MBA Urges CFPB to Simplify Civil Investigative Demands Process

The Mortgage Bankers Association, in a letter to the Consumer Financial Protection Bureau, said the CFPB should re-examine and revamp its Civil Investigative Demands process to ease administrative burdens on mortgage lenders and servicers and ensure due process.

The MBA letter is the first response to a dozen CFPB Requests for Information on its practices and procedures promulgated by Acting CFPB Director Mick Mulvaney, who has ordered a top-to-bottom review of Bureau practices as part of the Trump Administration’s efforts to reduce regulatory rules from the federal government.

“The CID process is an important and powerful tool for the Bureau to further their investigations,” wrote MBA President and CEO David H. Stevens, CMB. “Receipt of a CID can cause lasting reputational harm to the recipient and frequently requires significant resources to respond. For these reasons, the Bureau’s CIDs should be targeted and limited, with a clearly defined process to challenge them if necessary. Such a process will allow the Bureau to investigate specific allegations to their satisfaction without requiring CID recipients to answer broad and vague requests for information under very tight timelines.”

CIDs are used by the Bureau to request information that may be relevant to a potential violation of consumer financial protection law. The letter describes aspects of the current CID process MBA deems unfair, including the overly broad notification of purpose statements; the low threshold of initiating an investigation; the inadequate CID challenge process; and the unrealistic timelines.

“Responding to a CID is a very burdensome process that can involve significant resources and reputational harm,” the MBA letter said. “These and other aspects of the current CID process contribute to an imbalance between the Bureau and CID recipient that’s contrary to due process protections.

The comment letter offers suggestions to correct this imbalance in a way that recognizes the costs and reputational risks to CID recipients. In addition, MBA reiterated its support for a broad reexamination of Bureau practices as detailed in the 2017 MBA white paper CFPB 2.0: Advancing Consumer Protection (, outlining key considerations for the Bureau as it begins to think about the next five years.

Among the paper’s recommendations:

–Place 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 it is bound by its guidance.
–Ensure 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 time for regulated entities to comply.
–Ensure due process in its enforcement actions.

“A new CFPB…can fulfill its consumer protection mission by producing rules and guidance that prevent consumer harm rather than merely punishing harm after it occurs,” the paper said. “Such a shift in emphasis recognizes the strides the Bureau and industry have made over the past six years in creating an environment where supervision and guidance are actively sought by industry to ensure compliance.”

In the letter, MBA said these larger, thematic concerns touch on all Bureau operations and therefore are a theme of many of the RFIs released to date.

“The information collected as part of the Bureau’s RFI initiative can serve as a crucial starting point to determining how to best orient the CFPB to ensure it serves consumers and creates access to financial opportunity,” Stevens said. “MBA applauds the RFI initiative to the extent it serves as the beginning of this important conversation.”

MBA expects to respond to the other 11 RFIs over the next several months.