requires “most mortgage lenders to make a good-faith effort to determine that you are likely to be able to pay back the loan.”
In both agency and private label, ATR has made the market fundamentally safer since the crisis. Investor confidence in RMBS is predicated on the credit worthiness of borrowers taking out mortgages and their ability to pay back those loans — the explicitly stated objective of ATR.
The basic idea that that borrowers should have the ability to pay their debts should not be controversial among lawmakers in Washington. A weakened CFPB that can no longer enforce this very basic form of consumer and investor protection, would undermine all of the work done to bring the US housing market back from the brink.
More's the pity there is no recent case study which would show the GOP what happens when you play fast and loose with mortgage lending standards.