President Biden, on February 13, 2021, officially announced nomination of Rohit Chopra to be Director of the Consumer Financial Protection Bureau, sending the nomination to the Senate Committee on Banking, Housing, and Urban Affairs.  If confirmed, Chopra would be the third Director of the agency – following Richard Cordray and Kathleen Kraninger.[1] 

A nomination hearing has yet been scheduled for March 2, 2021.  Given that Chopra was confirmed by the Senate in 2018 as a Commissioner of the Federal Trade Commission, holds Ivy League credentials, and the Democrats generally control the Senate, most observers anticipate that Chopra will be confirmed. 

Chopra’s roots go back to the early days of the CFPB.  He was part of the original implementation team.  Once the agency was organized, Chopra worked under Director Richard Cordray as the agency’s first student loan “point man”.  In that capacity, Chopra worked on a number of different student loan issues, including a report indicating that student loan overcharge schemes directly harmed military servicemembers.  The agency also put two large post-secondary schools out of business while Chopra worked at the agency. 

In DC, however, no one is confirmed until they are confirmed.

Meanwhile, the CFPB marches on.  Current Acting Director Dave Uejio’s activities and announcements suggest that the agency intends to be forwardly assertive even while awaiting a confirmed Director.  In just under a month since Uejio assumed the title of Acting Director, the CFPB has had 13 postings on its blog – 4 by Uejio himself.  And certain items posted during the prior administration have been archived, including the last 5 postings by Director Kraninger.  In his first blogpost, Uejio incorporated an internal message that he had sent to the CFPB staff thanking them for their hard work to date and announcing a change of direction.  In that posting, Uejio reiterated that his priorities are: 

·        relief for consumers facing hardship due to COVID-19 and the related economic crisis, and

·        racial equity

He also noted concern, and stated that the Bureau would act immediately, regarding recent findings that:

• Mortgage servicers gave consumers incomplete and inaccurate information about CARES Act forbearances, failed to process forbearance requests, and collected and assessed late fees despite having approved forbearances.

• Servicers withdrew money even though consumers were in deferment.

• One student loan servicer denied thousands of forbearance extensions because the loan holder never responded.

• Companies across markets misreported accounts to credit bureaus and violated CARES Act amendments that added protections to the Fair Credit Reporting Act.

• Some banks set off stimulus payments and unemployment insurance benefits in order to cover bank fees and other debts.

• Examiners found that the widely used policy of banks only taking PPP applications from pre-existing customers may have a disproportionate negative impact on minority-owned businesses.

 Uejio’s memorandum also stated, in part: 

I directed the [Supervision, Enforcement, and Fair Lending] division to always determine the full scope of issues found in its exams, systematically remediate all of those who are harmed, and change policies, procedures, and practices to address the root causes of harms. For the Prioritized Assessments that do not already do this, [Uejio noted he wants] Supervision to follow up to ensure it is done, without conducting new follow-up exams. Companies that have not already received instructions from our examiners should expect to receive letters in the mail soon.

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Over the coming weeks, we will also be reversing policies of the last administration that weakened enforcement and supervision.  As of today, it is the official policy of the CFPB to supervise lenders with regard to the Military Lending Act. And we are planning to rescind public statements conveying a relaxed approach to enforcement of the laws in our care.

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It's also time for the CFPB to take bold and swift action on racial equity.  I know this is close to the hearts of many of you.  The country is in the middle of a long overdue conversation about race, and as we all know, practices and policies of the financial services industry have both caused and exacerbated racial inequality.  I am going to elevate and expand existing investigations and exams and add new ones to ensure we have a healthy docket intended to address racial equity.  This of course means that fair lending enforcement is a top priority and will be emphasized accordingly.  But we will also look more broadly, beyond fair lending, to identify and root out unlawful conduct that disproportionately impacts communities of color and other vulnerable populations.

In subsequent postings, on February 4 and February 10, Acting Director Uejio made similar statements regarding his vision for changes in policy and structure in the coming months at the:  (i) Division of Research, Markets, and Regulations, and (ii) Division of Consumer Education and External Affairs. 

Hopefully, Acting Director Uejio will also keep in mind that industry best follows the rules and serves the public when the rules are clear, guidance is provided where requested, and there is limited whipsawing back and forth in approach – not just between administrations but also between leaders in the same administration.

Regardless, these communications suggest a much more Cordray-style approach to engagement – even Cordray in recent public appearances states so.  Mortgage industry participants would do well to keep these issues, and the revised posture of the agency, in mind when conducting business in this newly retro world. 

For more information, contact Troy Garris at 301-461-8952 or troy@garrishorn.com.

[1] The agency also has had two special advisors in its earliest days (Elizabeth Warren, now Senator from Massachusetts and Raj Date, now Managing Partner of Fenway Summer ) and two acting Directors (Mick Mulvaney and current Acting Director, Dave Uejio).

***This blog is provided for informational purposes only and is not legal advice.