January 12, 2016

Credit Union Times interviews Andy Arculin on CFPB director’s Know Before You Owe letter

2 min

Credit Union Times interviewed Venable counsel Andy Arculin in a January 12, 2016 article on Consumer Financial Protection Bureau (CFPB) Director Richard Cordray's letter on Know Before You Owe mortgage disclosure rules. Cordray sent the letter to the president of the Mortgage Bankers Association in an attempt to soothe compliance concerns over new disclosure rules.

"The most important part of the letter is that it might be helpful to investors who are just skittish, but it doesn't have any real force of law," said Arculin. "Typically liability under a statute is not something that an agency gets to decide. It's something that Congress has put in place and for the courts to interpret." Commenting on the content of the letter, Arculin said, "They seem to be saying that creditors and lenders shouldn't be worried about a loan estimate because you could always cure it with a closing disclosure…I think that's a dangerous thing for the CFPB to say. Especially considering not all these disclosures are subject to a real cure, meaning not everything is subject to a tolerance, you can't just give the consumer a credit and cure everything. As a matter of fact, in many cases you don't have to."

He added, "What they said in the letter is accurate, as far as I understand the statute… But, that doesn't mean that a court is always going to agree with it or there isn't some nuance that's missed." Arculin noted that the CFPB is trying to remind the industry that everything is not subject to statutory damages. "In their view, a lot of this hoopla about litigation risk and liability might be overblown."