The title insurance industry is finally mobilizing itself to take positions on bills currently pending in Washington, DC. With all the chatter recently making its way through the wires, we thought it was important to let you know how independent real estate settlement service providers and those who follow policy with NAILTA viewed the recent movements.
What is Going On?
The House Financial Services Committee (HFSC) recently convened a hearing concerning eleven (11) separate legislative bills that are each directed at the Dodd-Frank Act, and specifically the Consumer Financial Protection Bureau (CFPB). This is not the first effort for the HFSC on Dodd-Frank. Since 2011, there have been over fifty (50) such bills designed to alter, restrict or outright repeal Dodd-Frank and the CFPB.
None of any consequence have been signed into law.
Of the 11 current bills being pushed by the leadership of the HFSC, one has appeared on the radar screen for the title insurance industry. That bill is known as H.R. 4383, the Bureau of Consumer Financial Protection Small Business Advisory Board Act.
What Does H.R. 4383 Do?
The stated goal of the bill is to modify those portions of Dodd-Frank to mandate that the CFPB Director establish a Small Business Advisory Board (SBAB) to: (1) advise and consult with the Bureau; and, (2) provide information on emerging practices of small business that provide eligible financial products or services — i.e., information on what you do every day.
The bill would mandate that 12 representatives of small business meet with the CFPB at least two times per year to discuss these trends and issues, regardless of rulemaking efforts. To see the bill’s language, click here.
What is Missing From H.R. 4383?
H.R. 4383 does not mandate that the CFPB follow any of the guidance provided by the small business panel. Likewise, there is nothing in H.R. 4383 that would make the CFPB respond to the small business panels in an effectively public way. This repeats current federal law in this area.
H.R. 4383 also does not mandate that any member of the title insurance or other independent real estate settlement service fields serve on the panel when that panel is to determine rules affecting our industry. There is no guarantee that any member of our industry will serve on the proposed panel or worse there is no way to prevent that others who do not value or understand our industry will have representation when it matters most.
H.R. 4383 does not require professional relevance as a prerequisite for panel participation. That deficiency is a bad omen for the work of the proposed panel.
Imagine the proposed SBAB panel meeting to discuss the banking industry’s embrace of controlled business arrangements without having a title insurance professional on the panel to explain it, one way or another? Under H.R. 4383, that event — and the potential consequence of same — is nearly certain to occur.
H.R. 4383 is Redundant.
Another troubling fact about H.R. 4383 is that it attempts to address a problem that does not exist. Proponents of the bill want CFPB to listen to small business concerns during the rulemaking process. Current federal law already requires the CFPB to commence with small business advisory panels under Section 1100(G) of the Dodd-Frank Act and 5 U.S.C. Sec. 609(d) of the Small Business Regulatory Enforcement Fairness Act (SBREFA).
Thus, H.R. 4383 breaks no new ground on this issue.
The CFPB has already conducted similar small business panels in conjunction with the Intergrated Mortgage Disclosure Rule, Loan Originator Compensation Rule and Mortgage Servicing Rule. In other words, the aim of H.R 4383 — i.e., small business participation — is already being practiced. The real problem is that it is being practiced in front of the wrong audience. Without mandating our involvement, this bill is not going to change the situation for small businesses in our industry.
If the complaint concerning current policy is about the result of the CFPB’s rulemaking, H.R. 4383 does not address results, either. H.R. 4383 is about the process. Under existing law, the process is already the same. To fix the process and the result to truly help small business will require more than H.R. 4383 provides.
Why H.R. 4383, Then?
It is mid-term election season for the House of Representatives. H.R. 4383 and other bills to “fix” the CFPB or Dodd-Frank are more about politics, ideology and symbolism than they are about substantive public policy. Bills like this are good to rouse party bases on either side, but do little to actually impact the public policies needed to help those affected.
Firebreathers on both the left and the right want bills like this to pander to the symbolism of their parties. On the right, to give small busines owners the belief that government is out of control. On the left, to give consumers the belief that corporate interests are running amok.
The first casualty of a debate in mid-term election season is the truth. A second casualty is good public policy. Both are victims that deserve their due and your attention.
If H.R. 4383 actually forged new ground with the CFPB or ensured the participation of independent real estate settlement service providers in the rulemaking process, NAILTA would support the measure and urge each of you to do the same.
Since H.R. 4383 does not accomplish these goals, NAILTA has decided to oppose the measure and seek amendments to the bill that would actually help the small businesses in the real estate settement services industry that are truly impacted by CFPB rulemaking — i.e., you.
For more information on NAILTA’s position on H.R. 4383 and the bill itself, please click here.