Although he has the authority to fix "all sorts of financial services and products," Richard Cordray said his "greatest" focus will be on the mortgage market.
Cordray, first director of the U.S. Consumer Financial Protection Bureau, said Monday that there was "much to be fixed in this broken market."
"It was, after all, the house of cards that crashed our economy and caused so much pain for millions of Americans," he said.
Cordray, former Ohio attorney general, became the bureau's director in January after President Obama defied six months of Republican opposition and made the appointment during the congressional recess.
The Republican position has been articulated by Sen. Mitch McConnell of Kentucky, who said the bureau, "as created by the deeply flawed Dodd-Frank Act," is set to be one of the least accountable and most powerful agencies in Washington.
The appointment has given the bureau power to enforce provisions of the Dodd-Frank financial-overhaul bill that created it.
Today, four million mortgages - 7.6 percent of all home loans - are more than 90 days delinquent. About 23 percent of all borrowers owe more on their mortgages than their houses are worth - about 10 million, according to data from various sources.
Cordray is required by Dodd-Frank to develop standards to prevent a repeat of the housing crisis.
The process will be measured in "adjustments," he said, with one rule requiring mortgage servicers to provide consumers with better information in their billing statements, including principal owed, the current interest rate, the next date on which that rate may change (adjustables), and a phone number and e-mail address to contact the servicer.
The prototype is available for public comment at http://goo.gl/NCGBH.
Another rule would prevent "forced-place" insurance, which refers to coverage that servicers obtain at the borrowers' expense, typically at high cost, when they believe, even erroneously, that the homeowners' policies have lapsed.
Consumers would first be given the opportunity to obtain a new policy, which is generally less expensive than a forced-place one, he said.
In addition, there will be new disclosures for hybrid adjustable-rate mortgages, which Cordray called complicated loans that usually start with a lower "teaser" interest rate before resetting to a much higher one.
The new rule would require lenders to notify borrowers months ahead of their first rate adjustment, and the buyers would receive a "good-faith estimate" of their monthly payments.
Included with the notice would be a list of alternatives borrowers could pursue to avoid the higher rate, including refinancing and renegotiation of loan terms, he said.
Contact real estate writer Alan J. Heavens at 215-854-2472, aheavens@phillynews.com, or @alheavens on Twitter.
