Consumer Protection Bureau to Look at Mortgage LendingFirst
The new U.S. Consumer Financial Protection Bureau, born out of the Dodd-Frank Act and designed to protect consumers from financial abuses, has chosen to take a look into the mortgage industry as its first project.
The housing market has been in shambles for several years, one of the primary causes of the economic recession. Millions of homeowners are living with upside-down mortgages; millions have been forced into foreclosure. Major banks have irresponsibly approved home loans that borrowers would never be able to pay off, knowing that investors where the ones on the hook if borrowers defaulted.
Corporate greed? Victimized consumers? Sounds like the perfect way for the CFPB to cut its teeth. A high-profile case, what the agency makes of it will set a precedent as to the scope of the agency's powers and shed light as to how exactly it will be fulfilling its mission of championing consumers rights.
So far it seems that the Bureau is happy to leave the past in the past, leaving things like sanctions and penalties to the Securities and Exchange Commission. Instead, their focus will be on examining processing like loan modification procedures and foreclosure documentation to ensure that paperwork is filed properly and that the most is being done to keep struggling homeowners in their homes.
The Bureau will soon announce atimeline for creating a set of new regulations for mortgage lenders that are expected to start taking effect early next year. As of July 21st, the Bureau can officially start writing regulations for governing Wall Street.
On that same day they officially began monitoring the 105 U.S. banks that own over $10 million in assets.
The "Wall Street Watchdog" won't really be able to roll up its sleeves, however, until President Obama and Congress agree on its leader. The Senate Banking Committee has approved presidential nominee, former Ohio Attorney General, Richard Cordray, who still faces stiff opposition from Senate Republicans.
By: Javi Calderon
