CFPB Official Outlines Plans to Tackle Mortgage Market Regulation

One hundred days after officially taking power, the Consumer Financial Protection Bureau submitted testimony to the Subcommittee on Financial Institutions and Consumer Credit, reporting on its efforts to promote transparency, uphold the regulatory system, and empower consumers.

In his written testimony, Raj Date, special advisor to the Secretary of the Treasury on the CFPB, focused heavily on the mortgage market.

Bringing clarity and transparency to the marketplace is one of the bureau’s primary objectives, he said, and it’s doing what it can to fix the lack of transparency that contributed to the housing market collapse.

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He mentioned the Know Before You Owe initiative, one aspect of which combines the Truth in Lending Act with the Real Estate Settlement Procedures Act into a simpler, more useful mortgage disclosure form.

“Our work in this area will both reduce regulatory burden and make the costs and risks of a loan clearer so that consumers can choose the mortgage that best meets their needs,” said Date in his testimony.

Additionally, Date addressed the regulatory system for the lending market, which failed to protect consumers pre-Dodd-Frank, he said. The bureau is particularly conscious of upholding rules and regulations for all lenders.

“Our mission is to ensure that brokers, originators, and servicers play by the rules, regardless of their charter,” he said in his testimony. “It doesn’t matter if you’re a thrift, bank, finance company, industrial loan company, or investment bank. If you want to be in the business of consumer finance, then you’ve got to play by the rules like everyone else.”

The bureau took action by publishing the Supervision and Examination Manual, a guide for its examiners to use in overseeing companies that provide consumer financial products and services, Date explained. Additionally, it has released examination procedures for mortgage servicing.

Date also mentioned the CFPB’s efforts to empower consumers and mentioned the appointment of Hubert “Skip” Humphrey III to head up the newly established Office of Financial Protection for Older Americans.

This office, he said, will “help seniors navigate financial challenges by educating and engaging them about their financial choices in areas such as long-term savings and planning for retirement and long-term care.”

The CFPB has been active in regards to service member affairs and also appointed a private education loan ombudsman, in addition to launching a Know Before You Owe initiative for student loans in partnership with the Department of Education to provide students with important information about borrowing and repayment.

Instead of leaving consumer protection in the hands of several different agencies, the CFPB consolidates focus with a “sole mission” making sure the financial markets work for American families, Date said. After the testimony, some Republicans expressed concern that authority from these previous agencies would now duplicated.

Another Republican wanted to know if the Department of Housing and Urban Development was still working on a form to streamline mortgage disclosure forms, one of the CFPB’s first initiatives.

Some members of the Subcommittee honed in the Bureau’s structure rather than its progress and plans, however.

“My fear is that there are simply no checks and balances,” said Rep. Spencer Bachus, the chairman of the full Financial Institutions and Consumer Credit committee. “It could easily become a loose cannon. That would be the worst case scenario, and it may not, but it’s headed by a single director who answers to no one.”

Republicans brought up the fact that the original House bill called for a commission structure rather than its current governance structure of a single director.

The CFPB has already  testified in two hearings before the Financial Services oversight subcommittee, Democrats pointed out, countering claims of a lack of oversight.

Read Date’s testimony here.

Written by Alyssa Gerace

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  • Ms. Warren told us that that clarity and transparency in lending was THE (not one of the) primary objective of the CFPB.  Ms. Warren told us that that clarity and transparency in lending was THE (not one of the) primary objective of the CFPB.  I believe Mr. Date far more than I ever believed the comedy and late night tour of Ms. Warren.  I am glad Ms Warren is now behind us.
     
    I hope he means it when he says:  “Our mission is to ensure that brokers, originators, and servicers play by the rules, regardless of their charter,” he said in his testimony. “It doesn’t matter if you’re a thrift, bank, finance company, industrial loan company, or investment bank. If you want to be in the business of consumer finance, then you’ve got to play by the rules like everyone else.”
     
    Will the CFPB pare down the preemption nationally chartered banks believe they have when it comes to state consumer laws?  Will the CFPB get the SAFE Act amended so that all originators must pass the NMLS exam?  What is it they actually intend on doing?  Will his statement be more bluster than action?
     
    By bringing up LTC and retirement planning, is the CFPB looking to get involved in insurance and securities?  It seems Mr. Date is vindicating the concerns of many conservatives that with little oversight CFPB will expand into areas never intended by Congress. 
     
    At least Mr. Date is bringing more clarity and transparency to the CFPB than his predecessor ever did.  What he is saying is troubling and even though it is vague and lacks detail, at least it is not being deflected and intentionally buried behind relentless attacks.
    .

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