MBA, Trade Groups Offer Support for CFPB Framework Legislation

The Mortgage Bankers Association and 16 other industry trade groups sent a letter to Capitol Hill this week in support of legislation that would provide a statutory framework for the Consumer Financial Protection Bureau’s guidance on industry compliance.

H.R. 5334, the Give Useful Information to Define Effective Compliance Act, also known as the GUIDE Compliance Act (https://www.congress.gov/bill/115th-congress/house-bill/5534), was introduced in April by Reps. Sean Duffy, R-Wis., and Earl Perlmutter, D-Colo. The bill mandates that the CFPB Director issue “guidance” that is 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 CFPB to publish in the Federal Register within one year of enactment of the definitions, criteria, timelines and process for issuing each type of guidance the CFPB shall provide, with a final rule required within 18 months of enactment; and 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. It also requires the CFPB to establish a process and timeframes for requests for guidance, including time limits to provide answers in response to requests for guidance.

“By encouraging greater consistency with CFPB guidance, this bill will increase transparency, help level the playing field, and improve compliance with consumer financial laws,” Perlmutter said. “The GUIDE Compliance Act will benefit consumers and businesses across the country by helping everyone understand the rules.”

MBA has long called for greater transparency and clarity in CFPB rules, criticizing the Bureau for creating rules that have been difficult to understand and interpret.

In the letter, MBA and the other trade groups praised Duffy and Perlmutter for introducing the GUIDE Compliance Act, saying requiring the CFPB to issues regular, written interpretive rules and guidance would better protect consumers.

“Market participants continue to be frustrated by CFPB guidance that contains caveats which serve to diminish the reliability of said regulation for future reference,” the letter said. “The Bureau has been historically slow to issue guidance, which has created an environment of uncertainty amongst all stakeholders.”

For example, with the CFPB’s Know Before You Owe (KBYO) rule, which revised consumer mortgage disclosures, the Bureau failed to adequately answer the numerous technical and substantive questions raised by the complex proposal, resulting in confusion for consumers and industry participants alike.

“By creating a more transparent regulatory environment, we believe this legislation, once enacted, will serve to enhance the effectiveness and efficiency of the CFPB,” the letter said. “We strongly support H.R. 5534 and look forward to working with you and your colleagues on the House Financial Services Committee to create a groundswell for its rapid consideration.”

Joining MBA in the letter: the American Land Title Association; the Appraisal Institute; the Community Home Lenders Association; the Community Mortgage Lenders of America; the Consumer Bankers Association; the Consumer Mortgage Coalition; the Financial Services Roundtable; the Independent Community Bankers of America; the Manufactured Housing Institute; the National Association of Federally Insured Credit Unions; the National Association of Home Builders; the National Association of Mortgage Brokers; the National Association of Realtors; the National Reverse Mortgage Lenders Association; RESPRO; and The Realty Alliance.