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CFPB Questioned by Republicans Over Ex-Employees’ Mortgage Plans

U.S. Representative Darrell Issa
U.S. Representative Darrell Issa, a Republican from California, asked Consumer Financial Protection Bureau Director Richard Cordray to provide by Aug. 14 information including all documents related to drafting of the qualified mortgage rule since Feb. 17, 2011. Photographer: Joshua Roberts/Bloomberg

U.S. House Republicans are asking the Consumer Financial Protection Bureau for documents related to work on its qualified mortgage rule amid claims that former employees are seeking to profit from measures they helped write.

Representatives Darrell Issa of California and Jeb Hensarling of Texas made the request in a letter to CFPB Director Richard Cordray, they said in a statement today. The lawmakers singled out Raj Date, saying that former deputy director’s advisory firm focuses on “borrowers who do not meet the standards for ‘qualified mortgages’ as set by the CFPB.”

“Simply put, it appears that former CFPB employees are now offering financial products in a market sector created by the very rules they were in a position to influence,” they said in the letter. “This conduct raises serious questions about the integrity of the CFPB’s rulemaking process.”

The consumer bureau, created over Republican opposition as part of the Dodd-Frank Act, has faced lawmakers’ criticism for its mortgage underwriting standards, budget and collection of consumer financial services data. Date, who left the CFPB in January, has hired former bureau employees Gary Reeder, Chris Haspel and Mitch Hochburg at his Washington-based Fenway Summer LLC, which plans to provide loans to borrowers he considers low risk even though they might carry debt that exceeds a threshold created by the qualified mortgage rule.

Issa, chairman of the House Oversight and Government Reform Committee, and Hensarling, who leads the Financial Services panel, asked Cordray to provide by Aug. 14 information including all documents related to drafting of the qualified mortgage rule since Feb. 17, 2011. The lawmakers’ letter was also signed by Republican Representatives Jim Jordan of Ohio, Shelley Moore Capito of West Virginia and Patrick McHenry of North Carolina.

“In crafting our mortgage rules the bureau engaged in a transparent process, with extensive public input and outreach to stakeholders,” Moira Vahey, a CFPB spokeswoman, said in an e-mail. “As a result, our new rules create important new consumer protections and help establish a foundation for recovery in the mortgage market.”

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