An edited version of this post by Roy Oppenheim was first published in US News and World Report’s Home Front Blog and is being redistributed on South Florida Law Blog with their permission.
In that vein, any attempt to regulate the mortgage industry—even a flawed one—is better than no attempt at all. Even an incorrect approach can be fixed, and has a chance to ultimately succeed.
For instance, the Qualified Mortgage rule recently unveiled by the Consumer Financial Protection Bureau lacks a thorough enforcement arm, but it wasn’t entirely without merit. It was thorough, and had the potential to benefit homeowners.
That’s probably why the banks—and the politicians that stand with them—are doing everything in their power to kill the more restrictive lending rules, not by arguing the merits of the rule itself, but by trying to undermine the legitimacy of the CFPB itself.
A decision by a federal appeals court has called into question President Barack Obama’s recess appointment of the CFPB’s director Richard Cordray last year, and everything Cordray has done in the last 12 months—including establishing the Qualified Mortgage Rule—could be headed to the scrap yard.
Instead of fine tuning the CFPB’s new lending rules, and giving them the financial backing they need to succeed, the president and Congress are re-arguing Cordray’s credentials, and whether his appointment is constitutional. Meanwhile homes are still being foreclosed on, bad mortgages are still being sold, and the nation is stuck with a rudderless CFPB.