Ultimately, the final piece of the puzzle fell into place when President Trump appointed Mick Mulvaney to step in as acting director of the CFPB, replacing Richard Cordray, who
had been at the helm of the agency since its conception
in 2011. Mulvaney’s appointment seemed to be the signal many in the mortgage industry were looking for —
an indication that the attitude, focus and direction of the
CFPB was going to shift.
With Republicans in control of Congress, the White
House and the CFPB, the winds of political change
started to blow in favor of financial deregulation, yet
again. That promised to create a new oversight landscape for the mortgage industry.
Interestingly, since these changes have taken place,
there hasn’t been a vast rollback of financial regulation
as some analysts predicted. It’s true that there have
been minor modifications, such as revisions to the
Home Mortgage Disclosure Act (HMDA) and the recent
elimination of the TILA-RESPA Integrated Disclosure
(TRID) “black hole,” which have marked key wins for
the mortgage industry.
The most significant regulatory modification,
however, has actually been a decreased level of enforcement from federal financial watchdogs — and
not a monumental change in the law. In light of this
new development, some mortgage originators have
adopted an attitude of compliance indifference,
swapping out fear for apathy. It may be enticing to
fall into the belief that the CFPB is toast, a relic of the
past, something with which the industry no longer
has to contend, but this is a false sense of security
that could prove detrimental to lenders and originators in the long term.
The fact remains that the CFPB is still alive and
well. It’s still performing audits and undertaking examinations. Despite dropping its old “gotcha” mentality and aggressive behavior, the bureau is still responsible for enforcing regulations, which are also
still on the books.
Additionally, many state regulators view the CFPB’s
lack of inaction as apathy, and feel it’s their responsi-
bility to step in and make sure lending practices are
being appropriately monitored. This belief has caused
some states to augment their financial regulations in
an effort to cover a perceived lack of federal super-
vision. This burgeoning of state-level oversight may
have significant impact on some mortgage origina-
tors’ business operations.
Considering these realities, lenders should be wary
of the temptation to toss out the rulebook simply because regulatory enforcement feels lax. Savvy business leaders will remember that the past informs the
future and, if there’s one thing the mortgage industry
can learn from its past, it’s that political-party control
will inevitably change and, when it does, the appetite
for federal financial oversight may as well.
So, what will the future bring for mortgage lending?
Which political party will emerge as the victor in this
year’s midterm elections, in 2020 and beyond? Who will
be the next head of the CFPB? What will federal financial oversight look like over the next decade? Will states
step up and fill the perceived regulatory enforcement
void? How can lenders and originators adequately plan
for the unknown?
While the answers may vary, the formula for success
remains the same. Prepare for the future by learning
lessons from the past. Mortgage professionals who
continue to follow the rules and regulations governing
the industry, regardless of current enforcement standards, stand to gain far more in the long run than those
looking for loopholes in the system.
In the words of Spanish-American philosopher,
George Santayana, “Those who cannot remember the
past are condemned to repeat it.” There’s no need to
replicate the mistakes of the past. Ultimately, mortgage
originators and others in the industry who operate on a
foundation of unwavering ethical business practices will
be better positioned to weather the political and regulatory storms that may be gathering on the horizon. n
Information contained in this article does not constitute legal, financial, or other professional advice or services and should not be used as a substitute for professional
advice. The reader accepts full responsibility for the use
of the information contained herein. Primary Residential
Mortgage Inc. (NMLS 3094) is an Equal Housing Lender
For more articles on the changing compliance landscape
“Underwriting Predictability Is the Elephant in the Room,” Scott Olson, May 2018
“The Elixir for TRID Imperfections,” Josh Friend, November 2017
“Fixing TRID’s Catch- 22 Rules,” Holly Spencer Bunting, February 2017
“Nightmare Scenario for Compliance,” Janice Minchenberg, November 2016
“Where Do We Go From Here?” Brian Rogerson, December 2016
View these articles and more at ScotsmanGuide.com.
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the CFPB’s lack of
inaction as apathy,
practices are being