CFPB, DOJ, FTC, state AGs. Trying to keep these regulators straight can be maddening. However, they all have one thing in common: they are increasing scrutiny on lending practices and stepping up enforcement when violations are uncovered.
Most likely, you’re already doing the right things when it comes to your lending practices. So how do you demonstrate this and keep yourself out of the regulatory quicksand?
Let’s take a step back. What’s happening in the world of Fair Lending enforcement?
Federal agencies work either alone or in partnership with one another or with State Attorneys General to enforce fair lending regulations. Here’s who they are and what they’re enforcing.
The Department of Justice
The Fair Lending Unit of the Housing and Civil Enforcement Section conducts the DOJ’s enforcement of fair lending laws. Since the unit’s founding in 2010, it has filed at least 40 lending matters under multiple regulations (the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act to name a few).
The Federal Trade Commission
The FTC takes action by issuing regulations to protect consumers, including rules covering mortgage foreclosure assistance services, credit reports, mortgage advertising and debt relief services sold by telemarketers and other financial products and services. The FTC’s authority covers for-profit entities such as mortgage companies, mortgage brokers, creditors and debt collectors. The FTC shares authority with the Consumer Financial Protection Bureau, or CFPB, to enforce the consumer protection laws for non-bank financial institutions.
The Consumer Financial Protection Bureau
With the formation of the CFPB, lending organizations of all stripes have come under increased scrutiny. The CFPB was established in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Its goal is to help consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.
Under its charter, the CFPB:
- Writes rules, supervises companies, and enforces federal consumer financial protection laws
- Restricts unfair, deceptive, or abusive acts or practices
- Takes consumer complaints
- Promotes financial education
- Researches consumer behavior
- Monitors financial markets for new risks to consumers
- Enforces laws that outlaw discrimination and other unfair treatment in consumer finance
Since its inception, the CFPB, in partnership with other agencies like the Federal Trade Commission and Department of Justice, has negotiated several settlements with providers of financial services.
So, what do you need to do to keep out of regulatory quicksand?
Regulatory pressure is nothing new, but with the added scrutiny of these regulatory agencies, it important for you to take the necessary steps to ensure your organization fills any compliance gaps that may raise red flags. The best way to plug your compliance holes and meet the expectations of all the agencies concerned with fair lending practices is to fully embrace the CFPB’s guidance and put in place a Compliance Management System, or CMS.
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OPERATION RUSE CONTROL
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June 1, 2015
REGULATORS ANNOUNCE $9 MILLION SETTLEMENT
CFPB and DOJ Announce $9 Million Settlement with mortgage lender charged with discriminatory broker compensation policy.
November 14, 2014
MORTGAGE LENDER TO PAY $730,000
CFPB orders California mortgage lender, Franklin Loan Corporation, to pay $730,000 for giving its employees illegal bonuses for steering consumers into loans with higher interest rates.