In a speech to its Consumer Advisory Board, Richard Cordray, the director of the Consumer Financial Protection Bureau (CFPB), put forth nine goals to guide the Bureau in the coming years. After TRID and increasing CFPB actions against mortgage lenders in recent months, many are surprised at how little time Cordray spent discussing mortgage regulation in his speech. Today we’ll give you a rundown of the new areas of focus for the regulatory agency, and explain why online marketplace mortgage lenders may be the CFPB’s next target.
- Mortgage Regulation – With a value of $10 trillion, the mortgage market is the largest covered by the CFPB. Despite TRID, half of all mortgage shoppers are not comparing rates. The CFPB will focus on getting mortgage servicers to encourage borrowers to shop around.
- Student Loans – Currently, there is close to $1.2 trillion in student debt spread across 40 million customers. Over 25% are struggling to make payments, and the CFPB will continue to work with the Department of Education to align servicer incentives with consumer outcomes.
- Consumer Reporting – About 29 million consumers lack a credit report, and 19 million more have insufficient info for a credit score. The CFPB wants more accurate and effective data and dispute management. They will hold institutions accountable for remedying any deficiencies.
- Small Business Lending – With a market over $1 trillion serving 28 million small businesses, no federal agency currently collects comprehensive data on small business loans. The CFPB plans on assembling a small business lending team for market research, data collection, and infrastructure implementation to analyze complaints and enforce compliance.
- Consumer Education – Only 17 states require high school students to take a personal finance course. The Bureau wants to create consumer financial decision-making tools to provide consumers with better resources.
- Open-use Loans – Open-use loans are defined as any credit product that is offered without expectation of use for a specific purchase, including credit cards, overdraft products, payday loans, auto title loans, and installment loans. The Bureau aims institute rules that promote transparency and protect consumers from debt traps, deceptive marketing, and illegal debt collection practices.
- Debt Collection – Debt collectors lack the incentive to conform to the legal protections afforded consumers, and the CFPB intends to ensure collectors maintain accruable records and collect debt legally.
- Institutional Accountability – Congress has granted the CFPB authority to regulate the use of arbitration clauses, the goal being to institutions accountable for unlawful conduct and give consumers the ability to effectuate their rights.
The Next CFPB Target?
On March 7th, the CFPB released a consumer bulletin regarding marketplace lenders, who offer a variety of online loans, including installment loans, mortgages, student loans and auto loans. The CFPB has been collecting complaints about marketplace lenders under general categories like “Mortgages” and “Student Loans”. Now, the CFPB will create separate categories specifically for marketplace lenders—the goal being to let marketplace lenders know the CFPB has its eye on them.
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