CFPB Releases Fall Unified Agenda

By: Greggory B. Oberg, Esq.

Twice a year, the CFPB publishes a report addressing regulatory matters the Bureau reasonably anticipates addressing during (roughly) the last twelve months. In late November 2019, the CFPB released their Fall 2019 Agenda, which will cover the anticipated actions between now and October 1, 2020.

Contents of Report

Consistent with previous years and the format prescribed, four sections are presented with each Regulatory Agenda. A written Preamble generally describes the content of the Agenda, and is probably the most useful part of the Agenda for those interested in reading the tea leaves. The subsequent four sections cover short term and long term proposed actions, and summarizes actions addressed in previous Agendas which are now completed.

The Preamble provides the basic overview, and thus the entirety of this blog will be addressing Preamble unless otherwise noted.

A full copy of the report can be found here.

Without reading too far into any of the language provided; we've taken the time to evaluate the Agenda and summarize the changes we may see in the next 12 months (and beyond) in a 5-10 minute brief for our clients, below.

Preamble

Pursuant to Dodd-Frank, ... the Bureau has rulemaking, supervisory, enforcement, consumer education, and other authorities relating to consumer financial products and services[,] ... includ[ing] the authority to issue regulations under more than a dozen Federal consumer financial laws ... for the purpose of ensuring that all consumers have access to markets for consumer financial products ans services and that markets ... are fair, transparent, and competitive.

Preamble to Regulatory Agenda Fall 2019, at pg. 2

After re-iterating the Bureau's statutory mandate under Dodd-Frank, the Agenda turns to the variety of tools at its disposal to effectuate the statutory goals. With regard to Rulemaking, the CFPB seems to state a preference for other methods of ensuring fair markets, stating that where "the Bureau had discretion, the ... focus on preventing consumer harm" will be achieved by "maximizing informed consumer choice, and by reducing unwarranted regulatory burden which can adversely affect competition." See Preamble at pgs 2-3.

Notably, a permanent direction in Kathy Kraninger took over in late 2018, and embarked on a much publicized listening tour around the "Call for Evidence" initiative. This is the first Agenda published after Kraninger's tour, and aims to provide increased transparency into what actions Kraninger's CFPB expects to take pursuant to the "evidence" collected on the listening tour.

Before moving onto the substantive objectives of the Bureau in both the short-term and long-term, I wanted to highlight one passage in the preamble that I found interesting:

With specific regard to rulemaking, the Bureau seeks to articulate clear rules of the road for regulated entities that promote competition[.] If Congress directs the Bureau to promulgate rules or address specific issues through rulemaking, the Bureau will comply with the law.

Preamble to Regulatory Agenda Fall 2019, at pg. 2

(Ongoing) Implementation of Statutory Directives

The Bureau next turns to the ongoing rulemaking processes as of July 25, 2019, through which the Bureau intends to "maximize consumer welfare and achieve other statutory objectives through protecting consumers from harm and minimizing regulatory burden, including facilitating industry compliance with rules." See Preamble at pg. 3.

Consistent with this statement, the ongoing directives the Bureau addresses primarily (if not exclusively) arise out of May 2018 reforms to Dodd-Frank promulgated under EGRRCPA. Any topics addressed under this header arise under Congressional mandate to act, and as such may not be indicative of what the Bureau wishes to focus on. Instead, it should be read as what the Bureau must do.

Various topics appropriate for Administrative Procedures Act (APA) formal rulemaking are addressed, with updates on progress:

• PACE Lending: ANPRM completed, NPRM anticipated.

• Escrow Requirements: preliminary analysis of escrow exemptions for certain lenders. CFPB is currently reviewing data collected in 2019.

• ECOA: collection and reporting of credit applications by women-owned, minority-owned, and small businesses. A symposium will be held in November 2019, after which small businesses will be consulted and further action contemplated.

• Small Entity Guidance: Ongoing updates pursuant to EGRRCPA to "provide clearer, authoritative guidance on certain mortgage regulations (internal quotations omitted). See Preamble at pg. 4.

Promoting Competition, Increasing Transparency, and Preserving Fair Markets

Next, the Bureau addressed continuations of Agenda items published in Spring 2019, providing examples of efforts to "articulate clear rules of the road for regulated entities." See Preamble at 5. Here, the Bureau addressed 4 areas:

• HMDA

As if we haven't seen enough change in HMDA; more is coming! You may remember the May 2019 NPRM reconsidering the thresholds for closed-end and open-end reporting. This NPRM was re-opened over the summer and closed in October, resulting in a Final Rule extending the temporary threshold.

The Bureau will be releasing another Final Rule applicable to HMDA in Spring 2020, which will address the permanent thresholds. In a similar "reform minded" vein, the CFPB published an ANPRM in May 2019 on reportability of certain data points. The Bureau will address this, and the publication of such data with annual HMDA LARs, at some point in Summer 2020.

• Payday, Vehicle Title, and Certain High-Cost Installment Loans

A 2017 final rule on the topic was brought up for reconsideration by the Bureau in a February 2019 NPRM addressing mandatory underwriting requirements in such loans. The Bureau expects to take final action to rescind the 2017 rule consistent with the Feb 2019 NRPM at some point in April 2020.

• Fair Debt Collections Practices Act (FDCPA)

In May 2019, a NPRM was published regarding Regulation F governing debt collection activities under the FDCPA. The Bureau is taking into consideration those comments received, performing certain testing of disclosures, and expects to issue a final action in 2020.

• Remittance Rule

While nothing is scheduled as of now, the Bureau is considering stakeholder feedback on the Remittance Rule's coverage and the expiration of a statutorily-established exception in the Remittance Rule that permits banks and CUs to estimate certain required disclosures.

New Projects and Further Planning

The major focus here is on the QM Patch expiration/renewal/replacement prior to the January 2021 expiration of that rule.

Outside of QM and GSE-based reforms which will necessarily take a large portion of the Bureau's focus, two new items are added to the long-term regulatory agenda based on the results of Kraninger's Call for Evidence in 2018 and 2019 Listening Tour. Note that these items will likely be addressed in 2021 fiscal or later.

First, (and perhaps one of the most requested reforms) the Bureau plans to review the LO Compensation rules in light of commentator opinions that the rule is too restrictive. While I'm sure industry (and specifically the compliance teams that have to deal with the rules) want this change, don't hold your breath. It's not coming until at least 2021; but hey...its on the agenda at least, right?

Second, the Bureau wants to explore technology and modernization of disclosures. Specifically, the E-Sign Act has received increased attention in the past due to the proliferation of online mortgage lending and increased demand from consumers to transact business in their native environments (their phones).