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Besides the recent ruling in the PHH case, there are other things happening with the CFPB.
First, some good news. Dodd-Frank requires the CFPB to review and assess the effects of any rules implemented under the Act.
Accordingly, even though it’s only been 3 years since we got the QM rule, they are already hard at work evaluating its effect on mortgage lending (QM Review). If the assessment reveals problems it would require specific rulemaking to make any needed changes to QM. This could be costly and time-consuming for both CFPB and lenders.
So, unless their assessment reveals any major problems, for now, we should not expect to see any major changes to the QM rules, with maybe an exception to extend the safe harbor provisions for agency approved and guaranteed loans. This I know would put many lenders’ minds at ease.
On the other hand, just when we thought it might be safe to go back into MSAs, CFPB filed a brief in connection with their case against Intercept Corp., a payment processor, outlining their disagreement with the issue of their unconstitutional structure as found in the PHH case (Intercept).
With the filing of this brief, it becomes quite clear that CFPB is not about to accept the ruling of the U.S. Court of Appeals for the D.C. Circuit. It looks as though they may have just begun to fight.
So what comes next?
- Is CFPB’s structure of a single Director who can only be removed by the President “for cause” constitutional. The Appeals Court in DC says no.
- What will the decision be in the Intercept case? What effects will these rulings have on the financial services industry?
- How will these outcomes impact how CFPB handles future audits and enforcement actions?
Only The Shadow knows…stay tuned.
