The CFPB released their strategic plan for FY 2018-2022. We have all experienced what a change in administration can do to any bureau in DC and the CFPB is no exception. Now under the temporary direction of Mr. Mulvaney, a potentially kinder more gentler CFPB is emerging for the financial services industry. When the financial crisis hit I believe that most lenders would say that some regulation needed to occur in order to get rid of the bad people who were clearly preying on consumers. Of course, they didn’t expect the pendulum to swing so hard the other way that compliance became a burdensome process. Now under new management, there is hope by lenders that it will swing back the other way a bit.
The strategic plan is just 16 pages long, and it is very “bullet-pointy” (is that a word) which is great for reading but not very telling. What we do see is a repeated reference to protecting consumers from unfair, deceptive, or abusive practices and from discrimination. Of the three goals mentioned one directly references supervision, enforcement, and fair lending.
The Bureau’s Supervision, Enforcement, and Fair Lending Division’s efforts to improve Bureau supervision examinations and enforcement activities include:
- Continuing to implement, expand, and evaluate the effect of process improvements;
- Continuing to review and analyze processes to determine methods for increased effectiveness and efficiency in its supervision program; and
- Piloting a project to conduct supervisory activities to supplement the traditional examination process.
The question remains what will this look like for mortgage lenders going forward? My guess is that you will still be expected to have strong fair lending controls in place. If you do not or your compliance management system needs work, then, in my opinion, the bureau will be adopting a supervision program that points out what you need to improve and will then expect you to improve it by the next time they check in. Or, at very least report on the efforts that you have made, which is very similar to the way the other prudential regulators work.
What I find most interesting is the statement “Piloting a project to conduct supervisory activities to supplement the traditional examination process.” Hmmm, now that sounds interesting, what could they be referring to? I would love your ideas so post them below!
Sure, the teeth of the tiger may have been filed down but remember that a tiger still has claws and other friends with teeth who are the State AG’s. The high population state AG’s are a little upset right now with the direction of the bureau, so as I stated in an earlier article, a lender should prepare for dealing with multi-state issues instead of just one bureau.
Be smart, stay in business and stay off the radar screen by having a comprehensive fair lending plan in place, with good outcomes as compared to your peers, outreach to your community as a whole, minimal pricing disparity and few exceptions and you should have little to worry about.