The Future of Mortgage Regulation: Life After the CFPB?

In Episode 15 of Val’s Vibe, Valerie Saunders dives into the major shake-ups at the Consumer Financial Protection Bureau (CFPB) and what they could mean for the mortgage industry. With the CFPB now a shell of its former self, could we see a return to HUD oversight and greater state enforcement? What happens to key regulations like TRID and the Qualified Mortgage (QM) rule? Val breaks it all down, shares her perspective on what’s next, and asks: Would the mortgage industry be better or worse without the CFPB? Tune in and let’s talk about it! 

Transcript

  📍 Hey, everybody, welcome to another edition of Val's Vibe. This is Valerie Saunders, and I thought for this week's episode, we would talk a little bit about what's happening in Washington, D. C. and what potentially some of these changes might mean. Over the last few weeks, we have seen some massive changes within the Consumer Financial Protection Bureau, or CFPB.

Quite honestly, it practically doesn't exist any longer. We do know that there currently is a person nominated to be the new director, Mark Calabria has come in and stepped in the meantime to help oversee what's happening there. However a lot of the employees that are at the CFPB have been put on recess, just on hold wanting to not working.

If you go to consumerfinance. gov, which is the CFPB website you can see the shell of the website there, but it basically doesn't exist. It says that you have experienced an error and any of the tabs none of them work. What would happen if the CFPB no longer exists? I was in the mortgage business prior to 2008, like I'm sure many of you were, and prior to the CFPB's creation that happened as part of the mortgage meltdown and through Dodd Frank, we used to have oversight from HUD.

So HUD had regulatory authority over our federal lending laws, they would participate in audits. And we had a lot of involvement also from our state regulators. If the CFPB for some reason no longer exists or remains in its current state where really it's just a shell of itself and really doesn't have much authority at all.

There's really nobody there to do anything. I think what we're going to wind up seeing is a lot more involvement from our state agencies. So all of our state regulators, of course, they are still alive and well in existence. They're still actively guarding and enforcing our state lending laws.

But I know that, the CFPB's involvement probably does or did assist them with some enforcement actions. If the CFPB was going in and auditing a company, they could use those audits for their own state enforcement. They were looking to the CFPB and other federal regulatory agencies to provide them with guidance.

So I think that State enforcement will continue to be alive and well. We will still look directly to our state regulator who oversees each individual state lending law to provide us with information with compliance. We still have consumer protection directly from our states. Whether that is the state regulator or through state attorney general's offices, or the other consumer protection mechanisms that are in place on a state level, and of course the other consumer protection agencies that we have on a federal level.

I don't think that it's necessarily a horrible thing. If the CFPB goes away. But I do think that there will be probably a transition back to HUD overseeing and then state agencies working directly with HUD for enforcement, especially on a multi state mortgage level where you are dealing with companies who are licensed in multiple states.

Don't think that it would be necessarily a a terrible thing if the CFPB no longer existed. Also, what would happen to some of our federal lending laws? If I look at probably the two most prevalent federal lending laws that went into exist in existence after 2008, besides Dodd Frank, I would consider them the Qualified Mortgage Rule and TRID.

So once again, prior to these two lending laws going into effect, the mortgage marketplace was alive and it was actively doing lending. We did have oversight from our state regulator. And HUD in overseeing the the activities under RESPA and TILA, which QM and TRID still feed from RESPA and TILA.

So if TRID goes away and we no longer have the loan estimate and the closing disclosure That old HUD and that old good faith estimate are still there in the Truth in Lending Act. So we would just revert back to what we did previously. I personally liked the old HUD better than the Closing Disclosure.

I don't necessarily know that the LE and the CD had the effect that they were anticipating on consumers getting more information. And being able to do better comparisons than they were prior to TRID coming around once again, qualified mortgage I don't necessarily see it as a negative thing.

If the QM rule no longer existed. I think that the way that  the lending protection laws that we had in place prior to QM. I think served consumers and the mortgage industry fairly well. I look at Safe Harbor as really providing more protection to a lender because the consumer really can't fight a foreclosure under a QM loan under Safe Harbor, would be very difficult.

If QM and TRID and the CFPB went away tomorrow, I think we would all just wind up reverting back. To the the HUD, the good faith estimate, presumably HUD having oversight over our lending laws. And we would see a lot more involvement with our state regulators in compliance and enforcement.

Is that a bad thing? In my opinion, not necessarily. What do you think? Do you think it would be a bad thing if the CFPB and QM and TRID went away? Or do you think that our prior lending laws were perfectly fine and provided appropriate consumer protection. I don't think the HUD and the GFE and HUD's oversight of lending laws led to the mortgage meltdown.

I think there were a lot of outside influences that affected that. And so I think, we have learned from some of the negative aspects that occurred as part of the mortgage meltdown. And I don't see those coming back into place because the CFPB, QM, and TRID doesn't exist. So let me know what you think.

We'll talk more about this over the course of, I'm sure, the next couple of years. But those are, that's my food for thought. Hope everybody has a great rest of their week. And I look forward to talking to you again on another episode of Val's Vibe.