Biden Administration May Undo Some Trump-Era Mortgage Regulations
The Biden administration hinted it may dismantle mortgage rules inked during the waning days of Donald Trump’s presidency.
Those Trump-era rules erase protections for borrowers and may open the door to risky loans that led the housing bubble to burst in the 2008 financial crisis, according to some consumer advocates.
The bureau is charged with protecting consumers from abuse and predatory practices in credit cards, loans and other common financial services. It was created in 2011.
The new Trump-era measures — the Seasoned QM and General QM rules — relate to certain residential loans for homeowners. They rewrite protections codified in the Dodd-Frank financial reform law after the Great Recession.
Both are a type of qualified mortgage, a category that carries legal protections for lenders from consumer lawsuits. That may happen, for example, if borrowers can’t make monthly payments and lose their homes to foreclosure.
“It’s a big deal,” Patricia McCoy, a professor at Boston College Law School, said of the CFPB’s notice to possibly tweak the Trump-era measures. “The Seasoned QM rule is a really, really dangerous rule for consumers.”
If undertaken, the rulemaking process may ultimately change or rescind the rules, the CFPB said.