While the Consumer Financial Protection Bureau has yet to do much in the way of reverse mortgage examination or enforcement, the agency will be making an impact on the industry now that it has its full authority, representatives from the National Reverse Mortgage Lenders Association told attendees of a webinar Tuesday.
“Now that it has its full power, it can examine non-bank lenders. It can define what is unfair and deceptive,” said Jim Milano, legal counsel for NRMLA.
In addition to combining the Truth in Lending Act and Real Estate Settlement Procedures Act, there will be other changes to financial services laws, Milano said.
“The Bureau did not waste any time after [Richard Cordray was appointed CFPB director],” he said. “After he was appointed, the bureau quickly got busy with its powers.”
Referring to a “laundry list of laws” the CFPB must attend to over the course of 2012, Milano outlined the time frame for which lenders can expect to see substantial change. For the most part, it won’t happen until 2013—or beyond. That’s because the CFPB has a hefty list of rules to make under the Dodd-Frank Act, and has inherited authority from many other agencies since launching in July 2011.
The new federal agency is likely to take its cues from state regulators, Milano said, based on indications from the CFPB thus far. Some lenders have already come under examination of the CFPB, but the agency will most likely look to the largest lenders first, along with those that have an outstanding number of complaints, he said. And they do have some historical guidance when it comes to enforcement.
“So far, they have indicated they will defer to state regulators on non-bank mortgage companies,” Milano said.
Some more immediate changes that could come into play are changes to insurance in-force that will likely impact reverse mortgage lenders, as well as the question of whether the CFPB will conduct a similar effort to combine disclosures as it has done for forward lending. In addition, Milano noted, the bureau is conducting an industry-wide reverse mortgage study and has launched an Office of Older Americans for all senior consumer protections.
But the uncertainty factor is paramount in all of the CFPB’s work, Milano said.
“The Dodd-Frank Act will have many side effects and unintended consequences for years to come,” he said. “We’re seeing of uncertainty and unknown in the days of the bureau getting started up.”
Written by Elizabeth Ecker