Mortgage Legal and Compliance Report—February 2018

The CFPB’s New Mission Statement: No More “Pushing the Envelope,” and Ending “Regulation by Enforcement,” says Mulvaney

On January 23, 2018, the acting CFPB Director, Mick Mulvaney, sent an email to staff redirecting the agency’s mission and focus. In the email, Mulvaney emphasized that the law mandates the enforcement of consumer protection laws and that, although things would be different under his leadership, the CFPB will continue to fulfill this mandate.

Mulvaney noted, however, that the CFPB will no longer “push the envelope” in pursuit of the agency’s mission. He commented that he did not see the CFPB as the “good guys” out to fight the “bad guys,” but instead the agency would treat both consumers and financial services companies fairly and equally. To that end, the CFPB will focus its enforcement efforts on “quantifiable and unavoidable harm to the consumer.” Where no such harm exists, the agency will not “go looking for excuses to bring lawsuits.”

As for regulation, there will be “more formal rulemaking on which financial institutions can rely, and less regulation by enforcement.” The CFPB will prioritize its efforts on debt collection because of the high number of consumer complaints on that issue.

Mulvaney’s mission statement can be found here:

Texas Adopts Pre-Licensing Education Expiration Period

The Finance Commission of Texas recently adopted two new rules regarding pre-licensing education requirements for residential mortgage loan originators (“RMLOs”). The new rules require the following individuals to retake the 20 hours of pre-licensing education as required by the S.A.F.E. Mortgage Licensing Act:

  • Individuals who fail to obtain a valid license or federal registration within five years from the date of completion; or
  • Licensed individuals who fail to maintain the license or federal registration for at least five consecutive years.

See 7 Texas Administrative Code (“TAC”) §§ 2.107; 81.109. The purpose of these rules is to implement changes to Texas Finance Code § 180.056(h), which now authorizes the Finance Commission to set the expiration periods for pre-licensing education of RMLOs. The five-year expiration period under the new rules is the same time-period prescribed by the previous version of Texas Finance Code § 180.056(h), but the Commission indicated that it intends to consider a reduction to a 3-year expiration period in fall 2018.

Texas Amends the Definition of “Physical Office

The Finance Commission also recently amended the Texas Administrative Code and simplified the definition of “physical office” for residential mortgage loan companies and mortgage bankers.  The amendments define “physical office” as “an actual office where the business of mortgage lending and/or the business of taking or soliciting residential mortgage loan applications are conducted.” See TAC §§ 80.2; 81.2. The amendments are not substantive but instead divide the existing definition into separate sections. In addition, the specific requirements for a “physical office” have been moved to separate sections. See 7 TAC §§ 80.206; 81.206. This new definition was effective beginning January 7, 2018.

The CFPB and Federal Agencies Adjust Civil Penalties for Inflation

The CFPB recently issued a final rule[1] to adjust civil penalties within its jurisdiction for inflation.  The adjustments are required by the Federal Civil Penalties Inflation Adjustment Act of 1990 which, pursuant to the 2015 Adjustment Act, requires federal agencies to adjust the civil penalties within their jurisdiction annually, not later than January 15.  A civil money penalty is a fine imposed by a federal agency as a result of misconduct.

The civil penalties adjusted by the CFPB include the Tier 1-3 penalties set forth in Section 1055 of Dodd-Frank, as well as the civil penalties in the Interstate Land Sales Full Disclosure Act, Real Estate Settlement Procedures Act, SAFE Act, and Truth in Lending Act. The new penalty amounts are below:

To obtain the new penalty amounts, the CFPB multiplied each penalty amount by the “cost-of-living adjustment” multiplier and rounded to the nearest dollar.  For the 2018 annual adjustment, the multiplier used was 1.02041. These amounts are calculated “for each day during which such violation continues.” The new penalty amounts apply to civil penalties assessed after January 15, 2018.

In addition, the National Credit Union Administration (NCUA),[2] the Office of the Comptroller of the Currency (OCC),[3] the Federal Deposit Insurance Corporation (FDIC),[4] and the Federal Reserve[5]  issued similar adjustment notices in the Federal Register, updating the maximum civil money penalty amount that may be imposed by each agency.


[1] The CFPB final rule is available here:


[2] The NCUA final rule is available here:


[3] The OCC final rule is available here:


[4] The FDIC final rule is available here:


[5] The Federal Reserve final rule is available here: