In the past, under the guise of promoting innovation, individual firms privately lobbied the Consumer Financial Protection Bureau to obtain special regulatory treatment. If they were successful, a firm receiving special treatment could then attract investors and customers by wrongly implying that their business model and practices were endorsed by the government. In other situations, companies that were able to successfully lobby for special treatment did not follow through on their end of the bargain.
Consumer protection and financial regulators should not be in the business of picking winners and losers. After concluding that its policies failed to meaningfully promote innovation and after assessing the risks for abuse, the CFPB has shifted toward more open and transparent methods of adjusting its regulations for new business models. Instead, the agency is now inviting petitions for rulemaking and requests for Advisory Opinions, and focusing on other programs, like its (TDP Policy) and other efforts to promote competition.
ICBA application for alternative mortgage disclosures for construction loans
The CFPB is in the final stage of review of an application regarding consumer disclosures of a loan that finances both a construction phase and the permanent purchase of a home. In its application, the Independent Community Bankers of America (ICBA) states it is not uncommon in rural communities for first-time homebuyers to build their first home because there are limited existing affordable “starter” homes. The application seeks to adjust the existing mortgage disclosures to facilitate the offering of these products. The ICBA believes that consumer understanding of construction loans would be improved by disclosures that it views as more specifically tailored to such loans. If this “template” application is approved, individual lenders can then apply to enroll in an in-market testing pilot. As indicated in the TDP Policy, however, a template is non-operative, i.e., it does not provide permission to conduct a trial disclosure program to any party, and it does not bind the CFPB to grant individual applications.
The CFPB is making the application available to the public for inspection.
Seeking public comments
Submissions will be accepted until March 29, 2023. You may submit information and other comments, identified by Docket No. CFPB-2023-0016, by any of the following methods:
- : Follow the instructions for submitting comments.
- Email: ICBATrialDisclosureApplication@CFPB.gov. Include Docket No. CFPB-2023-0016 in the subject line of the message.
- Mail/Hand Delivery/Courier: Comment Intake—ICBA Trial Disclosure Application, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals should not be included. Submissions will not be edited to remove any identifying or contact information.