ACUMA ONpoint
ACUMA ONpoint
Hot Takes From The Hill: When Supreme Court Decisions Meet Your Mortgage
In this conversation with Leah Dempsey, Shareholder at Brownstein Hyatt Farber Schreck, Washington's regulatory landscape is undergoing seismic shifts that credit unions can't ignore. The CFPB under Acting Director Mark Calabria has transitioned from addressing Biden-era regulatory holdovers to implementing proactive policy changes that could benefit the credit union industry. This includes potential revisions to decade-old mortgage rules and modifications to the controversial public complaint database that has long frustrated financial institutions.
Meanwhile, the reconciliation process faces significant hurdles as the Senate parliamentarian recently struck down several key provisions championed by Banking Committee Chairman Tim Scott, including an attempt to zero out CFPB funding. With a July 4th deadline looming, lawmakers face intense pressure to complete the package despite these setbacks and emerging geopolitical concerns in the Middle East potentially shifting priorities.
Most significantly for mortgage lenders, the Supreme Court's recent Hobbs Act ruling threatens to upend established compliance frameworks for member communications and lending programs. Like last year's landmark Loepper decision that ended Chevron deference, courts may give less weight to interpretations from agencies like the FCC, HUD, and USDA. For credit unions navigating the complex TCPA requirements or offering government-backed mortgage programs, this could create a challenging patchwork of judicial interpretations that vary by jurisdiction.
While Congress's immediate focus remains on reconciliation and stablecoin legislation, the second half of 2023 promises deeper engagement on housing and consumer finance issues more directly relevant to credit unions. These developments underscore the critical importance of staying informed and engaged with regulatory changes that will shape mortgage lending operations for years to come.
Sponsored by Loan Vision
The views and opinions expressed in this podcast do not necessarily reflect the views or positions of ACUMA, its board of directors, its management staff or its members. The podcast discussion presented is conversational in nature and for general information only.
Speaker 2:Hello and welcome to Act as On Point podcast, the policy series where we focus on policy issues impacting the credit union mortgage industry. I'm your host, peter Benjamin. Before we go to our episode, just a quick word from our sponsor Before we go to our episode just a quick word from our sponsor.
Speaker 3:This episode is being brought to you by Loan Vision. Is your credit union looking to turn your accounting department into a profit driver? Loan Vision can help no-transcript Transform your cost centers into revenue generators by equipping your team with the tools needed to better serve your members. And don't miss our monthly webinar series, where we share key strategies and best practices to help credit unions optimize their mortgage operations Register today at wwwloanvisioncom under our upcoming events page.
Speaker 4:It's a little bit earlier here, but I've been up since like 5 am and it's a sunny, nice day here, so everything's going well.
Speaker 2:I mean I'm sure it's probably a little bit cooler than it is here in the DC area, Temperatures are rising. What's going to be close to 100 degrees today, you know. I think that's a good segue and a good almost analogy for the climate that's happening in DC right now, for the climate that's happening in DC right now. So, to that point, let's dive into the latest and greatest that's happening in Washington. We have three great topics today. We have the CFPB, we have the reconciliation and we have the Hobbs Act, which we're going to expand on, and this has been a topic that we talked about in the past in a different form, but we're going to dive into it a bit more.
Speaker 2:I think there's some things that happened in the past week that you're going to expand on. The attorney in you is going to most certainly dive into it for us. But let's start with the CFPB. What is happening with the CFPB? Cfpb what is happening with the CFPB? We'll call it the. I don't know if we want to call it the saga or the soap opera with the CFPB. I think they both play well. But what's happening with the CFPB?
Speaker 4:Well, yeah, I mean, it's a busy time over there and we've obviously been following since beginning of the year when there's been lawsuits about changing the size of the staff, there was a nominee that was pulled Jonathan McKernan. But you know, despite a lot of flurry of activity and different kind of changes happening through litigation and other avenues, they've kind of, I think, settled into some policymaking finally and they've been active, I think, in a very productive way for credit unions.
Speaker 2:And happy to talk a little bit more about that. No, let's dive into that a bit Because I think you know, obviously, you, obviously the CFPB is, for all intents and purposes, outside of the a bit. You know most credit unions almost fear that point in time when they kind of break over that. You know that $10 billion deposit threshold. You know they start ramping up staff, they start really doubling down on compliance. They start ramping up staff, they start really doubling down on compliance. They start questioning or asking a lot of questions from other credit unions or peer groups about what it's like being under the CPB's purview. Now, does that change, now that we're in this new era of CPB oversight or makeup of the CPB in this new administration? I don't necessarily know if I can call it new administration anymore, since we're halfway through the first year, but I think it's important for us to dive in a bit more because it does impact credit unions significantly. So if you could, let's dive in a bit.
