Consumer protection has been a hot button issue in the real estate sector over the past year. Industry marketing practices and cyber security standards have all made national headlines, all while the Consumer Financial Protection Bureau (CFPB) faced controversy and threats of elimination.
As the newest CFPB Director, Kathy Kraninger, settles into her role, the title industry is waiting to see how her approach will impact real estate sector. The latest Special Report from October Research highlights what’s to come for the CFPB and what the title industry can expect from Kraninger’s education-minded approach.
The Kraninger Approach
Kraninger has asserted that the bureau's new focus is prevention-oriented with a strong focus on consumer education rather than enforcement. In this report, October Research gathers reactions from across the real estate sector on Kraninger’s education-minded focus. The sentiments are mixed.
According to October Research's interviews, some favor her educational focus, calling it “more measured” than her predecessor, Richard Cordray, who introduced some of the Bureau’s most stringent regulations. Some believe Cordray’s regulations and enforcement were ill-informed and “stretched beyond the interpretation of law.”
Others believe Kraninger’s new focus leaves the title industry in the dark without enough direction on key issues. According to some, the current rulemaking is fuzzy, and there is concern that the CFPB will not address key issues such as RESPA Section 8 and TRID.
Even with polarizing views on the new direction of the CFPB, there remain some who are taking the “wait and see” stance, citing the lack of policymaking and enforcement as reasons to hold back on judgement until there’s something on which to rate their satisfaction.
What Topics Will Make The CFPB Docket?
When discerning what’s next for the title industry and the CFPB, the general consensus is uncertainty. October Research highlights several interviews with industry stakeholders who are scratching their head when asked to guess which issues Kranginer will tackle. Despite the uncertainty, those in the industry hope Kraninger will address the following issues soon:
- TRID: The mandatory 5 year review of TRID is coming up; however, the topic has not made the list on CFPB’s regulatory agendas. According to October Research's interviews, many in the title industry are hoping for clarity on TRID in regards to closing disclosures (CDs). ALTA has expressly asked for CFPB to address how title premiums are disclosed on CDs.
- Home Mortgage Disclosure Act (HMDA): Much like TRID, October Research says many in the title industry believe clarification around HMDA is needed for their lending partners. The latest revisions of HMDA regulations took place two-and-a-half years ago, and some are still unclear on which data is required for compliance in the eyes of the CFPB. The Bureau’s latest proposed changes to HMDA cover threshold adjustments and do not address the expanded data reporting requirements under HMDA.
What to Expect in the Kraninger Era
Kraninger is taking a less “activist” approach (with heavy enforcement and investigations) and is gearing her efforts toward responding to tangible consumer incident reports and ramping up consumer education efforts. The Wall Street Journal cites that at 2018’s fiscal year end, the CFPB reported a 76% increase in spending on consumer education. Kraninger plans to continue this trend. Whether increased education will protect consumers is still up for debate; Kraninger says the effectiveness of these efforts has not yet been measured.