In a speech to the Mortgage Bankers Association Tuesday, Consumer Financial Protection Bureau Director Richard Cordray highlighted the bureau's work in helping the housing economy to recover, while emphasizing to the industry more regulation and oversight remain to come.
Outlining the regulatory actions of the CFPB from 2014 to the present, Richard Cordray emphasized that the cost of compliance, though burdensome for the mortgage industry, was only what it should expect in light of the damage it caused, saying regulations were "inevitable" in light of the "far-reaching" effects of the financial crisis that Congress was trying to fix.
Cordray also noted that the CFPB "bought some critical time" for the industry by introducing the Title XIV regulations on qualified mortgages and the ability-to-repay rule, which gave the industry time to implement discrete parts of the Dodd-Frank Act.
"By adopting a reasonable, good-faith approach, we met the industry halfway," Cordray said, referencing the bureau's approach to industry examinations. He said that the bureau's method was "corrective rather than punitive."
"We and other regulators pledged to be sensitive to good-faith efforst of lenders, and that is precisely what we're doing," Cordray said. "Our initial (findings) indicate that lenders have been making good-faith efforts to comply with the rules."
Noting the long timeline for implementing the HMDA regulations, part of which take effect starting in January, Cordray said, "Time is passing and no one should be waiting to implement the rule."
Although speaking mainly to lenders, Cordray didn't pass up the opportunity to calll out servicers for their role in the financial crisis. "It is regrettable that much of the damage could have been contained by a more efficient servcing system, but servicers were ill-prepared and unable to address the best interests of their clients — the investors — much less consumers."
He also warned servicers that the CFPB will be monitoring servicer actions in light of the 900-page final servicing rule issued in August and echoed previous comments by the CFPB that while some servicers have made good progress, "many troubling issues persist."
The CFPB took on servicers directly in 2014 at the opening session of the MBA's National Servicing Conference, when Steven Antonakes, former deputy director of the CFPB, said, "Nearly eight years have passed and I remain deeply disappointed by the lack of progress the mortgage servicing industry has made.”
After citing some of the "encouraging signs" of progress in the housing recovery, Cordray revealed three priority areas for enforcement and supervision in the next year:
1. Consumer complaints
Cordray emphasized the importance lenders should be placing on these indicators of how they are serving customers, admonishing lenders to study not only their own internal complaint system, but use the CFPB's complaint database to learn how they can avoid mistakes other lenders are making. He said several times that the bureau considered monitoring and addressing complaints part of "a basic component" of any compliance effort.
2. Redlining
While "we could all wish this was a historic injustice of the past," Cordray said, the bureau has identified this as a target for its supervisory work, and has teamed up with the U.S. Department of Justice to bring major enforcement actions against institutions found to be discriminatory in their lending.
3. RESPA violations
The bureau is not backing down in its RESPA enforcement in light of the recent PHH ruling, Cordray said. He noted that the case "is not final at this point" and that the bureau "respectfully disagrees" with the finding. The CFPB will continue to adhere to its 2015 bulletin regarding marketing servicing agreements, Cordray said.
