HUGE LENDER FINES are coming after August 1, 2015.  This is when the HUD-1 goes away and new forms are to be used for consumer real estate closings. The Consumer Financial Protection Bureau (CFPB) who call themselves the “Bureau”, like the FBI does is solely funded on the fines it collections from violators.  Millions of fines are collected each year.  To stay alive, the Bureau must seek out violators, establish fines and must collect the fines for its budget.  Its 2015 budget is $618.7 million.  Remember the the CFPB mission is to make “rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their financial lives”.

The CFPB maintains the Consumer Financial Civil Penalty Fund (CPF) for this purpose. Collections of civil penalties are deposited into the CPF, and such funds are available for payments to victims of activities for which civil penalties have been imposed under the Federal consumer financial laws. If victims cannot be located or payments are otherwise not practicable, the Bureau is authorized to use such funds for consumer education and financial literacy programs.

The Bureau was established on July 21, 2010 under Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act Public Law No. 111-203 (Dodd-Frank Act).  The CFPB was established as an independent bureau within the Federal Reserve System.  The Dodd-Frank Act authorizes the CFPB to exercise its authorities to ensure that, with respect to consumer financial products and services: 1. Consumers are provided with timely and understandable information to make responsible decisions about financial transactions; 2. Consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination; 3. Outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens; 4. Federal consumer financial law is enforced consistently in order to promote fair competition; and 5. Markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.

When an independent bureau is in charge of enforcing the regulations so it  can feed its budget, to issue lender fines, we all need to be watch out for this elephant in the room.

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