Condo Media - April 2012 - 10

N e w s C A I

Meet the CFPB
Frequently Asked Questions
he Consumer Financial Protection Bureau (CFPB) was created by the Dodd Frank Act to serve as a watchdog over financial products. The bureau’s powers cover almost every consumer financial service, excluding insurance and securities. By statute, the CFPB must focus regulatory attention on financial institutions with assets of more than $10 billion. However, the bureau also has regulatory authority over many state-based entities offering financial services. This authority is a direct response to the unregulated financial services industry that exacerbated the recent financial crisis. While certain state-based industries are specifically named, the CFPB is allowed, in many instances, to name industries and products it will regulate, which includes the housing industry. This means the housing market, including CAI members, have an interest in the bureau’s work.

ing to stop the spread of risky and confusing mortgage products. The CFPB does not have to go to Congress for new authority to halt future market abuses. Is the focus on just mortgages? The CFPB has consumer protection authority over most financial services including student loans, credit cards and checking accounts. However, the CFPB has special authority over mortgage lending standards and real estate closings. The Dodd Frank Act gave the CFPB the responsibility of enforcing the federal Truth in Lending Act (TILA), a powerful consumer protection law. As the federal enforcer of TILA, the CFPB will establish and enforce mortgage standards that all lenders and housing market participants must follow. Congress also transferred rulemaking and enforcement authority under the Real Estate Settlement Procedures Act from HUD to the CFPB. The bureau is updating real estate closing disclosures and real estate closing forms. The CFPB sets standards that govern almost every aspect of the mortgage lending and closing process. I’m a community manager or a board member not a lender. The CFPB doesn’t regulate me, right? The CFPB was designed to mature with the market it regulates and there are limited restrictions on the types of individuals and firms it cannot supervise. The CFPB does not regulate institutions with assets less than $10 billion or other industry groups that have an explicitly defined exemption from CFPB supervision. The CFPB does regulate state-based individuals and companies that offer financial ser-

vices or products. It is this area of authority where the CFPB will focus a significant amount of attention. Congress granted the CFPB authority to expand its supervision. Given the role of community associations in our housing markets and the authority of associations to foreclose, it is reasonable to expect the CFPB to examine community associations at some point. My state just passed a transfer fee law. I thought the Federal Housing Finance Agency wasn’t pursuing one. What’s CFPB’s concern? The CFPB has been finalizing rules to govern national mortgage lending standards. This proposed rule, which was almost 400 pages long, included a onesentence question about transfer fees used by homeowner associations, but did not propose specific rules or restrictions on transfer fees. CAI submitted written comments on the proposed rule, encouraging the CFPB to permit states to regulate these. Almost 30 states now have statutes governing transfer fees and protect a community association’s right to use them. CAI will be monitoring CFPB’s treatment of transfer fees to ensure this mechanism is available to associations and that property owners in associations with a community transfer fee have equal access to mortgage credit. CM Because of its potential impact on community associations, CAI has added the CFPB to our Mortgage Matters program. CAI is working to protect homeowners in community associations and to ensure access to fair and affordable mortgage products for all current and potential association residents. You can follow our work and share your thoughts at www.caimortgagematters.org.

What is the CFPB’s main job? Congress created the CFPB to serve as a regulator to ensure consumers are protected by uniform enforcement of many existing (and some new) financial consumer protection laws. Prior to the CFPB, enforcement of federal laws was conducted by bank regulators and the Department of Housing and Urban Development (HUD). As the sole financial protection agency in the federal government, the CFPB will enforce consumer protections. How can the CFPB prevent a future crisis in the housing market? The CFPB studies developments in financial products and markets so the bureau can identify harmful products. Many faulted bank regulators for fail-

CONDO MEDIA • APRIL 2012

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Condo Media - April 2012

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