WASHINGTON — One of the most significant regulations to come out of the financial crisis — the Qualified Mortgage rule — could face significant changes under new leadership at the Consumer Financial Protection Bureau.

CFPB Acting Director Mick Mulvaney indicated Tuesday during a real estate convention that the rule, which took effect in 2013, painted all institutions with the same brush and needed to be reworked.

"Our duty is to look at unduly and overly burdensome regulations and our statutory interest is to see markets function,” Mulvaney said at the National Association of Realtors conference in Washington. “You’re going to see us try to bring some sanity to the larger market, including QM.”

Acting CFPB Director Mick Mulvaney
“There’s a difference between the mortgage that goes out on Quicken, or Rocket Mortgage . . . and the one that my local credit union does for someone that they’ve known for three generations," said acting CFPB Director Mick Mulvaney. Bloomberg News

The industry has long argued the rule was written assuming all mortgages were the same without taking into account the different types of lenders and mortgage products. Mulvaney appeared to agree with this criticism, specifically contrasting the widely popular digital Rocket Mortgage from Quicken Loans Inc. to getting a home loan from a small credit union.

“If you think you can have a one-size-fits-all rule for every single mortgage, you don’t understand the mortgage business,” Mulvaney said.“There’s a difference between the mortgage that goes out on Quicken, or Rocket Mortgage . . . and the one that my local credit union does for someone that they’ve known for three generations. Those are not the same thing, and to think that we’re going to try and force a square peg into a round hole impairs the ability of the market to function properly.”

The CFPB is already supposed to review the impact of the QM rule this year because the Dodd-Frank Act requires the bureau to review rules five years after they take effect. Mulvaney's comments appeared to indicate the agency was open to making further changes than beyond a simple review.

The QM rule under previous CFPB leadership already includes some carve-outs for community lenders. But many still argue they only write QM loans, partly over fear of consumer lawsuits or regulatory enforcement if they lend outside that box.

The House is also expected to vote in the coming weeks on a Senate bill that provides some regulatory relief to Dodd-Frank, including a “safe harbor” from the QM rule for lenders with less than $10 billion in assets that keep the mortgages on their books.

The CFPB has issued a dozen requests for public comment on various bureau functions and regulations but has not yet done so with the QM rule. Mulvaney did not indicate whether the agency would issue a request for comment on the QM rule.

But he did urge Realtors and lenders in the audience to submit comments on the dozen requests already published after receiving a lackluster response so far.

“I’ve been a little surprised at the lack of participation in a couple of areas,” said Mulvaney, noting the CFPB had received only six responses from one request and five of those responses were for a different department. “I need information from you folks, I need information from consumers. I need information from everybody who has a dog in the fight to send us the information in response to these requests.”

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