The Consumer Financial Protection Bureau would be required to issue guidance to mortgage lenders on how to comply with consumer finance laws under new legislation introduced in Congress.
The Give Useful Information to Define Effective Compliance (GUIDE) Compliance Act, or HR 5534, would regulate how the CFPB provides rules and guidance. The bill was introduced by House Financial Services Subcommittee on Housing and Insurance Chairman Sean Duffy (R-Wis.) and Congressman Ed Perlmutter (D-Colo.).
The bill proposed to require the CFPB director to issue “guidance” necessary or appropriate to carry out the purpose of the laws it is responsible for, including facilitating compliance. The bill also prohibits liability for reliance in good faith on guidance from the CFPB or any predecessor agency that was in effect at the time of such act or omission.
Additionally, the CFPB would be required to establish a process and timeframes for requests for guidance, including time limits to provide answers in response to requests for guidance, and to develop and publish guidelines for determining the size of any civil money penalties.
“The CFPB has historically ignored requests for guidance and clarification from American businesses, consumers, and Congress – especially in relation to the Know Before You Owe rule,” Duffy said. “That’s why I’m proud to sponsor bipartisan legislation to bring predictability and transparency to the CFPB’s rule-making process. The CFPB should focus on its mission to actually protect consumers rather than play ‘gotcha’ with ambiguous and surprising guidance for mortgage lenders.”
The Mortgage Bankers Association (MBA) welcomed the bill’s introduction, with President and CEO David Stevens saying he believes the bill can resolve regulation-by-enforcement.
"This is not an abstract concern,” Stevens said. “In 2015, CFPB issued its Know Before You Owe rule, overhauling disclosures for mortgage process. After issuing this rule, the bureau declined to offer guidance and timely answers, thereby confusing some consumers and other key market participants."