Speaker 4:Sure. Well, that's a great point and a great question. Some of what we've seen early on in the CFPB, when Mark Calabria and his team kind of took over as detailees from the OMB, is, you know, first really addressing a lot of the rulemakings and lawsuits that were kind of an overhang from the Biden administration. They've pretty much gone through that list. For the most part They've addressed credit card late fees. They addressed overdraft. They are in the middle of litigation addressing the medical debt credit reporting piece that we've talked about many times on the podcast. And now at this point we're starting to see some proactive policymaking. We have seen multiple things noticed in the Federal Register in recent weeks. They submitted to OIRA for review some of the mortgage rules and we're not 100% sure what that's going to entail yet, but it seems to indicate that the CPB is moving towards reopening and reexamining some of the regulations from the past decade. Plus the mortgage rules, as most listeners on this podcast know, were some of the first rules that the CFPB worked on. Some of that was because they statutorily had timelines where they had to. So I very much expect that over the next several months we're going to continue to see changes and deregulatory efforts.
Speaker 4:The CBP is also, I believe, going to be looking at things like the complaint database. They mentioned that in their withdrawal of the guidance pieces that they were going to withdraw, the consumer narratives related to the complaint database and potentially the fact that it's public. In general For credit unions, the complaints at NCUA are received by the agency but not made publicly available works well in identifying bad actors, without having the many problems that are associated with a complaint database that is public, where people look at certain products or services and they think, for instance, I'll talk about debt collection. That's an area where there's always a significant number of complaints. Many of those complaints are not complaints, they're inquiries because people are trying to learn more about what is happening with that account. A lot of them in recent months have been generated by AI and credit repair organizations. So there's a lot of problems, a lot of issues, and it's something that the industry has been flagging for a long time. There seems to be some appetite under the CFPB to finally address maybe some of those concerns that credit unions have.
Speaker 2:I do have a ton. It's kind of a random question. You know, with the trigger leads bill, that's kind of moving through the hill right. Would oversight of that fall back on the CPB?
Speaker 4:Yeah, I don't believe that legislation provides any additional oversight to the CFPB that I'm aware of. But it's a timely question because that bill is listed this week as something that could be considered on the House floor, not clear whether it's going to they're going to get to that or not. They have a lot on their plate this week but it's a you know, it's legislation that this Congress has been moving much quicker than we've seen it in any other Congresses and seems to be some bipartisan support on that issue. So that could be something that we see in the next few weeks actually moving forward, something that we see in the next few weeks actually moving forward.
Speaker 2:Because, if I know I'm catching you off guard and I know this wasn't part of our list of things we had to talk about, but I mean, I know that it's on the plate and I know it's moving through the House and it's already gone through the Senate and it's already gone through, obviously, the House Financial Services Committee. But while we were talking about everything that's happening with the CFPB, that was one question I did have was okay, well, who's really going to be monitoring the trigger leads bill? I guess it could be the FCC, right? Or it really could be the CFPB.
Speaker 4:Yeah, and you know what. To clarify your point, so the CFPB does have jurisdiction over the Fair Credit Reporting Act. So they oversee the implementation of any regulations related to the Fair Credit Reporting Act and they have enforcement authority over the Fair Credit Reporting Act. So to that extent it would fall under the CFPB's jurisdiction. My point was just that it didn't necessarily give them any new authorities in that area or call for any type of rulemaking or anything like that.
Speaker 2:Okay, good deal, good deal, all right. So, moving on past the CFPB, thank you very much for updating us on that. Again, this is I don't want to call it a moving target, but there's still a lot unraveling with the CFPB. And I guess, one final question on that, with us heading into the July 4th holiday and really this I don't want to call it a summer break because you never know what's going to happen. You know, in the next few weeks, especially with things that have recently transpired in the Middle East, but you know whether or not you know the Hill is going to be working or whether or not they're going to be taking a break.
Speaker 4:You know, is there any possibility that the CFPB really sees any type of director change or, as we're just assuming, that he's just the temporary director for the time being? That's a great question and I will tell you personally, I would love to see Dr Calabria stay over there. Unfortunately I do not get to vote, but I think he's doing a fantastic job and someone who really has great experience in these issues. But I think we will, we it really could go either way.
Speaker 4:I haven't necessarily heard there's been some articles that different names have been floated there, but there is precedent for leaving an acting director in a position for quite a while and then, you know, at some point Director Vaught I believe there's a time period for when he can be an acting director. So at some point they would have to switch it to another Senate-confirmed Republican to be the acting director, and that person could pretty much do the same thing if they wanted to and have the OMB detailees stay in that role, or they could nominate someone and they could move forward with that process. It really isn't totally clear yet, and I think to your point, with just everything going on with the Middle East and everything going on with the big beautiful bill and reconciliation. It's probably not top of the list for President Trump himself, even though to us in the financial services industry this is like a number one issue.
