MBA Advocacy Update: CFPB Creates Registry for Nonbanks Subject to Agency and Court Orders; Supreme Court Releases Decision in Cantero v. Bank of America

CFPB Creates Registry for Nonbanks Subject to Agency and Court Orders

Last Monday, the Consumer Financial Protection Bureau (CFPB) published a Final Rule creating a Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders (the Final Rule).

• The Final Rule requires covered nonbanks that are subject to certain agency or court orders to register those orders with the CFPB, with a limited exception for orders available on the Nationwide Multistate Licensing System (NMLS).
• Additionally, covered nonbanks that are subject to CFPB supervision must submit annual statements describing the steps taken to ensure compliance with covered orders and whether there was any instance of noncompliance with those orders. MBA’s summary of the final rule is available here.

What they’re saying: In a statement shared with industry trade media, Pete Mills, MBA’s SVP of Residential Policy and Strategic Industry Engagement, said:

“MBA is disappointed with the CFPB’s final rule of a Public Orders Registry, as it creates a costly and duplicative reporting framework for the mortgage industry. Including mortgage lenders and servicers in the registry is an unnecessary and redundant move, which we outlined as such in a March 2023 comment letter, and contradicts the CFPB’s concerns about lowering costs. The CFPB missed an opportunity to simply add its enforcement information on mortgage companies to the already comprehensive consumer-facing data base maintained – and already operative – by the Conference of State Bank Supervisors’ NMLS Consumer Access portal.”

What’s next: MBA will keep members informed of any updates and will track the implementation of this rule.

For more information, please contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557-2930.

CFPB Releases Circular Designating the Use of Certain Contract Terms as Deceptive

On Tuesday, the CFPB released a circular (Circular 2024-03) which states that including unlawful or unenforceable terms and conditions in a contract may violate the Consumer Financial Protection Act’s (CFPA) prohibition on deceptive acts or practices.

• The CFPB indicated that the inclusion of these terms is to mislead consumers about material terms to the contract, which can affect a consumer’s willingness to attempt to exercise that right. It also stated that disclaimers in the contract that specify the contact is “subject to applicable law” or terms are effective “except where unenforceable” do not cure this misunderstanding.
• Additionally, the CFPB did not specify whether it is a deceptive act to include a term in a contract that is later found to be unlawful or unenforceable after the contract is executed unless expressly remedied.

Why it matters: The CFPB identified several unlawful or unenforceable contract terms that, if used, may be deceptive. For example, Regulation Z prohibits the inclusion of terms requiring arbitration. Additionally, the Servicemembers Civil Relief Act (SCRA) renders unenforceable provisions in contracts that waive the rights of servicemembers to participate in class actions to enforce the SCRA.

What’s next: MBA will keep members informed of any updates on this issue and others pertaining to the CFPB.

For more information, please contact Justin Wiseman at (202) 557-2854 or Gabriel Acosta at (202) 557-2811.

Supreme Court Releases Decision in Cantero v. Bank of America

Last week, the Supreme Court released a 9-0 decision in Cantero v. Bank of America, remanding the case back to the Second Circuit Court of Appeals and vacating its previous decision.

The Supreme Court found that the Second Circuit Court of Appeals did not conduct the proper preemption analysis in its decision and remanded the case for reconsideration.
• Under the National Bank Act (NBA), state laws that prevent or significantly interfere with the exercise by a national bank of its powers are preempted. In Cantero, the Second Circuit Court of Appeals held that the NBA preempted a New York law which mandated a 2% interest payment on mortgage escrow accounts.
• Read MBA’s summary of the decision here

Why it matters: The Court’s decision does not answer whether the NBA preempts state interest on escrow laws. Rather, this decision keeps with the status quo, with state interest on escrow laws deemed not preempted in the 9th Circuit. Additionally, the Court provided no further guidance on the methodology for determining NBA preemption.

What’s next: Whether these interest on escrow laws are preempted is still being litigated at the appellate level. MBA will keep members informed of any updates.

For more information, please contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557-2930.

