COMMENTARY: by Jonathan Foxx
Jonathan Foxx, former Chief Compliance Officer of two publicly traded financial institutions, is the President and Managing Director of Lenders Compliance Group, the first full-service, mortgage risk management firm in the country.
A new era in residential mortgage loan originations has now begun with the issuance of the announcement of a designated transfer date for transferring specific enumerated authorities from the purview of other agencies to the Consumer Financial Protection Bureau.
Our firm has issued Mortgage Compliance Updates and Compliance Alerts relating to the mortgage reform act. We have also opened a new section in our Library for the CFPB, and if you want to read the legislation, that too is available in our Library.
And, as many of you know, I have written extensively on the new mortgage reform legislation and will continue to do so.
You might want to read the following articles, all published in the National Mortgage Professional Magazine, the nation's highly respected magazine devoted to mortgage banking:
- (September 2009 Edition)
- (October 2009 Edition)
- Landmark Financial Legislation: New Rules for Mortgage Originators - Part I: Reformation and Regulations
- (August 2010 Edition)
- NOTE: Part II - forthcoming this month in the September edition. Part III - forthcoming in the October edition.
On September 17, 2010, President Obama appointed Elizabeth Warren as an Assistant to the President and a Special Adviser to the Treasury Secretary, with responsibility to establish the CFPB.
Elizabeth Warren was not named the first Director (a five year post that requires Senate confirmation). Given her unique abilities, and the support of the President and Treasury Secretary, there is every reason to believe that she will bring insight, energy, and fairness to the position entrusted to her.
On September 20, 2010, the very first issuance regarding the Bureau of Consumer Finance Protection (CFPB) was published in the Federal Register.
In accordance with the Consumer Financial Protection Act of 2010 (CFP Act), the Secretary of the Treasury, Timothy Geithner, designated July 21, 2011 as the date for the transfer of functions to the CFPB.
On July 21, 2010, the President signed into law the CFP Act (i.e., Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act). Section 1062 of the CFP Act, in relevant part, requires the Secretary to designate a single calendar date for the transfer of functions, under section 1061, to the CFPB.
Therefore, on the ''designated transfer date'' of July 21, 2011, certain authorities will be transferred from other agencies to the CFPB, and the CFPB will be able to exercise certain additional, new authorities under the CFP Act and other laws.
Henceforth, we will be tracking CFPB announcements and issuances as well as any Treasury issuances pertaining to the CFPB.
If you have any questions about this matter,
please email me.
Orderly and Organized Start-Up
- Congress contemplated that the lead time for the ''orderly implementation'' of the CFPB's functions could range between 6 to 18 months after the date of enactment.
- To fulfill the statutory goal of an ''orderly and organized startup'' of the new agency, the CFPB should be provided a reasonable period of time to develop its operations and organization prior to the transfer of functions and employees from other agencies.
- A transfer date of July 21, 2011, 12 months after the date of enactment, will provide the CFPB an appropriate period of time to hire and assign employees to support its new functions, as well as to plan and make important decisions necessary to build a strong foundation for the new agency.
Functions of the CFPB
- On July 21, 2011, the ''consumer financial protection functions'' currently carried out by the Federal banking agencies, as well as certain authorities currently carried out by the Department of Housing and Urban Development (HUD) and the Federal Trade Commission (FTC), will be transferred to the CFPB.
- As of July 21, 2011, the CFPB will assume responsibility for consumer compliance supervision of very large depository institutions and their affiliates and promulgating regulations under various Federal consumer financial laws.
- Within 90 days after July 21, 2011, the transfer of certain employees from six of those agencies to the CFPB must also occur.
- Effective July 21, 2011, new authorities of the CFPB under subtitle C of the Act, as well as other consumer protection provisions, will become effective.
- In the intervening period, the CFPB will lay the groundwork for an efficient transfer and prepare for consumer protection activities after July 21, 2011.
- For instance, prior to July 21, 2011, the CFPB will:
- begin to conduct research relating to consumer financial products and services,
- develop its nationwide consumer complaint response center,
- plan and take steps to implement the risk-based supervision of non-depository covered persons, and
- prepare for the opening of outreach offices.
- Development of the supervision program for certain non-depository covered persons is particularly significant because no Federal agency previously has had the responsibility of supervising these entities, such as payday lenders, mortgage companies, debt collectors, and consumer reporting agencies.
- Prior to July 21, 2011, the CFPB will begin building the supervision program, including hiring and training examination staff and making preparations necessary to begin a risk-based supervision program.
The CFPB will also work during the intervening period to prepare for the new authorities that will transfer or take effect as of July 21, 2011, for instance by planning the orderly integration of bank, thrift, and credit union examiners from five different Federal agencies and preparing for rulemakings required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Visit Library for Issuance
CFPB: Designated Transfer Date
Federal Register, Vol. 75, No. 181
September 20, 2010
LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of hands-on and automated services in residential mortgage banking.