The CFPB’s regulatory priorities for the semiannual period ending October 31, 2014, include continuing work to implement Dodd-Frank Act mortgage protections, a series of rulemakings to address critical issues in other markets for consumer financial products and services, and following up on earlier efforts to streamline and modernize regulations that the CFPB has inherited from other Federal agencies.
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Implementing Dodd-Frank Act Mortgage Protections
A major effort of the CFPB is the implementation of its final rule combining several disclosures that consumers receive in connection with applying for and closing on a mortgage loan under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The project to integrate and streamline the disclosures is mandated under the Dodd-Frank Act both to increase consumer understanding of mortgage transactions and to facilitate compliance by industry. The integrated forms are the cornerstone of the CFPB’s broader “Know Before You Owe” initiative and will be supplemented by consumer education programs and regulatory implementation support programs going forward.
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In addition, the CFPB’s regulatory priorities include continuing rulemaking activities to implement a number of mortgage-related requirements under title XIV of the Dodd-Frank Act that are designed to strengthen consumer protections involving the origination and servicing of mortgages. The CFPB issued several implementing regulations in January 2013, most of which took effect in January 2014. The mortgage rules issued by the CFPB included rules on determining a consumer’s ability to repay a mortgage loan, and on “qualified mortgages”; and rules on mortgage servicing; loan originator compensation; escrow requirements for higher-priced mortgages; appraisal requirements under the Equal Credit Opportunity Act; an interagency rule on appraisals for higher-risk mortgage loans; and a rule implementing changes to requirements for high-cost mortgages.
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The CFPB plans to engage in a further rulemaking after the January 2014 effective date, to consider certain additional refinements to the final rules. For example, the CFPB plans to further examine certain provisions of the Dodd-Frank Act that create exceptions to new requirements for small creditors that operate predominantly in “rural or underserved areas.” The CFPB plans to engage in additional research and analysis concerning the definition of “rural or underserved” in order to address potential concerns regarding access to credit. The CFPB has also agreed to consider issuing additional guidance to facilitate the development of automated underwriting systems for originating qualified mortgages.
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The CFPB is also participating in a series of interagency rulemakings to implement various Dodd-Frank Act amendments to TILA and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) relating to mortgage appraisals. These include supplementing an earlier interagency TILA final rule issued in January 2013 relating to requirements for higher-risk mortgages and implementing certain other Dodd-Frank Act amendments to FIRREA concerning regulation of appraisal management companies and automated valuation models.
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Another major rulemaking priority for the CFPB is the implementation of the Dodd-Frank Act amendments to the Home Mortgage Disclosure Act (HMDA) that require supplementation of existing data reporting requirements regarding housing-related loans and applications for such loans. The CFPB views this rulemaking as a potential opportunity to fulfill its mission under the Dodd-Frank Act to reduce unwarranted regulatory burden. In coming months, the CFPB expects to conduct extensive outreach to stakeholders, including convening a panel under the Small Business Regulatory Enforcement Fairness Act in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with small lenders who may be affected by the rulemaking.
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CFPB Regulatory Efforts in Other Consumer Financial Markets
In addition to the implementation of the Dodd-Frank Act mortgage related amendments, the CFPB is also working on a number of rulemakings to address important consumer protection issues in other markets for consumer financial products and services. Much of this effort will be based on previous work of the CFPB such as Requests for Information, Advance Notices of Proposed Rulemaking (ANPRMs), and previously issued CFPB studies and reports. For instance, the CFPB issued an ANPRM on debt collection. The CFPB has also been engaged in extensive research and analysis concerning payday loans, deposit advance products, and bank overdraft programs, building on CFPB white papers issued in April and June 2013. The CFPB is considering whether rules governing these products may be warranted to address disclosures or industry practices.
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CFPB work is also continuing on a number of earlier initiatives concerning consumer payment services. Following on an earlier ANPRM concerning general purpose reloadable prepaid cards, for example, the CFPB is now engaged in consumer testing of potential disclosures as well as other research and analysis. A Notice of Proposed Rulemaking concerning prepaid cards is underway at present. In addition, the CFPB is working on a further rulemaking concerning consumer remittance transfers to foreign countries. The rulemaking addresses whether to extend a provision under the Dodd-Frank Act that allows insured depository institutions to estimate certain information for purposes of consumer disclosures. The provision will sunset in July 2015, unless the CFPB exercises authority to extend it for up to five years.
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CFPB Regulatory Streamlining Efforts
Another priority for the CFPB is continuing work on an earlier initiative to consider opportunities to modernize and streamline regulations that it inherited from other agencies pursuant to a transfer of rulemaking authority under the Dodd-Frank Act. The CFPB has issued a Notice of Proposed Rulemaking to explore whether to modify certain requirements under the Gramm-Leach-Bliley Act’s implementing Regulation P to which financial institutions provide annual notices regarding their data sharing practices. The Notice will follow up on comments that the CFPB has previously received suggesting that eliminating the requirement to provide such notices in certain situations – for instance perhaps where financial institutions do not share information with third parties or have not changed their practices since provision of the last annual notice – would significantly reduce compliance burden for industry and unwanted paperwork for consumers.