Last week, the American Bankers Association submitted comments to CFPB regarding the bureau’s recent advisory opinion on the application of Real Estate Settlement Procedures Act (RESPA) regulations to operators of digital mortgage technology platforms (digital mortgage comparison-shopping platforms or DMCSP). Although ABA offered support for the CFPB’s efforts to clarify risks associated with digital mortgage shopping platforms, the letter warned that parts of the advisory opinion are inconsistent with RESPA and Regulation X. In the letter, ABA called on the bureau to rescind and revise the advisory opinion and reissue it for comment from all segments, including lenders, borrowers and settlement service providers. ABA also recommended that the bureau devote broader attention to reviewing and reforming the entirety of RESPA’s Section 8 provisions.
These comments were submitted as part of a white paper containing multiple other comment letters to federal regulators. The white paper and accompanying comments recommend that federal bank regulators better align with the legal framework of the Administrative Procedure Act and that agencies adopt written procedures governing the development, issuance and use of guidance, which will maximize the utility of future guidance documents.
Overall, these submissions express ABA’s growing concern about the use of “guidance” to advance regulatory policy agendas. While the banking industry welcomes guidance that helps banks understand and comply with legal requirements, too often recently, the agencies have characterized as guidance what is in practice a “legislative rule” that Congress requires to go through notice-and-comment rulemaking. Too often, these issuances exceed the legal authority Congress provided, ABA contends.
