Incoming CFPB Director Invites Hope, Fear from Mortgage Businesses

After a drawn-out process between nomination and confirmation stemming largely from optics and politics, Rohit Chopra was confirmed by the U.S. Senate along a largely party-line vote to serve as the third full-time director of the Consumer Financial Protection Bureau (CFPB) late last month.

Just before the inauguration of President Joe Biden, Chopra was named as Biden’s nominee to serve as the new director of the consumer watchdog agency; authority effectively granted to Biden by a Supreme Court case supported both by the previous administration as well as by the prior CFPB Director herself. It became immediately apparent that the incoming president aimed to return the CFPB to a regulatory posture that was highly reminiscent of the Bureau under the administration of President Barack Obama, with Chopra being a vital indicator of that idea for some.

The reverse mortgage industry has a particular interest in the affairs of the CFPB since it is the government agency charged with regulating the industry at the national level. While specific individuals operating within the industry have varying opinions about the Bureau itself, those set with speaking for the industry describe a hopeful attitude about working with the agency to ensure that it can assist seniors who wish to stay in their homes.

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Potential areas of CFPB focus under Chopra

In terms of the broader reaction to the confirmation of incoming Director Chopra, the experience that the former Federal Trade Commissioner has in government and at the Bureau itself could prove beneficial in the internal operations of the CFPB and the entities that regularly interact with it. This is according to Joseph Lynyak III, partner at international law firm Dorsey & Whitney and an expert on regulatory reform and the CFPB.

Official portrait of FTC Commissioner Rohit Chopra FTC | CC0
Rohit Chopra

“Director Chopra brings to the table a wealth of government administrative experience and direct knowledge of the CFPB itself,” Lynyak says. “He was present when the CFPB was being organized, and actively participated in senior-level policy development, including enforcement strategy.”

Natural questions which arise from Chopra’s confirmation tend to revolve around whether or not the Bureau will return to an aggressive enforcement strategy and whether or not the Bureau will focus litigation on larger banks and mortgage lenders or more minor non-bank participants like payday lenders and debt collectors, according to Lynyak.

“In any event, it appears clear that fair lending compliance will once again be a priority, and lenders of all sizes should begin to review their fair lending statistical data and compliance procedures,” he adds.

Reverse mortgage industry response

In terms of the specific response of the reverse mortgage industry to Chopra’s confirmation, the National Reverse Mortgage Lenders Association (NRMLA) has stated that it is hopeful for a productive working relationship with the CFPB. This relationship has been maintained since the agency’s founding a decade ago.

“We congratulate Rohit Chopra on his appointment,” said Steve Irwin, president of NRMLA in a phone call with RMD. “We wish him well, and we look forward to continuing our engagement with the Office of Older Americans and the Office of Mortgage Markets.”

Before Chopra’s confirmation, the CFPB had taken two notable actions against reverse mortgage lenders during the Biden administration, both geared in some fashion toward industry advertising. The first took place this past April, with the Bureau settling with Mahwah, N.J.-based Nationwide Equities for advertising practices it described as “deceptive,” accusing the lender’s materials of violating the Mortgage Acts and Practices Advertising Rule (MAP Rule), the Truth in Lending Act (TILA), and the Consumer Financial Protection Act of 2010 (CFPA).

More recently, the CFPB settled with reverse mortgage industry leader American Advisors Group (AAG), alleging the lender sent borrowers deceptive and inflated home estimates in direct mailers to convince consumers to take out a reverse mortgage. The direct mailers advertised a prominent “estimated home value,” according to the court filing, which the CFPB claimed was inflated in an accompanying complaint.

The CFPB took both reverse mortgage-relevant actions under the leadership of Acting Director Dave Uejio, who will move over to a position at the U.S. Department of Housing and Urban Development (HUD) upon the swearing-in of incoming Director Chopra.

Broader responses to Chopra’s confirmation

Institutional responses to Chopra’s confirmation have been generally positive. Among them, Bill Himpler, president and CEO of the American Financial Services Association (AFSA), describes a productive previous working relationship with Chopra and hopes to continue it into his tenure leading the CFPB.

“Over the years, AFSA and its members have had the opportunity to work with Rohit Chopra both during his time as a Commissioner at the Federal Trade Commission and his prior stint as a senior leader at the Consumer Financial Protection Bureau,” Himpler said in a statement. “In engaging with our industry, Mr. Chopra has always been gracious with his time and in considering the views of the consumer credit industry. We congratulate Mr. Chopra on his CFPB Senate confirmation and look forward to working constructively with him on pro-consumer policies that ensure access to credit.”

The hope for a productive working relationship was also shared by Rob Nichols, president and CEO of the American Bankers Association (ABA) in a statement released shortly after Chopra’s confirmation.

“We congratulate Rohit Chopra on his confirmation to serve as the next director of the Consumer Financial Protection Bureau, which has the important role of overseeing our highly competitive financial services marketplace and protecting consumers,” Nichols said. “We look forward to working with him to make sure consumers continue to have access to the financial products and services they want and need with the protections they deserve.”

While consumer and affordable housing advocates have largely praised Chopra’s confirmation, other industry stakeholders are open with their concern about being caught in a flurry of potential activity by the CFPB director, as detailed by HousingWire Senior Mortgage Reporter Georgia Kromrei in a recent story appearing in RMD’s sister publication.

“Rather than issuing clear, predictable guidance, the mortgage industry fears the CFPB will pursue headline-grabbing, high-profile enforcement actions,” the story reads. ‘Some, including ranking Senate Banking Committee member, Pennsylvania Republican Sen. Pat Toomey, have said the CFPB engages in regulation by enforcement.”

Indeed, before the confirmation vote, Sen. Toomey verbally blasted the nomination of Chopra, saying he would transform the CFPB into “the rogue, unaccountable anti-business agency it was during the Obama administration, and we have every reason to believe he would continue to disregard legitimate congressional oversight requests.”

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