MBA Urges CFPB to Improve Administrative Adjudication Processes

The Mortgage Bankers Association, in a May 7 letter to the Consumer Financial Protection Bureau, urged the Bureau to emphasize fairness over speed in its administrative adjudication process to ensure against unintended consequences and protect due process.

The MBA letter is the second in a series of responses to CFPB Requests for Information on the Bureau’s practices and procedures. This particular RFI focused on Bureau Rules of Practice for Adjudication Proceedings; Acting CFPB Director Mick Mulvaney asked MBA and other parties to comment on the Bureau’s operations and practices.

MBA recommended the Bureau provide respondents with the option of a judicial forum by adopting a removal mechanism. In addition, MBA said the Bureau should improve the administrative adjudication process for respondents who prefer an administrative proceeding. Until the Bureau can implement these changes, MBA said, contested matters should be brought in federal court.

“The [CFPB’s] authority to conduct administrative adjudications is one of the Bureau’s most important authorities. The consequences of an adverse adjudication can be severe, resulting in potentially ruinous penalties and irreparable reputational harm to regulated entities,” wrote MBA President and CEO David Stevens, CMB. “While the current adjudication process facilitates a speedy resolution, it does so by sacrificing important due process protections. Given the significant stakes and complex issues often involved in contested matters, this sacrifice is not appropriate. It’s true that both speed and fairness are worthy objectives for administrative adjudications, however they are not of equal value. Fairness must be the primary objective.”

MBA urged the Bureau to redouble its efforts to create a fair and just forum for parties to administrative adjudications. “By acting as an adjudicator, thereby filling a role typically reserved for the courts, the Bureau must make every effort to ensure adjudication proceedings are impartial and, to the extent possible, that they have the appearance of impartiality,” the letter said. “This is particularly important given that unlike a court, the [CFPB] Director fills many roles including those of prosecutor by initiating the proceeding and appellate jurist by determining its ultimate outcome.”

Additionally, MBA said the Bureau can add much-needed fairness to this process by adopting an automatic removal mechanism. In addition to ceding forum selection to respondents, the Bureau should reform problematic aspects of the administrative adjudication process.

“Taking steps such as creating more flexible timing requirements, broadening discovery tools, and implementing a transparent forum selection process will help ensure [CFPB] administrative adjudications do not ‘result in undue burdens, impacts, or costs on the parties subject to these proceedings,'” MBA said.