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Confused about the CFPB? Don't stop implementing mortgage regulations

Mortgage expert talks about next steps forward for industry

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The future of the Consumer Financial Protection Bureau is as clear as mud, as there at least four different situations at play right now trying to completely change its structure, with one of them going as far as dismantling it all together.

Meanwhile, the industry is left to conduct business in the middle of all this despite the uncertain future of the biggest mortgage finance watchdog.

The CFPB currently has three possible outcomes at play that involve an act of Congress, seen here, here and here, to change its structure. However, there is also one that involves the current landmark battle between PHH and the CFPB.

The latest update on the case came out on Thursday when the U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of the CFPB, allowing the embattled agency to defend the constitutionality of its leadership structure.

The court asked both parties to consider the following issue for the hearing: “Is the CFPB's structure as a single-Director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?”

And beyond the questionable structure of the CFPB, President Donald Trump recently released a presidential memorandum and executive order to significantly reduce regulation.

While the CFPB, as an independent agency, is not required to follow them, it is encouraged to “identify existing regulations that, if repealed or revised, would achieve cost savings that would fully offset the costs of new significant regulatory actions.”

As all of this is happening, the industry is in the middle of implementing two of the biggest mortgage rules to come its way, the CFPB’s TILA-RESPA Integrated Disclosures rule and the final mortgage servicing rule.

At the Mortgage Bankers Association’s national mortgage servicing conference in Dallas, Wade Pyun, vice president and senior corporate counsel of U.S. Bank Home Mortgage, stated that there is currently “so much speculation about the CFPB.”

Given the confusion, Pyun noted that the approach has to be that the industry assumes that these rules will take effect as normal.

Pyun explained that Trump’s initial 2 for 1 executive order to reduce regulation may simplify the existing regulatory structures.

However, he said the counter view is that this could make any new regulations even more complicated because of the expectation to balance and offset cost.

According to the executive order, “Any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.”

“How this will play out remains to be seen,” Pyun said.

Looking at the CFPB’s actions as of late, it doesn’t look like they’re letting up at all.

This year already has proved to be a busy year for the CFPB. In housing-related actions only, the bureau has already released three press releases. Most recently, the bureau ordered Prospect Mortgage to pay a $3.5 million fine for improper mortgage referrals, in what the regulator called an alleged "kickback" scheme.

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