CFPB Fall 2021 Rulemaking Agenda

Source

By Susan M. Bernard – Dec. 13, 2021

Consistent with the Bureau’s past practice, we have published the Bureau’s Fall 2021 Agenda as part of the Fall 2021 Unified Agenda of Federal Regulatory and Deregulatory Actions, which is coordinated by the Office of Management and Budget (OMB). The Agenda lists the regulatory matters that we plan to pursue during the period from Nov. 1, 2021 to Oct. 31, 2022, as described further below. The complete Unified Agenda is available to the public at the following website: http://www.reginfo.gov.

Our Fall 2021 Agenda reflects the continuation of significant rulemakings that further our consumer financial protection mission and help to advance the country’s economic recovery from the financial crisis related to the COVID-19 pandemic.

We also continue to prioritize work that promotes racial and economic equity and supports underserved and marginalized communities by, among other things, facilitating access to fair and affordable credit.

Our newly confirmed Director, Rohit Chopra, began his term on October 12, 2021, after we submitted the Bureau’s Fall 2021 agenda to OMB. We anticipate that Director Chopra’s regulatory priorities will be more fully reflected in the Spring 2022 Agenda.

We have several regulatory activities planned through the fall of 2022. Key among these are the following:

Small Business Lending Data Collection

Section 1071 of the Dodd-Frank Act requires financial institutions to collect, report, and make public certain information concerning credit applications made by women-owned, minority-owned, and small businesses. Congress enacted section 1071 for the purpose of facilitating enforcement of fair lending laws and enabling communities, governmental entities, and creditors to identify business and community development needs and opportunities for women-owned, minority-owned, and small businesses.

We have been working on this important and complex rulemaking for a number of years, through research, policy development, and public engagement. In particular, we have solicited comments and information from small businesses and small business lenders (some of which are themselves small businesses), including minority- and women-owned small businesses.

On Oct. 8, we published a proposed rule in the Federal Register which, if finalized as proposed, would require financial institutions to report information about small business credit applications, including information related to the credit applied for, demographic and other information about the small business credit applicant, and key elements of the price of the credit offered. We are accepting public comments on the proposed rule through January 6, 2022, when we will begin to review and consider those comments as we move to develop a final rule.

Availability of electronic consumer financial account data

We are also working on a rule required by section 1033 of the Dodd-Frank Act to address the availability of consumer financial account data in electronic form, which has helped consumers understand their finances and make better-informed financial decisions.

Research has shown that the ability of consumers to permit access to third parties of certain consumer financial account data may improve lenders’ ability to determine that a consumer is credit-worthy, and may also expand the consumer’s access to credit by expanding their choices with respect to lenders and potentially allowing lenders to provide credit at more affordable prices than if they relied on traditional credit scoring alone.

Consumers’ access to their own financial information is particularly important at a time when financial institutions are increasingly using “alternative data,” such as checking-account transaction data, in making credit decisions. We support innovation and believe that appropriate implementation of section 1033 can lead to competitive, consumer-friendly markets, while recognizing the importance of ensuring the safety and security of consumer account data.

We have taken a number of steps to gather information and perspectives from the public, financial institutions, consumer advocacy groups, and others concerning current practices with respect to financial data access and data sharing and to learn more about this complex and rapidly changing market.

Most recently, in November 2020, we published an Advance Notice of Proposed Rulemaking (ANPRM) concerning the implementation of section 1033. The comment period closed in February 2021. We are reviewing and considering comments received in response to the ANPRM, as well as monitoring the market as we assess potential next steps, including whether a Small Business Review Panel is required pursuant to the Regulatory Flexibility Act.

Property Assessed Clean Energy (PACE) Financing

We are also continuing our work to implement section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, which mandates that we issue regulations relating to “Property Assessed Clean Energy” (PACE) financing. PACE financing is a tool for consumers to finance certain improvements to residential real property.

PACE financing has characteristics of both home equity lending and real property taxes. Like home equity loans, PACE obligations arise through a voluntary contract and are secured by real property. But, under State law, they are billed and repaid as special property tax assessments and typically secured by a lien with equal priority to real property taxes.

In March 2019, we released an ANPRM to solicit information in order to develop a proposed rule and are continuing to engage with stakeholders and collect information for the rulemaking, including by collecting quantitative data on the effect of PACE on consumers’ financial outcomes.

Standards for Automated Valuation Models (AVMs)

We are participating with the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Housing Finance Agency to develop regulations to implement the amendments made by the Dodd-Frank Act to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 concerning automated valuation models (AVMs).

The amendments require rules for quality control standards for AVMs. These quality control standards are designed to ensure a high level of confidence in the estimates produced by the valuation models, protect against the manipulation of data, seek to avoid conflicts of interest, require random sample testing and reviews, and account for any other such factor that the Agencies determine to be appropriate.

Facilitating transition away from LIBOR Index

Earlier this week, we issued a final rule to address the anticipated expiration of the LIBOR index, which the UK Financial Conduct Authority has stated that it cannot guarantee publication of beyond June 2023.

This rulemaking is important for the millions of consumers who have adjustable-rate mortgages, credit cards, student loans, reverse mortgages, home equity lines of credit, or other loans that are tied to the LIBOR index.

Our work is designed to lessen the financial impact to consumers and facilitate creditor compliance by providing examples of replacement indices that meet Regulation Z requirements. We issued the proposed rule in June 2020.

Reviewing existing regulations and market monitoring

Section 1022(d) of the Dodd-Frank Act requires us to conduct an assessment of each significant rule or order we have adopted under Federal consumer financial law and publish a report of each assessment no later than five years after the effective date of the subject matter or order.

We decided to conduct an assessment of a rule implementing the Home Mortgage Disclosure Act (HMDA), most of which became effective in January 2018, and recently issued a Request for Information seeking comment from the public to ensure the Bureau can use the data collected under this rule to most effectively meet its goals. Section 610 of the Regulatory Flexibility Act (RFA) also requires us to consider the effect on small entities of certain rules we promulgate.

In August 2020, we began our RFA section 610 review of Regulation Z rules that implement the Credit Card Accountability Responsibility and Disclosure Act of 2009. Specifically, we reviewed an interim final rule and three final rules published by the Board from July 2009 to April 2011. After considering the statutory review factors and public comments, we determined that the CARD Act rules should continue without change.

Finally, as required by the Dodd-Frank Act, we are continuing to monitor markets for consumer financial products and services to identify risks to consumers and the proper functioning of such markets.