About six months ago, Mick Mulvaney took over as acting director of the Consumer Financial Protection Bureau, and has received criticism for his actions, and lack thereof, while leading the bureau.
So what exactly does a CFPB exam look like under today’s standards, and what can lenders expect from exams under Mulvaney’s bureau? One lender gave the inside scoop in a panel Thursday at the NEXT Women’s Mortgage Tech conference in Dallas.
During the panel “Inside 2018 CFPB Audits Post-Mulvaney: Guaranteed Rate, HMDA and Fair Lending,” Guaranteed Rate Chief Compliance Officer Rebecca Blabolil gave attendees an inside look at the company’s recent CFPB audit.
Recently, the company was informed it would be subject to an exam by the CFPB. What’s more, the bureau later informed Guaranteed Rate, with just four weeks’ notice, that the head of fair lending would oversee the exam.
In the company’s rapid and intense preparation, Blabolil shared her insight on how to prepare. She explained three key points that helped Guaranteed Rate prepare:
Attorney prepped office: Before the exam, the office was prepared by an attorney who coached the staff and management on how to approach the exam and what to talk about. Because many members of management were unprepared for how to deal with CFPB examiners, having preparation time with the attorney helped them to know what to talk about, and when to stop talking.
Get executive management involved: Blabolil explained that the earlier executive management is brought in on the exam prep, the better it will be for the company. While some managers tend to leave the preparation to the compliance department, the company will experience better results when management is engaged in the process.
Create PowerPoints:: PowerPoints will keep the focus on the exam where the company wants it. It gives the company more control of the direction of the discussion. While CFPB examiners will still ask questions, often times it will be directed at the information coming from the slides. Blabolil explained the more extensive the power points are and the more information they hold, the better.
However, while Guaranteed Rate was in the midst of prepping for its exam, Mulvaney’s “kinder, gentler” memo was released. This memo reflected Mulvaney’s call for a regulator that is kinder and gentler to the financial industry.
But the company’s CFPB area manager said this wouldn’t change anything, and the exam would still go on as planned.
The next doubt surfaced when the Washington Post published an article announcing President Donald Trump was stripping lending enforcement powers from the Office of Fair Lending. However, once again the company was told that while enforcement action was being moved to another department and there could be personnel changes, CFPB examinations would continue as before.
But the next day, the company was informed that the head of the Office of Fair Lending would not, in fact, be attending the exam.
Through the ups and downs of the process under the new acting director, Blabolil said Guaranteed Rate took away several key points over how CFPB exams will be performed under the new administration.
First, as there were and continue to be several personnel shifts, the new CFPB examiners are typically less experienced and do not always know many specifics about the mortgage industry.
Also, while the CFPB exams may look similar to the way they did before, there will certainly be fewer exams performed.
But this is not a reason for lenders to grow lax. Blabolil explained that while the CFPB may not be doing as many exams, states have stepped up their game. Since the CFPB has relaxed their grip, Guaranteed Rate claimed it has seen 12 states step up to examine the company that have never conducted exams in the past.