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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 Consumer Financial Protection Bureau said Tuesday it is considering whether to “revisit” the rules, issued in December when Trump appointee Kathy Kraninger led the agency. (She stepped down last month at the request of President Joe Biden.)

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.

Real Estate“Big deal”

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.

The new rules are scheduled to phase in starting March 1.

“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.

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