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CFPB Needs To Establish Clear And Consistent Standards

MBA president details organization’s regulatory battles at annual meeting

Bob Broeksmit
Insider
Bob Broeksmit
CFPB Needs To Establish Clear And Consistent Standards

The following is an excerpt of prepared remarks Bob Broeksmit, CMB, Mortgage Bankers Association president and CEO, delivered at MBA’s 2022 Annual Convention & Expo.

The MBA is … focused outward, to create a broader environment that works in your favor.

One of the biggest examples is our round-the-clock and round-the-country advocacy.  We all know that when times are tough, bad policies have a habit of rearing their ugly head. We’re talking about laws and regulations that raise your costs instead of lowering them.  At the MBA, we refuse to let that happen, which is why we’re fighting on so many fronts.

For the past year and a half, we’ve held the line on harmful tax hikes in Washington, D.C.

When Congress was debating the “Build Back Better Act,” we worked with key lawmakers, on both sides of the aisle, to stop the worst proposals. It worked-- those tax hikes never saw the light of day.

In fact, when Congress passed the so-called Inflation Reduction Act in August, it reflected our work and your needs. The final legislation didn’t include a host of dangerous tax hikes. And it preserved the existing taxation regime for mortgage servicing rights.

We’re equally focused on stopping regulatory overreach.

The main threat we see is coming from the Consumer Finance Protection Bureau (CFPB), where the single director can act as judge, jury, and executioner, all in one.

When it comes to the bureau, the bottom line is this:  Americans need the CFPB to establish clear and consistent standards. That means providing the opportunity for notice and comment when enacting rules. And it never means circumventing the rulemaking process.

Market oversight works best when regulators provide consistent guidance to all market participants via notice and comment rulemaking, interpretive rules, and guidance that reflect stakeholder input, and applying them prospectively and providing the market appropriate runways for compliance.   

That approach allows MBA to educate the bureau on the potential impact of their rules, just as we did on their request for information on fees that mortgage originators and servicers charge their customers.  It allowed us to tell the bureau that these types of fees are clearly disclosed in advance, reasonable, and reflect services actually performed.         

Unfortunately, the bureau isn’t always abiding by this commonsense system. It’s sometimes announcing new legal obligations without formal process or deliberation. It’s also enforcing novel and untested legal theories, making it very difficult for firms to understand their legal obligations. The CFPB’s actions exact a high cost on markets and, ultimately, consumers.

Now is no time to make you hire more lawyers to try to understand what the bureau is doing.  You need relief, and you need certainty. That’s the path to lower costs–and we’re making sure the CFPB knows it.   We will work with the bureau and others to ensure they understand the need for clear rules and lower costs to consumers.

California Battles, Too

Washington isn’t the only place where dangerous policies are on the docket. The same is true in many states. Once again, the MBA is on the job, and our advocacy is getting results.

There’s no better proof than California. Everyone knows that what starts in the Golden State rarely stops there. It quickly spreads to like-minded states, and even to the federal government. That’s why we’ve fought so hard to stop harmful ideas from becoming reality.

This year alone, we’ve achieved two big California victories.

First, in partnership with the California MBA, we led the charge against a bill that would have created a costly and complex new foreclosure system. After months of hard work, and after mobilizing hundreds of MBA members to speak out, the sponsor withdrew the bill. It’s now dead for the foreseeable future.

The second victory is even more important. For much of the past year, the California legislature has been moving to impose Community Reinvestment Act (CRA) requirements on non-banks. But we made sure that won’t happen. I’m pleased to report that the bill has been amended-- and expanding the CRA is off the table.

These are the kind of wins you need right now, and not just in California. From coast to coast, we’re fighting dangerous policies, including CRA expansion, rent control, and many others. We’ll hold the line in state capitals, the same as we do in our nation’s capital!

Whatever issue we engage on, and wherever we engage on it, your partnership is essential. That’s why we give you so many opportunities for collaborative progress.

This article was originally published in the Mortgage Banker Magazine November 2022 issue.
Bob Broeksmit
Bob Broeksmit,
Bob Broeksmit

President and CEO, Mortgage Bankers Association

Published on
Nov 21, 2022
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