Richard Cordray, the former Attorney General of Ohio, was officially sworn in as director of the Consumer Financial Protection Bureau (CFPB), a long-awaited appointment that had been stalled by Congressional stonewalling.
The question for real estate professionals, though, is a heady one. What will Cordray’s impact be on housing, given the powers he is granted as the agency’s director?
According to a recent article by CNBC’s Diana Olick, a big part of Cordray’s job will involve the regulation of non-bank lenders, an area of finance that the CFPB had, until now, had no power to regulate.
Guy Cecala, the CEO and publisher of Inside Mortgage Finance, said in Olick’s piece that such a regulating presence could be substantial for the industry.
“That could have a big impact,” Cecala said. “A lot of these firms – ranging from mortgage brokers to large lenders like PHH – have effectively escaped regulation in the past. Now they will not only have to submit to reporting but also lending regulations previously only extended to depository institutions.”
Another, more immediate impact Cordray could have is on the still-developing state’s attorneys generals’ negotiations with big banks over the robo-signing scandals of 2010.
Edward Mills, a policy analys at FBR, said in Olick’s article that Cordray, as a former AG, could provide a meaningful presence in the negotiations, which were meant to conclude last year but have dragged on into 2012.
Beyond the Cordray and CFPB, though, Olick also raises an interesting point regarding recess appointments, the controversial method of appointing agency directors when Congress is out of session, thereby bypassing the chamber and its potentially obstructionist members.
Such a method, Olick writes, could be used to replace Edward DeMarco, the acting director of the Federal Housing Finance Agency who has long resisted government efforts to aid housing for the sake of the balance sheets of Fannie Mae, Freddie Mac and the Federal Housing Administration. If DeMarco were to be replaced by a more reform-minded director, he or she could work with Cordray on additional assistance to American homeowners.
“A different FHFA director might take a more expansive view of what is needed to help housing,” said Jaret Seiberg, a financial services policy analyst at Guggenheim Securities, in Olick’s article. “That opens the door to much bigger refinancing programs than what have been adopted so far. For borrowers, that means lower rates which helps the economy, helps housing and helps the President’s re-election effort.”