Thank you for the introduction and good afternoon everyone. It’s an honor having the opportunity to share my thoughts on the CFPB’s priorities at the NAAG Spring Consumer Protection Conference. I’m pleased to share the virtual stage with Acting Chairwoman Slaughter and Acting Chairwoman Rosenworcel.
Like me, I’m sure they have obtained some unique insights and newfound appreciation during their time in the leadership role for their agencies.
As I said to CFPB staff during my first day as Acting Director, I’m not here to be a steward. The challenges facing our country are simply too urgent. As long as I’m in this role, I’ll be using every tool at the Bureau’s disposal to address the nation’s economic and housing security crisis brought on by the pandemic.
Attorneys General and the CFPB have a long history of cooperating together and continue to do so. Just last month, the CFPB and New York Attorney General Letitia James jointly filed a complaint in federal court to seize $1.6 million in assets from the operator of a now defunct debt collection scheme.
Through our sharing of legal theories and fact-gathering work, our partnerships with state Attorneys General makes investigations more efficient and effective.
I appreciate that every Attorney General has a unique set of priorities and initiatives for the constituents they represent, but rarely have we seen such a confluence of events as we have encountered during this pandemic. The challenges facing this country should be uniting our focus toward helping resolve some of the financial hardship issues that continue to cascade for many consumers.
One of the greatest potential tragedies unfolding is an unprecedented increase in housing insecurity, which we know not only threatens families financially, but which the Centers for Disease Control and Prevention has found can contribute to the further spread of the virus.
And we have clearly seen that health and economic impacts of this once-in-a-century event have disproportionately targeted our most vulnerable consumers, including those from communities of color. The inequalities already embedded in the economic system have been completely exacerbated by COVID-19.
With that in mind, I established two main priorities for the Bureau when I took on the role of Acting Director: seeking relief for consumers facing financial hardship due to the COVID-19 pandemic, and addressing racial inequities in the financial services industry.
In the 3 months that I’ve led the CFPB, we have taken several measures to help address these core issues.
We rescinded policy statements made by the previous administration and made clear that we would employ the full scope of the Bureau’s supervisory and enforcement authority provided under the Dodd-Frank Act.
We introduced a new rule requiring debt collectors to provide written notice to tenants of their rights under the CDC eviction moratorium, which will help address the tens of thousands of evictions that are still happening every week.
We proposed a set of rule changes intended to help ensure that millions of struggling homeowners have the opportunity to be evaluated for loss mitigation options before foreclosure, when the emergency federal foreclosure protections expire later this year.
And finally, we delayed the compliance date for the final Qualified Mortgage rule, to avoid any disruption to the housing market and ensure borrowers have access to responsible home loans during this critical time.
I want to expand further on the upcoming expiration of moratoriums that millions of renters face, and what the Bureau is doing about it.
As you know, the CDC has extended its moratorium on residential evictions through June 30, to keep people in their homes and out of shelters or other shared living settings, and stop the spread of COVID-19. However, tens of thousands of tenants and families are being evicted every week, often without being told of their rights under the CDC moratorium.
The scale of these evictions is hard to wrap your head around. For each individual or family seeing their belongings left on the curb, an eviction is a tragedy, a turning point, a challenge from which it is extremely hard to recover.
Our interim final rule, which went into effect last week, requires debt collectors to provide tenants who may have jurisdictional rights under the CDC order with written notice of those rights when filing an eviction action for nonpayment of rent, so eligible people will have a chance to save their homes. We also clarified that debt collectors can be held accountable under federal law if they violate this requirement.
The CFPB will move forward with investigations into debt collectors that act illegally, and state attorneys general also have authority to enforce the Fair Debt Collection Practices Act. And the FDCPA includes a private right of action, so tenants may also hold debt collectors accountable.
I’ll mention here that the CDC order has been challenged in a number of courts, and as of today, there is a nationwide injunction that is stayed pending appeal. We are following the litigation closely and will continue to do whatever we can to protect vulnerable tenants during this crisis.
Like renters, many homeowners are about to exit forbearance protections and face similar distress meeting their monthly payments.
In April, we warned that servicers need to be prepared for a high volume of borrowers exiting forbearance, and the CFPB has proposed additional guardrails and tools for servicers as they navigate the coming months.
We have made it clear to mortgage servicers that the Bureau will be paying particular attention to how they respond to borrower requests for loss mitigation assistance and process loss mitigation applications.
The CFPB urges servicers to dedicate sufficient resources and staff to ensure they can communicate clearly with borrowers, effectively manage borrower requests for assistance, promote loss mitigation, and ultimately reduce avoidable foreclosures and foreclosure-related costs.
The CFPB recently proposed a set of rule changes intended to help prevent avoidable foreclosures as the emergency federal foreclosure protections expire. The CFPB’s proposal, if finalized, would:
- Give nearly 3 million borrowers behind on their mortgages more time to explore ways to resume making payments and avoid foreclosure;
- Allow mortgage servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application; and
- Ensure that borrowers are informed of their options through temporary changes to certain required servicer communications
The comment period for these rule changes ended yesterday. We will soon be reviewing the comments that have come in and determine next steps.
These housing insecurity issues have important implications for racial equity. Like so much else about COVID-19, the economic damage has disproportionately affected communities of color. Job losses have been concentrated in low wage sectors, even while “essential” workers were required to put themselves at risk. Black and Hispanic households are roughly twice as likely to be behind on their rent than white households. Black and Hispanic households are more than twice as likely to rent than white households, a disparity that denies them a key avenue of wealth accumulation.
This country is in the middle of a long-overdue conversation about race, and practices and policies of the financial services industry have both caused and exacerbated racial inequality. At the CFPB, I have elevated and expanded existing investigations and exams, and added new ones, to ensure we have a healthy docket intended to address racial equity.
This of course means that fair lending enforcement is a top priority and will be emphasized accordingly. We will also look more broadly, beyond fair lending, to identify and root out unlawful conduct that disproportionately impacts communities of color and other vulnerable populations.
In March, I shared a message on LinkedIn and Twitter expressing my outrage about recent violence and racism targeting AAPI people. Only one day later, the massacre in Atlanta left eight people murdered, including six AAPI women. Since that event just one month ago, we have seen a renewed epidemic of mass shootings, as well as ever more killings of people of color by police that have left me numb and heartbroken.
It doesn’t take much looking to see that latent, structural racism in the criminal justice system has had a profound and negative effect on communities of color. By centering the CFPB’s focus on racial equity, it is my sincere hope that even at times like this, we can act to make a dent in the pernicious effects of racial injustice in our consumer finance space. Racial inequity has been the work of centuries, and racial justice will be the work of generations.
Finally, I’m aware this group is particularly interested in what the CFPB is doing on the CFPB payday lending rule, a portion of which, the Ability to Repay Underwriting Provisions, was rescinded by the previous administration last year. The Payments Provisions were not rescinded but have been stayed by court order. As I’m sure you can appreciate, because the rule is subject to pending litigation, I cannot comment extensively on what the CFPB is doing in this space.
The CFPB is acutely aware of consumer harms in the small dollar lending market, and is particularly concerned with any lender’s business model that is dependent on consumers’ inability to repay their loans. The Bureau will use the authority provided by Congress to address these harms, including through vigorous market monitoring, supervision, enforcement, and through appropriate rulemaking.
I will turn it back over and look forward to answering some questions. Thank you.