The mortgage industry collectively shuddered today as the Senate approved Rohit Chopra as director of the Consumer Financial Protection Bureau for a five-year term.
Consumer finance experts and attorneys specializing in mortgage regulation compliance expect Chopra, an acolyte of Massachusetts Democratic Sen. Elizabeth Warren, to ramp up the CFPB’s enforcement activities. The vote split 50-48 in favor of Chopra.
Pennsylvania Republican Sen. Patrick Toomey said that under Chopra, the CFPB would return to “rulemaking by enforcement.” Toomey said that Chopra tweeted out allegations about credit unions, which he said were later retracted by the CFPB, an indication that Chopra would be willing to “shoot first and ask questions later,” he said.
The previous director of the CFPB, Kathy Kraninger, now a lobbyist at a cryptocurrency firm, tended to pursue enforcement actions against smaller firms, and not as often as the prior CFPB regime. Observers expect that Chopra will lead the CFPB in the spirit of its first director, Richard Cordray, who led the agency from 2012 to 2017 and recovered $12 billion in fines from banks such as Wells Fargo, JPMorgan Chase and Bank of America.
Ohio Democratic Sen. Sherrod Brown, who chairs the Senate Banking Committee, spoke in support of Chopra’s nomination.
Servicers should be communicating with borrowers early, ensuring to do so in a compliant manner by staying abreast of the current and proposed regulations, CFPB or otherwise. Alert them that they do have the option to sell their house now while in forbearance if they wish as a forbearance exit option.
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Gesturing outside the Senate chambers to lobbyists milling in the hall, Brown said that “corporations and payday lenders all have high price lobbyists, and have an outsize voice in this town.”
“The people that Chopra will be paid to protect don’t have lobbyists, or a [political action committee], and certainly not a SuperPAC,” Brown said.
This will be Chopra’s second stint at the consumer watchdog agency. In 2011, he was appointed to be the CFPB’s student loan ombudsman. Chopra was unanimously confirmed by the Senate in 2018 for his current position at the Federal Trade Commission, where he pushed for more aggressive remedies against big tech companies, like Facebook, in dissenting opinions.
President Joe Biden nominated Chopra in January. But his March confirmation hearing ended in a tie, which forced the nomination to be brought to the full Senate, after he told the Senate Banking Committee that the CFPB should examine “looming problems when it comes to forbearances.”
“I don’t want to see another foreclosure crisis in this country,” Chopra told the committee. “And we need to do everything we can to make sure the laws are being followed and homeowners can navigate their options.”
“In the mortgage market, fair and effective oversight can promote a resilient and competitive financial sector, and address the systemic inequities faced by families of color,” Chopra said in his opening statement. “Perhaps most importantly, administration of consumer protection laws can help families navigate their options to save their homes.”