Procrastinate CFPB compliance

Procrastinating CFPB Compliance Will Cost You

We’ve all been there. Procrastination is like that term paper in high school or college that you put off to the last minute-everyone has done this at least once. You were lucky if you passed. In the mortgage closing industry, however, a failing grade from the CFPB will result in much more serious consequences than a simple detention slip.

The temptation here is to think, “What’s the big deal? I’ll change a few documents, it shouldn’t take very long.” Unfortunately, that is not the case. These documents not only have very different requirements than what has previously been expected, but the process surrounding these forms are also changing. These procedures are not easily understood or completed and the advanced planning for changes is proving to be quite difficult.

The CFPB is giving us the compliance “what”: it is up to us to figure out the compliance “how.”

Other leaders in the industry are urging for preparation as well.

Benjamin Olsen, a partner at BuckleySandler LLP in Washington and ATS Secured counsel, commented in this article, “Congress expanded the TILA disclosures to include several additional items, such as the aggregate amount of settlement charges.”

The article, written by Mark Fogarty at the National Mortgage News, goes on to define the penalties and cost for non-compliance as going “from stiff to astronomical.” They include:

Tier 1-$5,000 per day for general penalties
Tier 2-$25,000 per day for reckless engagement in violations
Tier 3-$1,000,000 per day for knowing violations

The takeaway? Don’t procrastinate. The CFPB has proven that they are not to be trifled with and understanding exactly how to comply with regulations must be a priority for your financial institution. Every delay will cost you.

On this side of August 1st, 2015, the CFPB charged a company almost $21 million dollars for a bait and switch scheme according to this article. On the other side of the countdown, they will charge a million dollars per day for knowing violations.

Benjamin Olsen is counsel to ATS Secured and has produced an in-depth paper discussing the wide-ranging requirements from the CFPB and Prudential Regulators for both depository and non-bank lenders.

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