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The Consumer Financial Protection Bureau is reviewing its rules and regulations, with the goal of making them simpler and easier to understand.
In a blog post titled “Rethinking the approach to regulations” published June 17 on the agency’s website, CFPB Director Rohit Chopra states that the effort includes reviewing its Qualified Mortgage Rules, “to explore ways to spur streamlined modification and refinancing in the mortgage market, as well as assessing aspects of the ‘seasoning’ provisions.”
The QM review was listed among “several priorities” cited by Chopra. “We are heavily focused on implementing long-standing Congressional directives, many of which have gone ignored,” he wrote. “These include (rulemaking) related to consumer access to their financial records, increasing transparency in the small business lending marketplace, and implementing regulations for quality control standards for automated valuation models under Sections 1033, 1071, and 1473(q) of the Dodd-Frank Act.”
Other regulations under review include those related to Property Assessed Clean Energy financing under Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, he states.
In addition, he wrote, “the CFPB is reviewing other authorities authorized by Congress that have gone unused. For example, we are assessing whether to utilize Congressional authority to register certain nonbank financial companies to identify potential scammers and others that repeatedly violate the law.”
Chopra states the bureau also is reviewing “a host of rules that the agency inherited from other agencies, including the Federal Reserve Board of Governors and the Federal Trade Commission, as well as other rulemakings the CFPB pursued in its first decade of existence. Many of these rules have now been tested in the marketplace for many years and are in need of a fresh look.”
In addition to the QM rules, these include rules originally developed by the Federal Reserve under the Credit CARD Act of 2009, and rules originally developed by the FTC to implement the Fair Credit Reporting Act.
“Markets work best when rules are simple, easy to understand, and easy to enforce,” Chopra wrote. “The CFPB is seeking to move away from highly complicated rules that have long been a staple of consumer financial regulation and towards simpler and clearer rules. In addition, the CFPB is dramatically increasing the amount of guidance it is providing to the marketplace, in accordance with the same principles.”
He continued, “Regulators have historically issued overly complicated and tailored rules for the existing regulatory landscape, as opposed to providing basic bright-line guidance and rules that can withstand evolution of the marketplace over time. The CFPB aspires to more clearly communicate the agency’s expectations in simple and straight-forward terms, which will produce more durable guidance and rules, in addition to numerous other benefits. While this task is difficult, we believe it is important to move away from the failed approach of the past.”
Chopra noted that the bureau has also made an effort to increase its transparency and encourage public input through its rulemaking petition process, while also offering its Advisory Opinion program, launched in 2020, as a way to "quickly provide interpretive rules to industry so that they can better understand the rules of the road."
The CFPB is accepting requests for future advisory opinions, as well as feedback on any existing advisory opinions, via a dedicated email address: [email protected].