In what could be called the housing finance industry's version of "Scared Straight," a veteran regulatory attorney read the riot act to a group of industry executives in Las Vegas, warning them that the new Consumer Financial Protection Bureau can be expected to come down hard on mortgage firms that don't toe the line.
"It's going to be ugly," Philip Schulman of K&L Gates in Washington, D.C., told members of the Real Estate Settlement Providers Council at their annual meeting in Las Vegas.
Calling the bureau an "uber, uber agency," Shulman said the CFPB will open its doors on July 21 with "enormous powers," including, among other things, the right to rescind entire contracts, order refunds and restitution, levy civil penalties of up to $1 million a day, and focus plenty of negative publicity on violators of the numerous laws and regulations it will enforce.
"I've been in this field for 30 years, and no other agency has had the fire power this agency has," the attorney said. And he expects the bureau to rule with an iron fist, at least until it thinks it has the industry's full, unbridled attention.
"They're going to want to make a name for themselves early on, and you don't want to be one of the companies it chooses to make an example of," Schulman warned. "If they want to put a company down as an example, they can put a company down."
Another regulatory lawyer, Jennifer Keas of Foley & Lardner, agreed, saying the penalties at the CFPB's disposal amounted to "a nuclear arsenal of weaponry."
