FINALLY – MOVEMENT FROM THE CFPB

On November 29th the Consumer Financial Protection Bureau (CFPB) published a notice and request for information about streamlining the inherited regulations. This publication is significant for several reasons.

INHERITED REGULATIONS

The “inherited regulations” include 14 existing consumer regulations, including, among others, Regulation Z and Regulation X (RESPA), that the CFPB inherited from other regulatory agencies on July 21, 2011. The inherited regulations will be published in Chapter X of Title 12 of the Code of Federal Regulations.

We believe that all of the existing regulations will be renumbered. For example, the citation for the payment schedule disclosure for closed-end mortgage loans in Regulation Z will change from 12 CFR 226.18(s) to 12 CFR 1026.18(s). It appears that the regulation will still carry the moniker of Regulation Z.

So, what is the impact of this change? You will need to review and update policies, procedures, training materials, and related documents to reflect the new citations. While this is not a complicated task it is burdensome and time consuming. How time consuming will be determined by the frequency of use of citations in your compliance documentation.

STREAMLINING THE INHERITED REGULATIONS

The CFPB is soliciting input on how to streamline the inherited regulations by updating, modifying or eliminating outdated, unduly burdensome, or unnecessary provisions. Based on their efforts to date on combining the Truth in Lending and RESPA disclosures the CFPB appears sincere in its efforts to streamline regulations.

So, what is the impact? You should submit suggestions to the CFPB on ways to improve the regulations. Just pick the few items that are most bothersome for you. Explain why the disclosure issue is a problem and provide suggestions for improvement.

PRIORITIES FOR THE COMING YEAR

The notice lists the CFPB priorities for the next 12 months. The list includes ability to repay rules, consolidating TIL and RESPA disclosures, and protections against harmful servicing practices.

SIGNIFICANT OBSERVATION

The CFPB is finally moving. The CFPB has been frozen in place by the on-going political circus, featuring Congress and the White House. The headless agency appeared reluctant to take any action until leadership was in place. It looks like action begins in earnest in two weeks. This is a small first step. The real story will be how quickly the CFPB follows with more substantive steps.

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