ALTA Reminds CFPB of Issues Impacting Title Industry
October 28, 2021
The new head of the Consumer Financial Protection Bureau (CFPB) didn’t take long to highlight the issues the bureau will focus on to protect consumers.
Testifying before Congress, CFPB Director Rohit Chopra said the agency will focus on how technology giants impact the flow of money with the use of real-time consumer payments systems that collect huge amounts of personal data.
Chopra also said the CFPB will continue monitoring market conditions “to spot risks, ensure compliance with existing law, and promote competition in order to protect families and honest businesses.”
ALTA sent an introductory letter to Chopra that provided an overview of the title industry and explained how ALTA members responded to the COVID-19 pandemic to help closing transactions. The letter also reinforced ALTA’s position that the CFPB’s rule for the disclosure of title insurance fees on the Closing Disclosure does not provide consumers with clear information about their title insurance costs. ALTA also encouraged Chopra to build on the warning the CFPB issued in 2019 to help educate consumers about wire transfer fraud.
ALTA also mentioned that effective and balanced oversight is important to the industry.
“We support robust efforts by the CFPB to give the industry an opportunity to comment on policy statements, guidance, and bulletins, and seek advisory opinions to provide more specific guidance so businesses can meet Bureau expectations in their daily business practices,” wrote Diane Tomb, ALTA’s chief executive officer. “Additionally, ALTA believes a Small Business Advisory Board, similar to other advisory boards created for community banks and credit unions, would help foster a relationship with regulated entities with whom the Bureau may not engage directly as often, including many of our members.”
Based on Chopra’s testimony, it does not appear that issues directly impacting businesses in the title and settlement services space will key priorities. Meanwhile, the bureau will focus on helping to minimize avoidable foreclosures. In his testimony, Chopra said the CFPB is seeing many families struggle to afford their mortgage and rent payments, while household debt has started to increase at a faster rate. American families owed $15 trillion as of the end of the second quarter of this year, roughly $800 billion more than at the end of 2019.
“From July 2020 through June of this year, mortgage originations, including refinancing, hit historic highs with $4.6 trillion in originations,” Chopra’s written statement said. “There has been high demand for auto loans, and Americans now owe $1.4 trillion in auto debt.”
Chopra said technological progress holds the potential for enormous benefits to households and the economy, particularly with respect to real-time consumer payments.
“The desire of Big Tech to gain greater control over the flow of money in the economy raises a number of questions,” Chopra aid. “For example, how will these firms harvest and monetize data they collect on our transactions? What criteria will they use to decide who is removed from the platform? How will they ensure that payment systems adhere to consumer protections? Will Big Tech giants have an incentive to impede the entry of new firms seeking to offer competitive products and services?”
In one of Chopra’s first moves, the CFPB issued a series of data requests to tech giants like Apple, Facebook, Amazon, Google, Square and PayPal about their procedures for collecting, storing and using consumers’ financial information. The data requests are part of a larger focus from the White House and Congress on competition issues related to big tech.
“Big tech companies are eagerly expanding their empires to gain greater control and insight into our spending habits,” Chopra said. “We have ordered them to produce information about their business plans and practices.”
In a second move, the CFPB along with other federal banking regulators and the Department of Justice announced a settlement in a discrimination (or redlining) case against Trustmark. The move will see Trustmark pay a $5 million penalty and commit an additional $3.85 million to increase credit access in Memphis, Tenn.
Contact ALTA at 202-296-3671 or [email protected].