Although this year’s conference displayed a willingness of regulators to cooperate with industry efforts to comply with new regulations, the CFPB nevertheless shows no hesitation in filing enforcement actions, using civil penalties, damages and injunctive relief to implement thousands of pages of new regulations.
With over 3,500 pages of new regulations anticipated from the CFPB in 2013, the theme resonated through this year’s MBA regulatory conference was the “The Year of Compliance.” CFPB regulators on hand for various panel discussions at the conference struck a conciliatory tone, indicating their intent to cooperate with industry efforts to comply with the host of new regulations. However, recent enforcement actions with mortgage originators, servicers and even homebuilders reflect that the agency’s cooperation will be backed by a big stick. For example, as recently as May 30, 2013, the CFPB filed an enforcement action against Florida-based American Debt Settlement Solutions, Inc. and its owner for alleged violations of the Consumer Financial Protection Act of 2010 and the Telemarketing Sales Act.1 This action represents the first of its kind with the entry of a stipulated judgment imposing more than $500,000 in damages and civil penalties together with injunctive relief based on allegations that the company engaged in “abusive acts or practices” under Dodd Frank.
The CFPB’s new regulations and enforcement actions are sweeping across all aspects of the financial services industry. As a former deputy comptroller of the currency who sits on the CFPB consumer advisory board recently stated: “It’s possible everything you have been doing might be illegal.” 2 Mortgage Daily’s 2012 index also reflects a 15 percent rise year-over-year in 2012 in mortgage-related litigation.
Industry-wide regulatory changes will impact all aspects of commercial and residential mortgage lending and debt services, including ABAs, mortgage origination, servicing, secondary market activities, debt services and consolidation, vendor and quality-control management and even homebuilding, among other areas.
1. A copy of the Complaint may be retrieved from the following link: http://files.consumerfinance.gov/f/201305_cfpb_complaint_adss.pdf.
2. Lew Sichelman, Everything Might be Illegal, Mortg. Banking, May 2013, at 22.