this Consumer Financial Protection Bureau (CFPB) is establishing a public database to identify non-bank financial companies that have violated consumer laws, with the goal of avoiding repeat offending trends.
On Monday, the U.S. consumer financial regulator announced it had finalized rules to establish the new registry. It requires lenders found to have violated consumer laws to report certain final agency and court orders and judgments, including consent and stipulation orders. In addition, it requires senior executives to certify in writing that the company is not “in defiance” of the order.
“Financial firms often view penalties for illegal activity as a cost of doing business,” CFPB Director Rohit Chopra said in prepared remarks. “The CFPB’s new rule will help law enforcement agencies across the country detect and stop repeating the behavior.”
This is the first time the CFPB has used its authority to register a non-bank entity.
According to the CFPB, these orders are often public but not fully tracked by stakeholders. National regulators, investors, creditors, business partners and the public should use available information when conducting due diligence or research.
The final rule will take effect on September 16.
“The MBA is disappointed with the CFPB’s final rule on the Public Order Registry because it creates a costly and duplicative reporting framework for the mortgage industry,” said Pete Mills, senior vice president of residential policy at the Mortgage Bankers Association. ) express.
“Including mortgage lenders and servicers on the registry is unnecessary and redundant, as we outlined in our April 2023 comment letter, and contradicts the CFPB’s concerns about reducing costs. The CFPB is missing a simple The opportunity to add their mortgage company enforcement information to the comprehensive consumer-facing database maintained and operationalized by the Conference of State Bank Supervisors’ NMLS Consumer Access Portal.
The CFPB remains committed to holding companies that violate the law accountable. In early 2023, it established a felon unit to “actively ensure that the company, its senior management and board of directors do not treat any orders as recommendations.”
The CFPB believes that nonbank lenders generally face inconsistent regulation.
In 2008, the U.S. Congress passed the SAFE Act, requiring mortgage originators to register and obtain a license. As a result, many banks, credit unions and mortgage companies are known to regulators, but some non-bank companies remain licensed or registered.
The CFPB said it is using its authority under the Consumer Financial Protection Act to register nonbank institutions to support its role in monitoring consumer risks.
For example, in February 2023, the CFPB permanently banned RMK Financial Corporationwhose business is majestic home loanDespite an enforcement order issued by the CFPB in 2015, the mortgage industry has experienced a series of repeat violations.
Based on public feedback, CFPB rules for non-bank financial companies issuing orders to financial institutions National Multi-State Licensing System (NMLS) A simplified archiving process is available with Consumer Access.
this American Community Home Lender (CHLA) said in a statement that while it “appreciates the staggered compliance periods for small IMBs, CHLA reiterated our request in our comment letter to exempt small IMBs because they have already reported violations to the NMLS.” “
