American Banker: Risk Assessment to Guide CFPB Mortgage Enforcement

The CFPB is officially overseeing non-bank financial companies, including mortgage lenders, as of Wednesday and the appointment of its first-ever director, Richard Cordray. How the agency will go about enforcement of its regulatory power is another story, but American Banker spoke with Peggy Twohig, the bureau’s associate director for nonbank supervision, to gain insight into the process.

“I’m hopeful that within a month, we’ll be starting the actual notification and pre-exam scoping,” Twohig told American Banker. “When exactly we’ll have boots on the ground, I don’t know for sure, but I’m optimistic it will be shortly after that.”

American Banker reports:

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The Dodd-Frank Act dictated where the bureau should focus most of its attention by giving it the authority to oversee any company, regardless of size, in three markets: mortgages, payday lending and student loans.

Agency officials have made no secret that they intend to place a high priority on the mortgage market. In addition to developing rules that establish new servicing guidelines and require lenders to verify a borrower’s ability to repay, the CFPB has also established specific guidelines for examiners when reviewing mortgage servicing activities during the supervisory process.

Those guidelines will apply to both bank and nonbank supervision, and will be expanded in the future to include mortgage origination.

…One of the ways it intends to [establish oversight] is by assessing risk in each nonbank market and among companies, and focusing supervision resources where they are needed most.

Read the American Banker article.

Written by Elizabeth Ecker

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  • While it is great to know the principle which will guide the Bureau, it is also important to understand how the Bureau defines the terms and implements the principle.  It would also be insighful to understand what risks are criticial in this assessment and which are not.  Peggy is right, seeing the principle applied sooner rather than later will be very important.

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