MBA Letter Urges Bureau to Use Clear Guidance on Compliance Issues

Mike Sorohan

July 10, 2018

In its latest letter to the Consumer Financial Protection Bureau/Bureau of Consumer Financial Protection, the Mortgage Bankers Association reiterated its criticism of the Bureau's "regulation by enforcement" practices and urged the Bureau to adopt guidance principles to provide certainty to its rules and regulations.

While the letter acknowledges the Bureau's efforts in abandoning "regulation by enforcement," it encouraged the Bureau to adopt an approach that employs guidance to communicate regulatory expectations and articulate paths to compliance.

"The value of Bureau guidance materials lies in their reliability. Unfortunately, the Bureau's practice of using disclaimers to make guidance non-binding on the Bureau erodes much of its reliability," wrote MBA Senior Vice President of Residential Policy and Member Engagement Pete Mills. "Regulated entities must be able to rely on guidance to ensure they are operating within the rules. MBA therefore asks that the Bureau stand by its guidance and use disclaimers only when absolutely necessary and provide the rationale for doing so."

The letter is the latest in response to more than a dozen Bureau Requests for Information on its operations and policies. The RFIs were by Acting Bureau Director Mick Mulvaney. In each of its responses, MBA cites its call for a broad reexamination of Bureau practices as detailed in a 2017 working paper, CFPB 2.0: Advancing Consumer Protection (

MBA offered fundamental guidance principles, as well as several suggestions to assist the Bureau in fulfilling its mandate by providing regulated entities with certainty as to their legal and regulatory requirements. The letter addresses the Bureau's efforts regarding its inquiries function and compliance aids, but also provides suggestions for new forms of written guidance such as improvements to the no-action letter policy and adopting a robust advisory opinion mechanism.

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