Under Dodd-Frank, the CFPB is required to conduct a study of the mortgage arbitration process and its effects on consumers. Interestingly, a study of the CFPB report on arbitration done by the Mercatus Center at Georgia University found the CFPB’s own findings do not support the need for them to meddle in the current arbitration process (Arbitration).
Once more it appears the federal government, through the continuing efforts of the CFPB, is pushing to change something that doesn’t need changing. The CFPB study clearly shows that the current arbitration system works and, in fact, benefits consumers.
The Mercatus report clearly indicates that CFPB’s study presents no real basis for any regulatory or legislative proposal to limit the use of the current system. So why does CFPB continue to explore this course for action?
One clear finding in the Mercatus report is that the CFPB’s own study shows that consumers do much better under the current arbitration system than what most critics of this process claim. It also reports that the current system is a simple and effective process for consumers, including those who are not represented by an attorney in the process. It seems to me the current process fits the CFPB bill in providing consumers with a simple, clear, understandable and transparent process to settle differences with lenders without having to incur the time and expense of a legal battle.
Even though the study shows the current system is working, CFPB says it will continue to invite feedback from the industry on what is needed for change. The information they gather will be used so they can move forward in the rule-making process to alter the current arbitration system for the better (so they say), although it is working just fine as it is.
Hopefully, CFPB will be prudent in their endeavor for arbitration changes. Through the feedback they receive, they might uncover something that can improve the process without putting undue restraints or requirements on lenders. I am not sure just how much more lenders can endure. Maybe this time they’ll leave well enough alone and concentrate their efforts in areas needing their attention. Like a revamping of the consumer complaint database to provide more factual results on the complaints filed against lenders.
Are you aware of CFPB’s process to review and potentially change the arbitration process? Do you care? If so, you might want to get involved. It’s your industry; if a change is coming it’s best to be proactive in the process rather than reactive after it takes effect.