Last week, the Consumer Financial Protection Bureau (CFPB) released its four-year strategic plan. Based on what that document says, members of the real estate industry can breathe easy about the regulatory environment—for now.
The strategic plan, which the bureau posted on its website, openly repudiates the aggressive, push-the-envelope approach the CFPB’s former director, Richard Cordray, advocated. As Mick Mulvaney, the CFPB’s acting director, explains in the strategic plan, he views Cordray’s approach as thwarting the will of the American people, trampling citizens’ liberties, and interfering with state sovereignty. Mulvaney wants the redirected bureau to be mindful of the potential “misuse of [its] unparalleled powers.”
Various language throughout the strategic plan suggests that the bureau is happy to neuter its enforcement authority and to let market forces innovate. For example, instead of protecting consumers from bad actors, the CFPB’s primary mission is now to “ensure that all consumers have access to markets for consumer financial products and services.” And rather than trying to root out malfeasance through enforcement, the retooled CFPB will strive to oversee business in a way that “ensures that markets for consumer products and services are fair, transparent, and competitive.”
What this means is that real estate professionals can now enjoy “pushing the envelope” through their business practices. Unless a procedure amounts to a clear legal violation, with no justifiable basis, the CFPB is unlikely to crack down on it. So, for example, Zillow.com’s co-marketing practices will likely encounter no resistance from the Mulvaney-led CFPB. The same is true of other innovative business models, in which work is referred among settlement service providers in exchange for services actually (or nominally) performed. And cutting-edge products, like paperless mortgages and electronic closings, will face no resistance from the CFPB.
So the real question is whether businesses should embark on formerly questionable practices now, and hope that future CFPB administrators will not disallow them. It might be worth it. If a company can show that it has long engaged in a practice, with tacit or official blessing from the CFPB, that entity has a strong argument that it would be unfair, and a due-process violation, to later make the same practice unlawful.