CFPB to Provide More Info to Companies Under Investigation

April 23, 2019

The Consumer Financial Protection Bureau (Bureau) announced changes to policies regarding Civil Investigative Demands (CIDs) to ensure they provide more information about the potentially wrongful conduct under investigation. 

The bureau said the CIDs will provide more information about the potentially applicable provisions of law that may have been violated. CIDs will also typically specify the business activities subject to the CFPB’s  authority. In investigations where determining the extent of the bureau’s authority over the relevant activity is one of the significant purposes of the investigation, the CFPB said staff may specifically include that issue in the CID in the interests of further transparency. 

The new policy takes into account recent court decisions about notifications of purpose, and is consistent with a 2017 report by the Bureau’s Office of Inspector General that emphasized the importance of updating Office of Enforcement policies to reflect such developments. The new policy is also consistent with comments the Bureau received in response to the Requests for Information it issued in 2018, seeking feedback about various aspects of its operations, including its use of CIDs in enforcement investigations.

The Consumer Financial Protection Act of 2010 authorizes the Bureau to issue investigational subpoenas known as CIDs when looking into potential violations of law. The Act provides that each CID “shall state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation.” CIDs issued by the Bureau set out this information in a section known as the “notification of purpose.”

On April 17, CFPB Director Kathy Kraninger spoke publicly for the first time about her vision for the bureau. You can read her remarks here or watch. Four parts of Kraninger's speech stood out in regard to the Real Estate Settlement Procedures Act (RESPA):

  1. Empowering Consumers and Turning Financial Education into Action: Although the inaccurate disclosure of title fees under TRID still needs to be fixed, overall the Loan Estimate and Closing Disclosure are a good step. They're a better tool than the old HUD-1 and TILA disclosures.
  2. Ensuring Clear Rules of the Road: Frequently we hear from ALTA members about the need for clear rules of the road for RESPA. ALTA is in close touch with staff from the National Association of REALTORS and Mortgage Bankers Association, American Escrow Association and RESPRO and we hear similar concerns from all of our members: the need for RESPA rules of the road that industry can understand and adhere to, especially with regard to marketing and new companies that bring innovation to the real estate buying experience.
  3. Ensuring a Culture of Compliance through Supervision: It seems that we are hearing more from ALTA members about concerns they see around RESPA compliance in their markets. Do you always see a culture of compliance by all market participants?
  4. Holding Bad Actors to Account and Deterrence through Enforcement:While the financial services community felt a lot of enforcement under the previous CFPB Director Richard Cordray, this is where we are not likely to experience a lot of energy from Kraninger. In the words of one observer, the "speech reinforced our expectations for the Bureau: a dramatically diminished enforcement profile."


Contact ALTA at 202-296-3671 or [email protected].