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A first look at results from the National Survey of Mortgage Borrowers
In the wake of the Great Recession, Congress created the Consumer Financial Protection Bureau (CFPB or Bureau) to protect consumers and help avoid any repeat of the conditions that had led to the financial crisis. It has been widely recognized that dramatic deterioration in underwriting standards led to severe dislocations in the mortgage market, which were transmitted through various mechanisms, including mortgage securitization, into extensive damage to the broader economy. In accordance with the direction laid out by Congress, addressing the mortgage market was a high priority for the Bureau and, in January 2013, the CFPB finalized several mortgage rules, most of which took effect in January 2014. Among these rules, the Ability-to-Repay (ATR) rule requires that lenders generally make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans. The mortgage servicing rules establish strong protections for homeowners, including those facing foreclosure.
Many of the risky practices that led to the crisis were not present in the market when the ATR rule went into effect, so the Bureau did not anticipate that our rules would affect the broader market in an intense or abrupt fashion. Rather, the point of the rule is to establish important guardrails that will prevent a return to these risky lending practices as memories of the crisis may fade over time.
In the years following the recession, conditions in the mortgage market have, for the most part, slowly and steadily improved, and signals suggest that this should continue in the years ahead.
