MBA Commends Introduction of Bipartisan GUIDE Compliance Act

The Mortgage Bankers Association commended introduction of bipartisan legislation to regularize guidance and compliance information by the Consumer Financial Protection Bureau.

H.R. 5534, The Give Useful Information to Define Effective Compliance Act, or GUIDE Compliance Act (https://www.congress.gov/bill/115th-congress/house-bill/5534?r=11), introduced by House Financial Services subcommittee on Housing and Insurance Chairman Sean Duffy, R-Wis., and Rep. Ed Perlmutter, D-Colo., compels the CFPB to issue guidance, including guidance necessary to comply with the law; establishes clear standards for that guidance and how it is issued; and provides a safe harbor for good faith reliance on guidance issued by the Bureau.

“The GUIDE Compliance Act will protect consumers better by ensuring that companies regulated by the CFPB have a clear understanding of how to comply with important consumer finance laws,” said MBA President and CEO David H. Stevens, CMB. “We believe this legislation can help us get beyond the broken process of ‘regulation-by-enforcement.’ The best way to protect consumers is to provide clear interpretations of the rules, provide regulated entities fair notice of changes, and give them time to comply.”

Stevens emphasized that this “is not an abstract concern. In 2015, CFPB issued its Know Before You Owe rule, overhauling disclosures for mortgage process. After issuing this rule, the Bureau declined to offer guidance and timely answers, thereby confusing some consumers and other key market participants.”

“CFPB has historically ignored requests for guidance and clarification from American businesses, consumers and Congress–especially in relation to the Know Before You Owe rule,” Duffy said. “The CFPB should focus on its mission to actually protect consumers rather than play ‘gotcha’ with ambiguous and surprising guidance for mortgage lenders.”

Key provisions of the bill:

–Mandates that the CFPB Director issue “guidance” necessary or appropriate to carry out the purpose of the laws it is responsible for, including facilitating compliance;

–Defines “guidance” to include a range of written issuances from interpretative and legislative rules, to bulletins and frequently asked questions;

–Requires the Bureau to publish in the Federal Register within one year of enactment the definitions, criteria, timelines and process for issuing each type of guidance the Bureau shall provide, with a final rule required within 18 months of enactment;

–Prohibits liability for reliance in good faith on guidance from the Bureau or any predecessor agency that was in effect at the time of such act or omission;

–Requires the Bureau to establish a process and timeframes for requests for guidance, including time limits to provide answers in response to requests for guidance;

–Requires the Bureau to create a process for amending or revoking guidance, including a process for public notice and comment;

–Requires the Bureau to develop guidelines for determining the size of any civil money penalties and publish these guidelines in the Federal Register within 18 months of enactment.