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Cordray Clarifies QM Compliance Leeway To Congress
WASHINGTON (11/13/13)--Consumer Financial Protection Bureau Director Richard Cordray on Tuesday described what agency examiners will consider "good faith efforts" at qualified mortgage (QM) regulation compliance.

Cordray made the remarks as he presented his agency's semiannual report before the Senate Banking Committee.

Examiners will give institutions some leeway in the early months after the QM regulation is implemented in January, Cordray reiterated on Tuesday. Examiners, he said, will be looking for financial institutions to have taken the responsibilities seriously and have compliance monitoring in place. It doesn't mean that every detail will be perfect, but that they have made real efforts, he said.

The bureau is not looking to play "gotcha" with institutions that are still implementing the changes needed to comply with the regulations, Cordray emphasized. The CFPB director said he could not give an official cutoff date for when this leeway would end, but said the leeway would be granted for several months.

The Credit Union National Association has called on the CFPB and Congress to delay until September 2014 possible sanctions and legal liability under QM and other mortgage rules. CUNA has also sought a one-year mortgage regulation implementation delay. More than 100 U.S. House members last week also urged the bureau to defer implementation of pending mortgage rules until Jan. 1, 2015 to ensure financial institutions are able to transition their systems into full compliance with the rules.

The CFPB's data collection and market monitoring practices were also addressed during the hearing. Cordray, in an exchange with Sen. Mike Crapo (Idaho), who is the ranking Republican member of the committee, said that the bureau is not monitoring individual consumer credit card accounts. The agency's intent when it collects consumer data is to monitor trends and the practices of large institutions, Cordray said. The CFPB does not have any different data than the institutions themselves or other regulators have, he added.

Cordray, in response to a questions, told Sen. Sherrod Brown (D-Ohio) that the CFPB plans to move forward to address privacy notice issues soon. He said he has not fully defined what the bureau's approach will be, but he believes the agency and Congress are moving in the same direction.

Brown is a leading cosponsor of legislation that would eliminate a requirement that privacy notices be sent on an annual basis. It would instead allow the notices to be sent only when the privacy policy of a financial institution has changed. The Credit Union National Association supports the legislation.

If Congress acts in the area, the CFPB will implement what Congress approves, Cordray said.
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