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THE LATEST SERVICING Criticism, Concerns Plaguing Cordray's Leadership of the CFPB Lawmakers unhappy with Cordray's recess appointment continue to make waves on Capitol Hill, putting the CFPB's director on the defensive. N ewly appointed Consumer Financial Protection Bureau (CFPB) director Richard Cordray fended off another round of concern and criticism at a congressional hearing recently even as he portrayed Congress as an important check on the bureau's power. Lawmakers from both sides of the aisle stayed true to their parties' positions by alternately casting Cordray's recess appointment as a potentially dangerous abuse of presidential power and as a needed solution to congressional gridlock. Sen. Richard Shelby (R-Alabama), a frequent and outspoken critic of the CFPB, reasserted his suspicions in his opening remarks by calling the bureau "intentionally designed to be free of the most basic checks and balances." "Unfortunately, the president has circumvented one of the most basic checks with his recess appointment," he added. He fired off a number of questions about accountability and appropriations, calling into doubt the CFPB's ability to collaborate with banks and businesses in the absence of significant congressional oversight. Asked by Shelby how he intended to carry out his responsibilities in spite of oft- rumored legal challenges—a point he said the Supreme Court may address—Cordray said that the Dodd-Frank Act "gives me responsibility under the law. . . . My legal responsibility is to do the best job I can at the moment." Testy relations frequently occurred between Cordray and other lawmakers. When Sen. Bob Corker (R-Tennessee) addressed the reporting process for the CFPB, the director responded by saying simply, "We're subject to being brought up here and having you grill us." "I hope we can end this idea of a boycott," Sen. Chuck Schumer (D-New York) said at another juncture, adding: "People are tired of obstructionism for the sake of obstructionism" and lawmakers need to "rejoin the debate on the playing field rather than [take] their ball and [go] home." The mortgage marketplace reentered the conversation closer to the end of the hearing when Sen. Kay Hagan (R-North Carolina) inquired about the status of the qualified mortgage, which may obligate mortgage originators and brokers to take into account tough new standards for a borrower's ability to repay. Cordray characterized the ability-to-repay rule as "one of the rules Congress has required us to adopt to fix what is seen as and what were irregularities in the mortgage market." He said that the CFPB had received "hundreds, if not thousands" of comments from the public and industry and planned to move forward with it by year-end. "It is something that is very much on our minds," he told lawmakers. Data from Q4 2011 Shows Solid Reductions for Refinancing Borrowers A new survey reveals that a high percentage of homeowners opted to cut their balance by paying in more money during the final quarter of last year. N early 85 percent of refinancing homeowners with first-lien loans maintained or reduced their current payments by paying in additional cash in the fourth quarter last year. Of these, according to recent analysis by mortgage giant Freddie Mac, 49 percent of borrowers slashed their principal payments by refinancing at current rates, compared with 37 percent who preserved their payments. "Savvy homeowners are taking advantage of some of the lowest fixed rates in more than 60 years to lock in interest savings," Frank Nothaft, VP and chief economist with Freddie, said in a statement. So-called "cash-out" borrow- ers—those who upped their loan balances by at least 5 percent— accounted for 15 percent of all refinance loans, the lowest percentage in the 26-year history of the GSE's analysis. The share of activity undertaken by these borrowers has fallen in most metropolitan areas around the country, with the sharpest rates of decline taking place in Detroit and Miami. Thirty-year loans averaged about 1.4 percent in median interest rate reductions, saving about 26 percent in interest rates. Analysis found that median borrowers typically save around $2,700 in interest payments on loans worth $200,000. By comparison, "cash-in" shares rose in 10 major metropolitan areas, Freddie found. THE M REPORT | 49 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET