Lenders Are Afraid Of The CFPB

The actions of the Consumer Financial Protection Bureau (CFPB) have reshaped the mortgage space. And they aren’t stopping. There’s more to come. But not all the changes are welcome. New data shows that the majority of lenders are very concerned, in fact. The CFPB’s mandates and deadlines still dominate lenders’ top compliance concerns, according to QuestSoft’s eighth annual compliance survey. Here’s the scoop:

More than 500 lenders responded to the 2014 survey, with 62.2 percent ranking the Qualified Mortgage (QM) rule as a high concern. Lenders also cited other CFPB rulings including Ability-to-Repay (ATR) violations (57.2 percent high concern) and the combined Truth in Lending (TIL) and Good Faith Estimate (GFE) disclosure forms (54.8 percent high concern) as top concerns.

CFPB-related rulemaking has captured the top spot in the survey every year since 2012, the first survey year available following the creation of the regulatory body. Interestingly, survey respondents also expressed concern for CFPB rules that have yet to be finalized or publicized. Recently introduced discussion points for proposed Home Mortgage Disclosure Act (HMDA) changes (57.5 percent high concern), and other CFPB-related rulemakings (47.7 percent high concern), both outscored any non-CFPB category.

“Compared to last year’s survey, lenders appear more weary than ever of the CFPB’s rules, as non-CFPB issues are seen as increasingly lower priorities,” said Leonard Ryan, founder and president of QuestSoft. “It seems the message of the survey is that for many lenders, the mortgage environment has become highly dependent on the box of lending that the CFPB rules are creating.”

Ryan noted that survey respondents also cited vendor management as a growing concern. He indicated that his company has experienced a four-fold increase in the cost of simply processing compliance requests, adding: “There is a growing desire to consolidate the number of vendors. Being a provider who offers multiple compliance services in a single platform has definitely worked to our advantage.”

The survey also highlights RESPA Fee Tolerances (45 percent high concern), Fair Lending exams (40 percent high concern), CRA exam scrutiny (31.4 percent high concern), state consumer lending laws (25.7 percent high concern) and the NMLS Mortgage Call Reports (20.1 percent high concern) as this year’s additional compliance issues.

“The timeframe in between regulatory rule announcements and implementation dates simply doesn’t allow enough leeway for lenders to rework processes and implement new technologies in order to achieve compliance,” said Ryan. “Lenders will continue to seek counsel and integrate with venerable compliance providers, in efforts to prepare for audits and meet industry compliance standards.”

QuestSoft’s flagship software, Compliance EAGLE, provides lenders with automated compliance review tools to evaluate loan files for adherence to the full range of mortgage lending regulations, including QM, ATR, RESPA, HMDA, TILA, CRA, flood determination requirements, NMLS Call Reporting, federal, state, consumer and local lending laws.

About The Author


Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.