CFPB: Changing for the Better?
People who have been in the mortgage industry for more than a decade generally don’t dispute that standards and accountability were necessary as American consumers suffered years of fallout from lending practices that led to the infamous meltdown. But it’s also a widely-held belief that the Consumer Finance Protection Bureau (CFPB) brought more than we bargained for in the form of regulation through enforcement rather than clarity and guidance on how to comply. The bureau itself is on a fast track to reform these days since President Trump appointed Office of Management and Budget Director Mick Mulvaney as interim CFPB director. Recent developments indicate that change is clearly underway:
The CFPB issued the fourth in a series of Requests for Information (RFIs) on February 14 as part of an effort to improve overall efficiency and effectiveness of its supervision program and determine whether any changes to the program would be appropriate.
CFPB Chief of Staff Kirsten Sutton issued a memo to the entire bureau on February 9, stating, “If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.”
Though CFPB reform is welcome, it’s unlikely that relaxation of rules or enforcement practices will change the way mortgage companies and loan officers do business. The top-tier companies and people remained after widespread attrition occurred in 2008 and the Nationwide Multistate Licensing System & Registry (NMLS) was established. Since then, MLOs entering the business have learned the industry and built their practices in a new regulatory era.
Discontinuance of alleged “abuses of discretion” and confirmation from the US Court of Appeals for the District of Columbia that Dodd-Frank-mandated agencies have “gone beyond their statutes” in some challenged cases won’t cause lenders to abandon consumer protection. Today’s successful companies and producers got where they are by taking excellent care of their customers – entirely independently of CFPB direction or governance.
Hope for CFPB reform doesn’t spring from a desire to avoid compliance, but rather a need for accountability from a regulatory entity that has been slow to provide guidance and quick to enforce. Changes will likely lead to better understanding of bureau requirements and easier adoption of new rules – which in turn will benefit the consumers we serve.