After the Great Recession, many safeguards were put in place to protect consumers, and the biggest of all was the creation of a new governmental agency called the Consumer Financial Protection Bureau. Under the CFPB new mortgage lending rules were adopted which included many consumer protections, such as new disclosure, waiting periods and new loan closing documents. Many of these protections were already in place, but there was no good way for the government to enforce the rules and impose penalties against bad actors. That has changed, and the creation of the CFPB added teeth and enforcement to mortgage lending laws.
However, a recent decision by a federal appeals court overturned a $109 million penalty against a mortgage lender for, among other reasons, the structured nature of the CFPB. The court held that the CFPB is “unconstitutionally Structured” because the director is only answerable to the President and may only be fired for cause. This was an issue in the present case because the Director is in charge of levying fines such as the one at issue. While this case has struck a blow to the CFPB, it has not dissolved it or stripped it of authority, but rather seems to state that minor changes in the structure need to be made. Therefore, it is unlikely this will change the real estate mortgage closing procedures to which we all have become accustomed.
Harvey & Battey, P.A. has a full service real estate department and provides services for both consumer and commercial real estate lending, as well as representation of financial banking institutions in real estate transactions. If you have any real estate related questions, please give Kevin Dukes a call at (843) 524-3109, and our team will get to work for you.