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Posted by  JanetK_CA on 7/23/11 6:21pm
I really don't think it will affect our business volume in the short term - and maybe not at all. I had heard about it and my understanding was that it's designed to provide some protection to consumers against abuses by big financial institutions. I could be wrong, but I got the impression that the function of this agency is to be as much a watchdog as a regulator. If that's the case, I'm all for it.
I just skimmed over the article links that LindaH posted. (Thank you, Linda!) Here's a quote that seem to represent what the agency is supposed to be about:
"The CFPB will set and enforce clear, consistent rules that allow banks and other consumer financial services providers to compete on a level playing field and that let consumers see clearly the costs and features of products and services."
This their proposed functions are described in the following quote.
"The CFPB will look out for people as they borrow money or use other financial services by:
* Implementing and enforcing Federal consumer financial laws;
* Reviewing business practices to ensure that financial services providers are following the law;
* Monitoring the marketplace and taking appropriate action to make sure markets work as transparently as they can for consumers; and
* Establishing a toll-free consumer hotline and website for complaints and questions about consumer financial products and services.
Two abuses that come to mind immediately that this agency might help prevent are the common practice of banks these days processing checks before they process deposits, increasing the incidence of overdrafts and triggering service fees. Also, most of us have probably read - or personally heard - about foreclosures of homes where the borrowers had not defaulted on a single payment.
One of the articles mentioned the practice of some banks pursuing foreclosure of properties at the same time they're negotiating with the borrowers about modifications. I've heard of situations where underwater borrowers were advised to not make their payments in order to qualify for a mod, only to then have the bank pursue foreclosure.
Personally, I think it would be great to have more transparency in credit card billing and information, for example. How many of you ever read the small print when you get those notices that your credit card features have changed?
One of the few things I read that might have an impact on us is the possibility of requiring simplified disclosures with mortgage docs, but not until a year from now. That might actually be a good thing. (I think *some* of the recent changes to the HUD and TIL are beneficial.)
Time will tell, but I don't think there's going to be any drastic or immediate impact. If banks are conducting business with their clients in a fair and reasonable manner, I shouldn't think they'd have anything to worry about. However, if they need to resort to deceptive, confusing, underhanded or downright unfair practices to achieve their financial goals, then maybe they need to reset their goals. So I hope we'll see this agency even the playing field between lenders and consumers - without creating gridlock for either one.
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