Circuit has found that in the rulemaking context, "ecisionmakers violate the Due Process Clause and must be disqualified when they act with an 'unalterably closed mind' and are unable to rationally consider arguments." (See 663 F.3d 476, 487–88 (D.C. Under the Administrative Procedure Act, reviewing courts can set aside any agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." (See 5 U.S. Still, given the timing of her rehiring and the Bureau’s announcement, her involvement in the rulemaking process represents a clear prejudgment risk to the agency. She also referred to the seasoned QM as “dumb” and “illegal,” and intimated that “Black and Brown communities” stand the most to lose under the new rule.Īt the very least, the public record dictates that Thompson recuse herself from any new rulemaking involving the seasoned QM. ![]() As far back as August, Thompson panned the seasoned QM, arguing that it is bad for consumers because “if someone manages to scrape together the money to pay it for 3 years, the homeowner can't challenge the loan.” Separately, she released a call to action for people to submit public comments opposing the seasoned QM. Only fixed rate loans that perform for 3 years, but still subprime.” Here she is again, this time comparing the seasoned QM to subprime lending: “Remember when subprime lending sparked foreclosure crisis & global recession? CFPB's seasoned QM proposal meant to encourage subprime lending. Here she is on September 30 (with a helpful video): “How do we stop the CFPB's seasoned QM proposal that would allow lenders to make high-priced loans to people without checking to see if they have ability to repay?” What should pique their interest, though, is the fact that Diane Thompson, prior to rejoining the CFPB, was publicly advocating against the seasoned QM rule! Many consumer advocacy groups disagree with this principle, but that’s probably not a story that would get most investigative journalists’ juices flowing. At some point during the term of a loan, any borrower default would be the result of an unforeseeable change in the borrower’s circumstances, so it makes little sense to threaten the lender with penalties (for a faulty initial assessment) for the duration of the loan. ![]() In other words, after a borrower demonstrates the ability to repay their loan, the lender can be officially relieved of any mistakes in gauging the borrower’s ability to repay.Īs one of my previous columns argued, this concept makes perfect sense. Under this new category, lenders can use a borrower’s actual payment experience, over the course of three years, to obtain the qualified mortgage status for a loan. The seasoned QM rule, of course, is a new category of the (Dodd-Frank created) qualified mortgage. ![]() Some good old-fashioned investigative journalism is in order here, especially since the Bureau just announced that it “is considering whether to initiate a rulemaking to revisit the Seasoned QM Final Rule.” In a perfect world, the Washington Post (and other news outlets) will take as much interest in Thompson’s reappointment to the Bureau as it did in the Trump administration’s early efforts to staff the Bureau.
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