Ombudsman Recommends CFPB Improvements

from: ABA Daily Newsbytes -- Dec. 4, 2013

The Consumer Financial Protection Bureau’s ombudsman has recommended several improvements to the bureau’s exam procedures and communications efforts, according to a report yesterday. The ombudsman said the bureau is adopting its recommendations.

Based on concerns from supervised institutions about how to escalate examination problems and the scope of exam activities, the ombudsman recommended several enhancements to exam procedures. The CFPB should clearly identify the exam team members -- including the examiner in charge -- and their contact information, the ombudsman said. The bureau should also refer to the citation manual during exam communications, clearly describe the exam process up-front and provide regular updates on the exam’s status.

Also based on industry feedback, the ombudsman urged the CFPB to make it easier for users to access all updates on consumerfinance.gov. It also recommended that the bureau provide “more consistent and advanced lead time” for its public events.


http://files.consumerfinance.gov/f/201311_cfpb_annual-report_ombuds-office.pdf

Here's a suggestion that I have. I just e-mailed them two questions, asking for help understanding their guidelines on calculating and verifying rental income under Regulation Z Appendix Q.

Here is the canned response I received from them:

Thank you for emailing the Consumer Financial Protection Bureau about your question regarding the Bureau’s regulations. Please note that we can only provide informal oral responses to questions concerning the interpretation or application of specific regulatory provisions.

Industry: Resources to help you understand and comply with the Dodd-Frank Act mortgage reforms and our regulations, including downloadable compliance guides, are available through the CFPB’s website at www.consumerfinance.gov/regulatory-implementation. If after reviewing these materials you still have a question about how to interpret or apply specific CFPB regulations, please follow the instructions below to submit your inquiry and request a staff attorney contact you to provide an informal oral response. The response does not constitute an official interpretation or legal advice.

My suggestion is, why don't you be as helpful to the industry as you are to the consumer? In the long run, wouldn't that help the consumer? And isn't that what you are all about?

I have e-mailed them questions and they have called me back within 24 hours with an informal response. They cannot issue anything in writing, as that becomes an official CFPB interpretation.

When the regulations belonged to the Fed, I would e-mail them, call them, submit question via their website. Response - none.

So, don't be too quick to throw stones. Plus, how many compliance guides have the other regulatory agencies ever issued outside of the HMDA: Getting it right book and CRA compliance and those came from the FFIEC.

I'm just wondering of what use an "informal oral response" is? Can I rely on that? Would a different attorney give me a different response? If I document my conversation with the attorney, will that mean anything to an auditor or examiner nine months down the road?

Maybe - maybe not, but at least you can have a better idea of their thought processes. They also internally track this stuff for opportunities to provide further clarification. None of this is ever totally black and white. If you have questions based on a outlier situation, then whoever's opinion you get can always be questioned down the road.

That's a good point. If they get enough questions, and track them as you say, they might use those as a basis for a future final final final rule.

OK. Well, let's see what kind of response I get. Thanks, Randy.

If I am confident of anything at the Bureau, it is their ability and willingness to track the questions they are fielding. I'm also confident that they want their rules to actually work, so that we can be reasonably sure that eventually some of the problems they identify from the phone conversations and emailed questions will result in a nip here and a tuck there to put some of the explanations, if not in the regulations themselves, at least in the Commentary.

I think I've said this before, but this seems a good spot to say it again.

The industry criticism of the CFPB is, to me, mostly unwarranted. I think they have done a decent job of doing what Congress has told them to do (via the DFA). They have done more than many agencies with the issuance of small entity compliance guides and other methods of providing information on the new regulations.

They have made changes to proposed regulations based on feedback from the industry (and consumer advocacy groups as well).

They have responded to the one question I asked.

I'm curious what they will eventually do with some of the non-banking industries that they've expressed an interest in regulating, but I don't think it will be all bad. Some of those industries probably need to see regulation.

I just received a phone call from an attorney at the CFPB named Andy (didn't catch his last name). My primary question was about "projected rent" income, as referenced in Appendix Q II.D.2. He indicated to me that he could not give me any interpretation, but could only direct me to where I might find guidance.

He said that Appendix Q itself is a carbon copy of the HUD FHA Handbook, and suggested I could look there for guidance. He also suggested that the GSEs issue guidance which might be helpful. Finally, he directed my attention to the large paragraph at the beginning of the Appendix, right after the table of contents. That paragraph contains guidance on using guidance.

He seemed sympathetic to my dilemma, but he was not permitted to give me anything definitive. But at least he told me where I could look.

There ya go SF, don't you feel better now?

I feel properly chastened.

But not yet sufficiently edified.

They don't give difinitive answers because they don't know what the answer is. I'm sorry, but the very people who encouraged all of the subprime lending and pushed through loans which shouldn't have been originated in the first place, are now making the laws against what they encouraged! I was a loan originator back in the day, and there was a buyer for every single loan--if you couldn't get it through secondary market, you could get it through subprime. So, now that I've opened up the can of worms that has been sitting on the shelf for 6 years, anyone else agree?

anyone else agree?

Nope. You are definitely talking about congress, but not the various regulatory agencies and definitely not the CFPB.

Yes, I am talking about congress--they made the law--after the crisis they created! The CFPB is following the laws set up by the individuals who made the laws and created the mess--it's the domino affect. Just my thoughts,,and you can tell I'm still mad as Heck about it!