Nonbank Mortgage Lenders Would Submit to CFPA

Nonbank mortgage lenders would be required to register with the Consumer Financial Protection Agency, which would be given the power to conduct financial exams and take enforcement actions, according to a new draft of the House CFPA bill. "Nonbanks will be subject to a level of supervision and scrutiny that is no less burdensome or comprehensive than that governing traditional banks and thrifts and will fully reflect the risks posed by these previously unregulated entities," according to an outline of the CFPA bill. House Financial Services Committee chairman Barney Frank, D-Mass., made several changes to the CFPA bill (HR 3126) he introduced in July, reducing the burden on banks and to ensure critics that nonbank lenders will be a main focus of the new agency. The American Bankers Association said the new draft "provides a more explicit and stronger mandate to focus on nonbanks that were the primary cause of the financial crisis." However, the bill removes federal pre-emption of state and local laws, ABA said, and creates a new agency with extensive new powers that could conflict with bank safety and soundness regulators. "ABA looks forward to working with Congress to improve consumer protections, while avoiding undermining the availability of credit or imposing conflicting and costly regulations," ABA president and chief executive Edward Yingling said.