Addressing the Mortgage Bankers Association (MBA) 2018 Annual Convention in Washington, D.C., on October 15, 2018, CFPB Acting Director Mick Mulvaney advised that regulation by enforcement is dead, and that he does not care much for regulation by guidance either. He noted to MBA members that they have a right to know what the law is.

Acting Director Mulvaney advised that if a party is doing something that is against the law, the CFPB will take action against them. However, he pointed out the difference between the CFPB now and its approach under the prior director: If someone is doing something that complies with the law and the CFPB doesn’t like it, the agency will not take action.

With regard to UDAAP, Mr. Mulvaney stated that he believes the concepts of “unfair” and “deceptive” are well established in the law, but that is not so with regard to the concept of “abusive." He said he asked his staff to provide examples of what is abusive that is not also either unfair or deceptive. And he signaled that the CFPB will look to engage in rulemaking on the aspect of abusiveness.

As we have reported the MBA and other trade groups recently sent a letter to the CFPB seeking reforms in connection with the agency’s loan originator compensation rule. When asked by MBA President and CEO Robert Broeksmit about the letter, Mr. Mulvaney advised that he knew the letter was received and that it is being reviewed by staff, but that he had not actually seen the letter. Mr. Broeksmit then handed Mr. Mulvaney a copy of the letter, drawing laughs from the audience.

With regard to payday lending, Mr. Mulvaney advised that such loans can be dangerous for people given the high interest rates, but that people want them so they exist. He said he has told payday lenders they exist because bank regulators forced banks out of the business. But he stated that the OCC has signaled it will allow banks back in, and that the way to fix payday lending is through competition.