The Consumer Financial Protection Bureau will focus its examinations on practices at mortgage originators that “materially increase the risk of violations of federal consumer laws,’’ according to guidelines the bureau has issued.
“The mortgage market cannot work well for consumers if the spotlight shines only on one part of it, while the rest is left in darkness,” CFPB Director Richard Cordray said this week in a statement. “Our supervision program will illuminate the entire marketplace by making nonbanks play by the same rules as the banks.”
The guidelines say the CFPB and other agencies will: Assess the institution’s compliance management systems; determine whether any violation of a federal consumer financial law has occurred; and track activities such as initial advertisements and closing practices.
Cordray, who took the position following a recess appointment by President Obama earlier this month, is a former Ohio attorney general. Now that the CFPB has a permanent director in place it can regulate nonbanks as well as financial institutions.
It has primary regulatory responsibility over all nonbanks and over financial institutions with assets of more than $10 billion. For all other financial institutions, their federal or state safety and soundness regulator will enforce the CFPB’s regulations.