Changes to CFPB: Staying Compliant Despite the Uncertain Future of the CFPB
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection, which authorized the creation of the Consumer Financial Protection Bureau. The agency was created to supervise banks, lenders, and other non-bank agencies, such as credit reporting agencies, and protect consumers by keeping them informed and accepting their complaints related to mortgages, loans, and credit cards.
Although the CFPB has saved consumers $11.8 billion since 2011, the Trump Administration has targeted it as part of its desire to cut business regulations by 75%. The agency has long been perceived by many Republicans as being too powerful and not accountable to elected officials.
Under the Financial CHOICE Act, which made it through the House of Representatives in early June, the rules created as part of Dodd-Frank would be cut back or eliminated. As the act moves through the Senate, it’s likely to be restructured to garner more bipartisan support; otherwise, it probably won’t generate the votes needed to become law.
So as President Trump looks to reform or even eliminate the CFPB, lenders and mortgage servicers need to keep a close eye on what transpires to stay compliant under the government’s regulations. Yes, change may be slow to come, but because the agency faces the possibility of losing resources or even being dissolved, in the coming weeks and months it may move to increase the number of audits it carries out.
It’s imperative that lenders and mortgage servicers are vigilant in continuing their relationships with their external compliance support vendors. In addition, they need to incorporate and utilize technologies that make it simpler for them to originate and service loans and ensure that they are fully compliant with CFPB regulations.
Regulatory Technology Offers Protection
Fortunately, lenders and mortgage servicers can stay CFPB compliant by utilizing regulatory technology, or RegTech, which uses automation to make it easier to adhere to the agency’s regulations. This technology can now provide much more protection than simply alerting lenders and mortgage servicers that they are or are not in compliance; it’s also able to help improve operational efficiency, reduce risks and frauds, and augment customer due diligence (CDD) and compliance management. For lenders and mortgage servicers, RegTech can also help speed up and make the governance, risk management, and compliance implementation and management processes easier during the lending process.
For lenders and mortgage servicers, it’s important to keep in mind that although the Trump Administration may be successful in reducing business regulations, it’s likely going to take some time before the new policies and rules go into effect, based on what happens with the Financial CHOICE Act in the Senate. And if they do, lenders and mortgage servicers are going to need some time to become fully compliant, which means that RegTech will surely be an invaluable tool moving forward.
Here at Bay National Title Company, we’ll keep you apprised of what’s going on with the changes to CFPB and how any changes to the agency could affect consumers and lenders going forward.