Treasury Secretary Yellen Testifies on FY 2025 Budget Before Senate Appropriations Subcommittee

On Tuesday, Treasury Secretary Janet Yellen testified before the Senate Appropriations Subcommittee on Financial Services and General Government (FSGG) regarding the Treasury’s Fiscal Year (FY) 2025 budget request. A full summary of the hearing may be found here.

Why it matters: The hearing provided an update on implementation of the Inflation Reduction Act, Internal Revenue Service (IRS) programs and federal debt issuance. Chairman Chris Van Hollen (D-MD) highlighted the Biden administration’s efforts to address a lack of affordable housing and the need to take additional steps, such as housing tax credits.

What’s next: The Senate Appropriations Committee will start its consideration of FY25 spending bills in July, including the FSGG measure which allocates funding for key agencies such as the IRS and Treasury, the Securities and Exchange Commission (SEC), the Federal Housing Finance Agency (FHFA), the Small Business Administration (SBA), the Federal Trade Commission (FTC), and the White House.

For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.

Hearing Recap: Senate Budget Committee on the Impacts of Climate Change on Insurance Markets

On Wednesday, five private sector witnesses testified on the impacts climate change is having on insurance markets, insurance costs, mitigation efforts and data collection, and overall concerns about impacts on the financial system.

• As expected, discussion and questions from Senators broke along party lines, with Democrats focusing on climate change as the proximate cause of insurance issues while most Republicans rejected the premise that climate change has had a significant impact on insurance rates and availability. A full summary of the hearing may be found here.

Go deeper: Of note, Senator Tim Kaine (D-VA) called attention to the high insurance rates on multifamily housing, and Ranking Member Chuck Grassley (R-IA) discussed inflation as the driver of rising insurance costs.

Why it matters: MBA and industry professionals are keenly aware of the increased concerns regarding rising homeowners’ and property insurance costs and declining offerings and remain in ongoing dialogue with federal and state regulators and lawmakers on both sides of the aisle.

What’s next: MBA will continue to monitor this issue and seek opportunities to contribute to the broad insurance crisis dialogue in ways that are helpful to members.

For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.

MBA, California MBA Launch Call to Action on Insurance Crisis

Last week, MBA and the California MBA (CMBA) issued a Mortgage Action Alliance (MAA) Call to Action asking member residents to call on Governor Gavin Newsom, state legislators, and Insurance Commissioner Ricardo Lara to take immediate action to fix the state’s broken insurance system.

• Reform is needed by the Department of Insurance to modernize how insurance rates are set and regulated to ensure that property owners have access to policies in a competitive market, with reliable rates, and with coverage levels that protect their investments.

Why it matters: California–and other individual states–are facing serious crises due to the lack of competitive markets for property insurance. Homeowners and commercial/business property owners in California are getting dropped from their insurance carriers, facing uncompetitive costly new policies, or having to turn to the state’s FAIR plan or force-placed insurance as a last resort.

The bottom line: Governor Newsom has proposed Budget Trailer Bill Language that could help expedite the rate reform process – a move that both CMBA and MBA support and are pushing for adoption by the California Legislature in the next two weeks. Additionally, CMBA and the national MBA are hopeful California Insurance Commissioner Lara’s recent promises for reforms through his Sustainable Insurance Strategy come to fruition.

What’s next: If you are a resident of California and have not taken action yet, please click here to do so now.

For more information, please contact William Kooper (202) 557-2737 or Liz Facemire at (202) 557-2870. 

For more information about MAA, please contact Jamey Lynch (202) 557-2818.

Upcoming MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely single-family and commercial/multifamily programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars–which are complimentary to MBA members:

Bank-Owned Mortgage Divisions: What Bankers Need to Know to Manage Mortgage Banking – June 11
Best Practices for Ensuring Clarity, Speed and Compliance in Borrower Communications – June 13
Adding Reverse Mortgages to Your Business Line: The Value Proposition – June 20
Unpacking the Costs and Current State of Homeowners Insurance – June 20
Fundamentals of Loss Mitigation for Residential Servicers – June 25
What is the True ROI for Digital Closings? – June 25

MBA members can register for any of the above events and view recent webinar recordings by clicking here.

For more information, please contact David Upbin or (202) 557-2931.