CONSUMER FINANCIAL PROTECTION BUREAU COULD HURT THE HOUSING RECOVERY
Real estate groups had mixed reactions to President Obama’s controversial appointment Wednesday of Richard Cordray as the first director of the U.S. Consumer Financial Protection Bureau (CFPB).
While the bureau has had the power to regulate big banks since its official launch in July, it was not until the director position was filled that the CFPB could exercise its full supervisory duties over nonbank institutions, including mortgage companies such as originators, brokers and servicers, and loan modification or foreclosure relief services; payday lenders; and student loan providers.
“Many of these institutions had no regular federal oversight in the run-up to the financial crisis. They led a race to the bottom that pushed aside responsible businesses, including community banks and credit unions, and greatly harmed consumers,” Cordray said in a post on the CFPB’s blog on the day of his appointment.
“I am pleased to say that, starting today, we can now exercise the full authorities granted to us under the law and begin to supervise these nonbanks.”
Cordray has lost no time in flexing the bureau’s new powers. On Thursday, the bureau announced the launch of its nonbank supervision program, which it says will ensure “that banks and nonbanks play by the same rules.” The bureau also rolled out a mortgage complaint system.
In an email to members, David H. Stevens, president and CEO of the Mortgage Bankers Association and former head of the Federal Housing Administration, warned that “a fully empowered CFPB presents a number of new challenges for our industry.”
“In short, the CFPB’s influence on the financial services sector will be unprecedented, and MBA will continue to urge that appropriate institutional checks and balances be in place to ensure that the CFPB’s authority is used wisely and judiciously,” he said.
Stevens supported Republicans’ calls for structural changes to the bureau, “namely that the director’s position be replaced by a five-person commission, that the CFBP be subject to the normal congressional appropriations process, that CFPB rules be subject to review by the Office of Management and Budget (OMB), and that votes to overturn CFPB decisions by the Financial Stability Oversight Council (FSOC) take a simple majority rather than a two-thirds vote,” he said.
He added that the recess appointment, which Republicans had been blocking for months pending such changes, “promises to further exacerbate the political tensions between Democrats and Republicans.”
The U.S. Chamber of Commerce and the American Bankers Association blasted the appointment, and the former said it had not ruled out a legal challenge to the move, according to news reports.
Meanwhile, the San Diego-based National Association of Hispanic Real Estate Professionals backed Cordray’s installation.
“Mr. Cordray is a distinguished public servant with an impressive track record for defending the interest of the public and the underserved,” said Carmen Mercado, NAHREP’s president, in a statement.
“We believe his appointment will eliminate some degree of uncertainty in the market, which we hope results in more access to mortgage credit for qualified buyers.”
The 20,000-member association also stressed that protections should support “sustainable homeownership” and not further restrict access to mortgage credit for working families.
Consumer and civil rights groups, as well as 37 state attorneys general, applauded the appointment, according to news reports. Cordray is a former Ohio attorney general.
The National Association of Realtors said it had no position on Cordray’s appointment.