A group of a half dozen trade associations recently sent a letter to Mick Mulvaney, Acting Director of the Consumer Financial Protection Bureau. The letter raises objections over 2016 amendments to the CFPB’s 2013 RESPA and TILA Mortgage Servicer Rule, which are scheduled to go into effect in April 2018. The trade associations present an argument that these amendments, if implemented, could lead to borrower confusion and lead to numerous other administrative and legal hassles during the mortgage servicing process.
The amended CFPB rule would require mortgage servicers “to send monthly billing statements to consumers in active bankruptcy cases and certain bankruptcy cases in which the debtor’s personal liability was previously discharged.” The trade groups claim that this requirement would conflict with “well-settled bankruptcy law prohibiting a creditor from collecting from consumers who are in an active bankruptcy case or who have previously been discharged from personal liability in a prior bankruptcy case."
According to the letter, “the CFPB's final rule is contrary to this strong public policy of protecting bankruptcy debtors, will cause conflict within the administration of the bankruptcy case, and will unnecessarily subject servicers to serious liability under the Bankruptcy Code.” The letter goes on to argue that the CFPB’s final rule “presents significant risk of diluting the Judiciary's efforts in effectively administering its bankruptcy cases and usurps the Judiciary’s rulemaking power in deciding what information should and should not be provided to a debtor during a bankruptcy proceeding.”
If the CFPB declines to repeal its amended rule, the letter asks that the bureau to revisit specific portions of the rule, including “the past-payment breakdown, servicer transfers, and pre-confirmation cases, among others.”
Signatories on the letter included the National Association of Federally-Insured Credit Unions, American Financial Services Association, Consumer Mortgage Coalition, CUNA, HOPE NOW Alliance, Independent Community Bankers of America, and the Real Estate Settlement Providers Council. You can read the letter in full by clicking here.
Although the CFPB won a legal victory in late January, after the Court of Appeals for the District of Columbia Circuit ruled that the CFPB's structure is constitutional, the bureau is nevertheless undergoing a sea change of focus and intent under Acting Director Mick Mulvaney. Earlier this week, the CFPB and Mulvaney unveiled a new strategic plan for the bureau, vowing to meet the organization’s statutory responsibilities but go “no further,” adding that “pushing the envelope in pursuit of other objectives ignores the will of the American people" and "also risks trampling upon the liberties of our citizens."
This backing away from the CFPB’s focus on enforcement is consistent with Mulvaney’s past criticisms of the bureau as being too independent and overpowered. In November, shortly after taking the reins of the CFPB, Mulvaney instituted a 30-day hiring and regulatory freeze.