MBA Releases White Paper, CFPB 2.0: Advancing Consumer Protection

The Mortgage Bankers Association released a new white paper, prepared for MBA by law firm Covington and Burling, CFPB 2.0: Advancing Consumer Protection.

CFPBThe paper examines the approach of the Consumer Financial Protection Bureau during its first five years of undertaking enforcement actions in key areas–including actions that clearly departed from prior published interpretations–without providing sufficient supervisory guidance to the industry in advance.

“The CFPB has done well where it’s developed rules that focus on the worst excesses of the pre-crisis market,” said MBA President and CEO David Stevens, CMB. “However, the Bureau has too-often opted for a ‘regulation by enforcement’ approach that uses enforcement actions, rather than written guidance, to communicate to the industry about practices it finds problematic. The CFPB can better protect consumers by publishing clear, consistent regulations and bright-line guidance like other regulators.”

The paper urges the Bureau to exercise its ample authority to regularly provide authoritative explanatory and clarifying guidance to the industry–consistent with the practices of the other federal financial services regulators. Finally, the paper offers recommendations for change to help the CFPB better achieve its consumer protection mission.

“The Bureau’s reluctance to issue clear guidance on the laws it inherited, such as the Real Estate Settlement Procedures Act, has resulted in a confused, uneven market that actually narrows consumers’ access to sustainable credit,” Stevens said. “Now is the time to look back at what has been learned over the past five years and make some key changes that will help consumers and the industry alike.”

The paper offers eight recommendations, urging the CFPB to do the following:

–Place a priority on issuing appropriate guidance to facilitate compliance with federal law;

–Establish guidelines for when and how it will issue and revise rules and guidance;

–Acknowledge that the agency is bound by its guidance;

–Ensure appropriate industry input on mortgage and other issues;

–Provide timely answers to questions on regulations with authoritative guidance;

–Publish notice of changes in guidance and apply those changes prospectively;

–Provide appropriate time for regulated entities to comply with rules; and

–Ensure due process in its enforcement actions.

For a copy of the full report, visit