Speaker 2:I mean, you know it is a number one issue, but you know, I mean you hinted at a couple of things. Right, it's the big beautiful bill, reconciliation, you know. The Middle East, you know all these things have the possibility of impacting our day to day in the financial services industry. Right, historically speaking, a war in the Middle East has the potential to drive down interest rates. No one wants a war in the Middle East. No one wants lives lost. But you have to question what's going to happen with the priorities of the BBB and the reconciliation and the priorities of this administration now that we are entering into a wartime. But we're not here to talk about that. We're not here to debate wartime in the United States. We're here to talk about CBB, reconciliation and the Hobbs Act. So let's move forward with the one big beautiful bill and reconciliation. So what is again? This is an interesting dialogue. It kind of bring us up to speed on everything that's happening with. You know, reconciliation, if you could.
Speaker 4:Sure. Well, I mean there's a lot going on. There's a lot of moving pieces. Late last week the Senate parliamentarian started taking a closer look at several pieces of the bill, including the Senate banking provisions, and did strike down a number of provisions. I think most notably to us on this podcast is that Senator Tim Scott, the Senate banking chairman, attempted to zero out the funding of the CFPB and the parliamentarian basically said that's not going to pass muster for the birdbath and struck that. Also struck a provision that would have transferred the public company accounting oversight board back to this Securities and Exchange Commission and also a section related to pay of Federal Reserve staff. So this was kind of seen as a blow to Senate Republicans on the banking committee that a number of these provisions were struck down. I know that they're, as of today, taking a look with fresh eyes of where cuts may be able to be made that do pass muster of the birdbath. There is a section related to 1071 that passed through the parliamentarians' tests for the birdbath. So I think by the end of the week we will have more clarity.
Speaker 4:They are trying to get things done by the 4th of July. That's been the Trump administration's stated goal. There's a lot of pressure on the Senate and the House to do that, but it's starting to. Particularly after some of these things were struck down late last week. It's starting to look a little bit more questionable whether that time frame is going to be workable, but there's a lot of pressure to get this done as soon as possible. Like you said earlier on in the podcast, we're halfway through the first year.
Speaker 2:Time is really ticking away at this Congress and they really kind of need to get this done. Yeah, I mean, but not only that, I mean that timeline was also not factoring in. Again some recent developments, right?
Speaker 4:Exactly yeah.
Speaker 4:Although I think some of them could have been. I think there was a thought process that there was probably a 50% chance of some of these making it through and I think Senate Banking Chair Scott kind of swung for the fences, knowing it might be a tough uphill battle on some of these, but that was the approach he took. Be a tough uphill battle on some of these, but that was the approach he took. So people are surprised, but not shocked, and probably very likely have a plan B pretty much lined up to go pretty quickly.
Speaker 2:All right, so I'm looking at my calendar. You know here we are. You know roughly, you know when we're when we are recording this. You know we are approximately two weeks out from the 4th of July and if it's not done by the 4th of July, do they just go home or do they stay till it's done?
Speaker 4:I think the threat is they stay until it's done, which is a big motivator, because I think all of us like to take the 4th of July off.
Speaker 2:And no one wants to be in DC on the 4th of July. I mean it is insane.
Speaker 4:It is 100 million degrees. And there's 2 billion people downtown, so it's a pretty good motivator.
Speaker 2:Yeah, okay, yeah, okay, I get it. So no one. A pretty good motivator. Yeah, okay, yeah, okay, I get it. So no one wants to be there. Again, it's humid, it's a miserable temperature and, yes, everyone flocks to DC for the fireworks on the National Mall. So, yeah, you have to do it at least once in your life. But yeah, still, okay, okay. So anything else on reconciliation, or do you want to move on to the Hobbes Act?
Speaker 4:I mean there's a lot, but yeah, let's just move on for now and see where we are.
Speaker 2:Okay, I'm sure, reconciliation. I hate to say it, but we'll probably talk about it next podcast.
Speaker 4:Yeah, you said it, not me.
Speaker 2:I put it out into the universe. I put it out into the universe, all right. So what's going on with the Hobbes Act and if you could provide us a quick you know two second history of the Hobbes Act and how it relates to you know?
Speaker 4:recent events, somewhat recent events leads to, you know, recent events, somewhat recent events? Sure, yeah, and so the HUBBS Act is a special law that is related to final agency orders that only applies to certain agencies, and so some of the agencies that it applies to are the Federal Communications Commission, the Department of Housing and Urban Development, department of Agriculture, department of Transportation and then a few others, so it's kind of a select few agencies that it applies to. Relevant is when we saw the Loeber decision last year, that really changed the way that agency regulations were considered by courts.
Speaker 2:And when you say the Loeber decision, you're referring to Chevron right.
