Politics & MoneyMortgage

Smaller independent mortgage bankers request freedom from CFPB exams

CHLA responds to bureau’s request for comments

The Community Home Lenders Association submitted a letter to the Consumer Financial Protection Bureau requesting that smaller independent mortgage bankers be exempt from the bureau’s exams and audits.

This letter was sent in response to the CFPB’s request for comment on its own enforcement process, which it issued back in February. This request was the third in a series that now totals nine requests for information, with more to come.

Acting Director Mick Mulvaney explained he is calling for evidence to ensure the bureau is “fulfilling its proper and appropriate functions to best protect consumers.”

The CHLA, a national association that exclusively represents IMBs, included two recommendations in the letter.

1. The CFPB should adopt a formal policy or rule that exempts smaller IMBs from being subject to CFPB exams or audits.

2. The CFPB should adopt a formal policy or rule under which it will not take enforcement action against smaller IMBs unless the IMB’s primary regulator (i.e. any state in which they do business) or a federal regulator provides a referral for the CFPB to investigate and take action.

The letter pulled several examples to support its recommendation, including saying Mulvaney has recently been quoted saying the CFPB is exploring allowing prudential regulators late the lead on more supervisory matters to reduce duplication and ease the burden of exams.

The CHLA pointed out that last June, the U.S. Department of the Treasury’s report on regulation showed the burdens of dual regulation of both the CFPB and primary state regulators. The Treasury recommended that, “supervision of nonbanks should be returned to state regulators who have proven experience in this field and an existing process for interstate regulatory cooperation.”

Finally, the association said 99% of banks are completely exempt from CFPB exams and enforcement, but all IMBs are still subject to the exams in addition to supervision from the states in which they do business.

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