I asked [the] office [of Rep. John Ratcliffe, who has proposed to abolish the CFPB] to elaborate [on his claim that the CFPB hurts consumers]. I received a statement from Ratcliffe citing the group’s “qualified mortgage rule,” which he said “has made it harder for young people and retirees on fixed incomes to be able to purchase a home.”
He also cited “rules on prepaid cards and short-term lending products” — i.e., payday loans — and the agency’s “decision to expand class-action litigation in place of arbitration in consumer finance disputes.”
These are completely bogus complaints.
The qualified mortgage rule, also known as the ability-to-repay rule, requires that lenders do their homework to make sure a loan applicant can make regular payments. The idea is to avoid a repeat of the mortgage mess, in which banks handed money to pretty much anyone with a pulse and then passed off the crappy loans to unwary investors.
And the housing market is doing just fine, thanks. Mortgage applications for new homes were up 9.2% last month from a year before, according to the Mortgage Bankers Assn. Last year saw the largest number of existing homes sold — 5.45 million — since 2006, according to the National Assn. of Realtors.
* * * [The Bureau's] proposed rule for payday loans would require lenders to check if borrowers are creditworthy and make it harder for people to be trapped in endless cycles of debt.
The proposed rule for dispute settlement would block financial firms from using mandatory arbitration as a way to avoid class-action lawsuits. * * *
A 2007 study by Public Citizen found that over a four-year period, arbitrators ruled in favor of banks and credit card companies 94% of the time in disputes with California consumers. A 2015 Consumer Financial Protection Bureau study concluded that “class actions provide a more effective means for consumers to challenge problematic practices by these companies.”