Politics & MoneyMortgage

The CFPBÕ appalling double standard

On TRID, discrimination and accountability: “Do as we say, not as we do”

For months the Consumer Financial Protection Bureau was adamant that despite repeated pleas that the mortgage finance industry would not be ready for the Aug. 1 effective date for the onerous TILA-RESPA Integrated Disclosure rule, that it was a hard deadline.

And tough cookies if you’re not ready. (Not an exact quote, just my opinion.)

A recent survey conducted by Capsilon Corp., found that 41% of mortgage lenders were not prepared to meet the August deadline to comply with TRID.

“So what?” the CFPB hypothetically asked rhetorically.

The CFPB did give a little — under increasing industry and bipartisan congressional pressure — saying that the bureau would graciously grant an undefined grace period for good faith efforts since, you know, there was absolutely no way for the industry to even test the new systems and compliance apparatus until Aug. 1.

But otherwise, regardless of whether the industry was ready, the CFPB was adamant that Aug. 1 was a hard deadline.

And then, because the CFPB wasn’t ready, the deadline became an insteadline as the Bureau announced on June 17 that it moved the implementation date to Oct. 1. 

“We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks,” said CFPB Director Richard Cordray.

On June 24 the Bureau moved the date again, this time to Oct. 3.The industry was gracious in welcoming this 60-day respite.

“MBA welcomes the decision by the CFPB to issue a proposed amendment to delay the implementation of TRID until October 1st,” said Mortgage Bankers Association President and CEO David Stevens. “The complexity of this rule, which impacts not just mortgage disclosures but also the business processes behind the entire real estate transaction, warrants the additional time to get it right and ensure that consumers are not adversely affected by the transition.”  

“This two-month delay would give credit unions much-needed time to complete their testing and update processes as they seek to comply with this complex rule,” said National Association of Federal Credit Unions President and CEO Dan Berger. “However, NAFCU believes the bureau and the National Credit Union Administration still must take credit unions’ good-faith efforts to comply into account — beyond the Oct. 1 deadline.”

“ABA is pleased that the Consumer Financial Protection Bureau is extending the effective date to Oct. 1 for the ground-breaking Know Before You Owe mortgage disclosure rule,” said American Bankers Association President and CEO Frank Keating. “This extension will help protect consumers from disruptions during a traditionally busy period for home purchases. It will also help to assure new loan origination systems and compliance software under development by lenders and the vendors on whom they rely will be adequately installed and debugged, and staff training completed, before the effective date.”

That’s the thing — those represented by these organizations have to be gracious because they’re regulated by the CFPB.

But trade media is not. At least not yet.

So let me say what a whole lot of people are thinking: This is emblematic of the ongoing hypocrisy and double standards for which the CFPB is notorious.

Coming a day after we learn that the massive, likely Chinese-directed hack of every federal employee file at the Office of Personnel Management was facilitated because the OPM gave root access to contract Chinese programmers, we learn that the reason for the delay is because the CFPB couldn’t comply with a basic notification requirement.

“If you’re wondering what the ‘administrative error’ was that forced CFPB to delay its TRID rule, we have been informed by CFPB that the Bureau failed to comply with the Congressional Review Act’s requirement to notify Congress at least 60 days before a regulation becomes effective. The CRA is a basic tool for accountability,” said Jeff Emerson, a spokesperson for the House Financial Services Committee.

That form they failed to file, by the way? It’s just two pages.

The same bureau and mindset that would put a company to the screws for not complying with far, far more complex regulations isn’t holding anyone accountable for this.

It’s part of a pattern. The CFPB is zealous in seeking out discrimination — or even the perception of it — and yet they have an abysmal track record of ongoing discrimination, retaliation and fostering an insensitive, toxic workplace.

The same bureau that wants to monitor Americans’ credit card purchases opposes Congressional oversight and appropriations. A USCC-Zogby Analytics poll published in June shows that 78% of respondents believe the CFPB should have to seek Congressional approval for its budget like other agencies, incidentally.

(I won’t even mention the $185 million renovation the CFPB is undertaking on an office building it does not own, a renovation that costs more than the actual building itself, while trying to dictate how companies spend money that was actually earned. Oops, I mentioned it.)

Inscribed on the CFPB headquarters should be the Latin phrase: “Quod licet Iovi, non licet bovi.” Roughly, that means “What is permissible to the gods is not permissible for an ox.” Seems a fitting motto.

So what should happen?

Joseph Lynyak III is a partner at the international law firm Dorsey and Whitney in Washington, D.C., in its finance and restructuring group. Here’s what he had to say about the decision and CFPB Director Richard Cordray:

“Last week, the Director of the CFPB negated 30 years of interpretative precedent that has been relied upon the by mortgage industry to comply with mortgage lending rules. Today, the CFPB announced a long overdue delay in the TRID mortgage disclosures until October. His announced rationale is the start of the school year in September,” Lynyak said. “The delay is clearly needed — the explanation supporting the postponement defies logic.

“Director Cordray has lost reasonable managerial control of the agency and the Administration should consider asking for his resignation and replacing him with someone who understands the necessary balance between consumer and consumer lending priorities,” Lynyak said.

Considering that the former Attorney General, Eric Holder, wasn’t made to resign, never apologized, and is now getting a cushy corporate gig, it’s unlikely.

But does anyone have faith in the current director’s leadership and management anymore?  

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