The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov (CFPB) now has the authority to oversee nonbank businesses that provide consumers with financial products and services.[IMAGE]
Within this jurisdiction fall a host of mortgage companies that have largely gone unregulated in the past, including mortgage servicers that are not part of a depository institution, loan modification and foreclosure relief services, loan originators, and mortgage brokers.
With President Obama's recess appointment of Richard Cordray as CFPB director on Wednesday, the bureau can move forward with expanding its bank supervision program to nonbanks Ã¢â‚¬Â¦ and officials at the CFPB wasted no time wielding that additional authority.
In ""a blog post"":http://www.consumerfinance.gov/the-cfpb-launches-its-nonbank-supervision-program/ Wednesday afternoon, the CFPB announced the official launch of its nonbank supervisory program.
Ã¢â‚¬Å“By requiring the CFPB to examine nonbanks, the Dodd-Frank Act sought to ensure that consumers get the benefit of federal consumer financial laws on a consistent basis,Ã¢â‚¬Â according to the CFPB. Ã¢â‚¬Å“This consistent supervisory coverage will help level the playing field for all industry participants to create a fairer marketplace.Ã¢â‚¬Â[COLUMN_BREAK]
The CFPB has the authority to oversee nonbank mortgage companies no matter their size, and assess whether they are conducting their businesses in compliance with federal consumer financial laws, such as the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA).
Officials say the CFPBÃ¢â‚¬â„¢s approach to nonbank examination will be the same as its approach to bank examination.
The bureau released an ""800-page manual"":http://www.consumerfinance.gov/wp-content/themes/cfpb_theme/images/supervision_examination_manual_11211.pdf last October, detailing its examination procedures for both bank and nonbank entities. The guide pays particular attention to reviews of mortgage servicing practices Ã¢â‚¬" an area that CFPB officials have repeatedly referenced as a priority for their examiners.
The CFPB says it may also require nonbanks to file certain reports with its office, review consumer-facing marketing material, and inspect compliance systems and procedures as part of its review process.
According to the CFPB, its examiners will Ã¢â‚¬Å“in generalÃ¢â‚¬Â notify a nonbank in advance of an upcoming examination, but that doesnÃ¢â‚¬â„¢t completely rule out unannounced visits.
The CFPB says when considering whether and how to supervise particular nonbanks, the bureau will take into account several factors, including the nonbankÃ¢â‚¬â„¢s volume of business, types of products or services, and the extent of state oversight.
CFPB officials intend to coordinate with other federal and state regulators in order to allocate resources appropriately and minimize burdens on the nonbanks, the bureau explained.
The CFPB says it would like to maintain an ongoing dialogue about its supervision program and is requesting comments or feedback ""through its website"":http://www.consumerfinance.gov/the-cfpb-launches-its-nonbank-supervision-program/.