Speaker 4:Yes, yeah. So the Chevron line of cases and the big decision that we got last summer that basically said, you know previously that if a statute or a law was unclear there was deference to agencies to interpret that and Loeber struck that down and since then, you know, agency interpretations have been given less weight, which really aligns with a lot of the work of the Supreme Court and now at this point the Trump administration and Doge so been a big effort on that front over the last year. So this case that came down from the Supreme Court last week dealt with it was a TCPA related case that dealt with the Hobbs Act and really a similar question to the Chevron-Loper line of cases where it looked at some of the FCC's orders related to the TCPA and Loepper saying that even with the Hobbs Act, the court can can weight that less than it has been previously, which really is kind of a big deal because there are a number of FCC orders related to the TCPA which impacts credit unions and the calls that they are making, the calls and texts that they are making to members. As we've talked about many times, there's a lot of litigation on the TCPA and credit union world. There's a lot of class actions. Even with some of the improved precedent that was out there, we still continue to see cases on this.
Speaker 4:Well, here we are now. We have, um, the supreme court saying you know, if you're relying on something like what the FCC said about prior express consent, the court may or may not give that as much weight as they did prior to this decision. Um, so we don't know what. We don't know exactly yet what that means. We don't know what courts are going to say, but we know that the plaintiff's bar loves the tcpa and loves to come up with new legal theories to get those um five hundred dollars per call damages and to bring class actions where you can make a ton of money as a plaintiff's attorney. And this potentially throws a wrench into what was previous. What you know what kind of was a clearer landscape for following the TCPA.
Speaker 4:After the Facebook decision from the Supreme Court, we now have this decision, which we think will probably prompt some challenges at the district court level, which may you know, we don't know exactly how they're going to come down, but may create a new patchwork of different types of decisions related to things like consent that could vary depending on which court you are in around the country, which is a problem, as you know. If you're a credit union, if you're Navy Federal, for instance, and you have branches in every state in the country and courts come down on this issue differently in different circuits, it's pretty hard to develop a compliance program about consent that takes into effect. It takes into account all those different decisions. So very new just came out on Friday.
Speaker 4:We're not sure where this will lead yet, but we think it could open a can of worms and, as I mentioned, also relevant to Acuma members is that HUD is also covered by this. So, even though the case was specific to the FCC and the TCPA, it creates precedent for HUD regulations as well. So that you know. Similarly could open a number of issues that we may not even be thinking about yet.
Speaker 2:A number of issues that we may not even be thinking about yet. Well, I mean, it's not just that. You mentioned USDA, right? So I mean we originate USDA loans all the time, so at least our industry does. So I mean you referenced FCC, hud and USDA, all of which have potential to impact housing USDA, all of which have potential to impact housing. So it is very interesting to see how these types of laws have the potential to have longstanding repercussions on our industry and how we go about our day-to-day. So it's very fascinating.
Speaker 4:It's how it just all unravels, and I would say maybe just on the flip side of that there may be some upside as well. When you know, in the Biden administration the chairwoman of the FCC was not a fan of, necessarily, industry arguments related to the TCPA, so arguably she could have put out a TCPA order that was really problematic for callers and for credit unions. She didn't do that, but a future FCC could do that, someone that's more aligned with, like the NCLCs of the world. So I guess in that regard there's a little bit of a protection for the business industry that an FCC chairperson that wants to make life more difficult for business can't do that as easily. But kind of like we talked about with the Loper decision and the Chevron decision, there's upsides and downsides to these decisions.
Speaker 2:Okay, good to know. And before we close out, is there anything else that you want to hit?
Speaker 4:I think those are the big things. We will see what happens before the 4th of July. I'm looking forward to reconciliation wrapping up and, you know, honestly, the stablecoin legislation that debate may be wrapping up this week. They're really pushing to move the Genius Act forward. Trump called for that. That issue does impact credit unions but it's not their number one issue. So I'm kind of looking forward to when we get past those two areas of the House Financial Services Committee and then maybe digging into more of the housing issues and the consumer finance issues that may be of more interest to us and really credit union world once we get into the second half of the year. Okay, awesome.
Speaker 2:Well, leah, as always. Thank you very much for your time. It's always great talking to you and to everyone over at Brownstein. We appreciate your support and always educating the Acuna community. Thank you, and, to close out, thank you again to Loan Vision for sponsoring today's episode and to all of you. We know your time is valuable. Thank you for tuning in to the latest episode of Acuna's On Point Podcast. We hope you enjoyed it. Until next time, be well, my friends.
Speaker 1:Thanks for listening. We'll see you next time at the Acuma On Point podcast. If not already, be sure to subscribe and give us a five-star rating For more great episodes and information. Be sure to visit us online at acumaorg and to get the latest updates. Head over to our LinkedIn page.
