CFPB Begins Mortgage Audits. What Can Lenders Expect?

The Consumer Financial Protection Bureau has begun notifying lenders that audits are coming soon—for some within a matter of weeks.

One New York-area non-bank mortgage lender received word one week ago that three CFPB regulators will be on site to audit the company beginning next week, according to a company executive. Through a two-page notification document, the CFPB said it will remain on site for up to two weeks, the executive told RMD.

Beyond that, the details are unknown.


“It’s all new,” he told RMD. “We’re not sure what it’s going to mean, just that up to three people for up to two weeks to be on site.”

Compared with audit information from state regulators, the CFPB’s notification documents are much slimmer, he said.

Other mortgage industry sources have reported that the CFPB has sent similar requests to other lenders, but without any firm indication of what the audits will entail.

“[Non-banks] do need to be on alert that someone will be looking over their shoulder,” K&L Gates financial services attorney Larry Platt told RMD in January. “The Bureau can make it up as it goes along.”

The CFPB got its first director in January and issued guidelines for non-bank mortgage enforcement within days of the new director’s appointment. CFPB officials stated at the time they would begin that enforcement in the next one to two months.

Written by Elizabeth Ecker

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  • No doubt they have audit programs programs but since they have no familiarity with the lenders they will be auditing, their first few days will be spent on common items and proceeding onto less common items.  The first round of audits should be real learning lessons for all involved.  

  • Most all of you know how I feel about the “Financial Regulatory Reform Bill” (Dodd-Frank) and the Consumer Financial Protection Bureau (CFPB). I fear this is only the beginning of pure “H” for the entire financial industry. The CFPB has powers beyond one’s imagination and this is what the plan was all along, over regulate, over regulate and interfere! I am convinced for the betterment of our country and each American citizen that this bill must be repealed.

    Our industry (Reverse Mortgage) will be the focus of attention in 2012 for the CFPB, you can bet on that one! I can only hope that we as an industry will band together with groups such as NRMLA to get the Financial Regulatory Reform Bill repealed in its entirety. This will  and should do away with the CFPB as well.

    Thank you,

    John A. Smaldone

    • John,

      Dodd-Frank is not a bill; it is the law of the land.  I do not believe it should just be repealed; it must also be replaced.

      Until there is a formal bill to replace it, there is insufficient support in Congress to override a Presidential veto.  The political realities are to obtain a Congressional override to repeal Dodd-Frank, Democratic members of Congress will need something to vote for in its place.  

  • Critic,
    I did not say Dodd-Frank is a bill. The Bill is the “Financial Regulatory Reform Bill”. People refer to it as the Dodd-Frank bill, that I can’t help, we need to blame the news media for that.This bill, since its passage, July 15th, 2010 and its 2,346 pages is the most damaging bill ever past!  The bill gives the Federal Government complete power over our entire financial system.

    This bill needs to be repealed and we can’t wait for something new to replace it. Unfortunately we may not be able to repeal the bill until the political environment changes. Yes, we need some form of financial reform but not the way this bill is written.If we wait for something else is drafted, (who knows how long that will be) the amount of damage to the financial industry will be beyond imagination. And we may have to face this consequence! Also, if a replacement bill was to be drafted, who is going to do it!!

    Our industry, the traditional mortgage industry and community banks across the nation will suffer tremendously. This years bank failures, especially community banks will surpass 2011 figures. I am very familiar with this bill, I have been fighting against it and the CFPB since its inception. It was a bill passed behind closed doors right under the noses of the American people.One last word Critic on your comment is in reference to what you said about the Democrats in congress, them needing something else to vote for in its place. If the Democrats had a replacement bill to vote on, it would be a bill no better than what we have now or they would not vote to pass it!Thanks,John A. Smaldone

    • John,

      To repeal a law requires the Congress to vote it repealed.  If the President vetoes it, then 2/3rds of each chamber must approve it or it will not be repealed.

      Perhaps the Supreme Court can overturn it but will they?

  • I pity the poor people who are the first ones to be audited. We were one of the first companies audited by HUD and it was stunning to see how little the auditors knew about reverse mortgages.

    Thank goodness we were not one of the first selected by the damnable CFPB. They are gunning us for us, folks, so all y’all better be prepared.

    • reversemaniac,

      What makes you say that they are gunning for us?  I do not disagree that the CFPB by its very nature probably has a less than favorable bias toward the product and the industry but that is much different than saying that they are gunning for us.  

      Of course this reminds of the old line:  “Just because I am paranoid does not mean someone is not out to get me.”

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