"The report argues that these figures exceed the CFPB's reported figure of $21 billion returned to consumers through enforcement actions. Through a combination of regulation, supervision and the persistent threat of enforcement, the CFPB has increased the cost of credit for both lenders and borrowers, the report states. Moreover, instances of regulatory overreach and actions that bypass the Administrative Procedure Act introduce additional costs and uncertainty into credit markets that can further push lenders to retreat or limit offerings."
"The ability-to-repay (ATR) rule implemented under the DoddFrank Wall Street Reform and Consumer Protection Act requires lenders to verify a borrower's ability to repay their mortgage. Loans above a debt-to-income (DTI) ratio of 43% are objectively riskier and were associated with higher default probabilities during the heating crisis of the late 2000s. Exceeding that threshold now means carrying an interest rate that's roughly 16 basis points (bps) higher a 4.3% relative increase according to the report."
CFPB enforcement, regulation, supervision and enforcement threats have increased credit costs for lenders and borrowers and introduced uncertainty across credit markets. Regulatory overreach and actions bypassing the Administrative Procedure Act have raised compliance costs and pushed some lenders to retreat or limit offerings. The commonly cited $21 billion returned to consumers through enforcement actions understates the broader burden on the financial system. The ATR rule under Dodd-Frank requires lenders to verify ability to repay; loans above 43% DTI carry roughly 16 basis points higher rates, a 4.3% relative increase. CEA projects sizable aggregate increases in credit costs, though the effect mainly reflects a narrow subset of jumbo mortgages.
Read at www.housingwire.com
Unable to calculate read time
Collection
[
|
...
]