I was just reading this recent article on HousingWire regarding the Consumer Federal Protection Bureau (CFPB) and the ongoing discussions over regulatory enforcement within the finance industry. I always like to stay on top of any news relating to the mortgage industry, whether it affects our company or our clients.
When it comes to mortgage regulations, this is a topic that affects both sides. Regulations are generally put in place by the CFPB and other government entities in order to protect people. At the same time, some regulations are there to protect lenders. It’s always a balancing act to find the right solution.
Regulatory Enforcement About to Change?
This article on HousingWire highlights a memo that was recently leaked from CFPB sources. The memo is attributed to Mick Mulvaney, who is Acting Director of the CFPB and looking to change the bureau’s overall approach to regulatory enforcement in comparison to how it was run by previous Director, Richard Cordray.
I won’t post the entire memo here, but you can read major excerpts in the source article. One of the key lines from Mulvaney that jumped out to me—and everyone in the mortgage industry—stated that “We don’t just work for the government, we work for the people. And that means everyone … those who take loans, and those who use them.”
Why Regulations Are Enforced
Many regulations have been put in place over the years since the 2008 mortgage crisis that have made it much tougher for borrowers to qualify for home loans. Many regulations have helped stabilize the real estate market as it recovered. However, regulations have also hindered how mortgage lenders were able to do business. Unfortunately, not all new regulations were clearly communicated or enforced, so some mortgage companies were getting penalized for breaking regulations they didn’t even know existed. The new administration appears to be trying to reduce—or possibly end—regulation by enforcement.
Another key line from the Mulvaney memo reads: “On regulation it seems that the people we regulate should have the right to know what the rules are before being charged with breaking them. This means more formal rulemaking on which financial institutions can rely, and less regulation by enforcement.”
What Does It All Mean?
Some worry that Mulvaney’s motives are driven by protecting the finance industry more than the consumers this industry is serving. This remains to be seen, but it is another important point of view to consider. After all, it is the Consumer Financial Protection Bureau.
Regulations are important to have, especially in order to help protect against another major housing crisis. Mortgage loans shouldn’t just be given away to anyone. However, it should also be as easy as possible for someone who qualifies for a loan to secure one. Also, when there are regulations in place, they need to be clearly communicated and fairly enforced.
Obviously, I will be keeping a close eye on this story because new regulations or any deregulation efforts will directly impact Transparent Mortgage and the way we are able to serve our clients. Our priority is to always protect our borrowers and help them make the right financial decisions. Part of this means making sure we work within the CFPB regulatory system that’s in place and researching every option to find the best solutions for our customers.