5.Consumer Protection and The Dodd-Frank Act

In this lesson, you will be introduced to the Dodd-Frank Act.

The Dodd–Frank Wall Street Reform and Consumer Protection Act was enacted in 2010 for the purpose of promoting financial stability, ending the "too big to fail" mentality, protecting taxpayers by ending bail outs, and protecting consumers from abusive practices in the financial industry. 

The Dodd-Frank Act established the…

…Consumer Financial Protection Bureau (CFPB). Next, review the legislation from Dodd-Frank that impacts the mortgage lending industry.(1)

There are two main sections of the Dodd-Frank Act that impact Mortgage Lending:  

1. Title X (10), Consumer and Financial Protection Act

2. Title XIV (14), Mortgage Reform and Anti-Predatory Lending Act

Title X (10)

Consumer and Financial Protection Act

Title 10 created the Consumer Financial Protection Bureau which consolidated the responsibility of rule making and enforcement of prior regulations pertaining to the mortgage industry.

Title XIV (14)

Mortgage Reform and Anti-Predatory Lending Act

Title 14 amends the Truth in Lending Act, the Equal Credit Opportunity Act, and other consumer financial laws to prevent mortgage-related abuses and to improve availability of responsible, affordable mortgage credit. Let's look at each of these titles in a little more detail.(2)(3)

The purpose of the CFPB is to ensure…

…consumer access to fair, transparent, and competitive markets for financial products by consistently enforcing federal consumer financial laws.(4) 

CFPB authorities include:

• Administering, enforcing, and implementing federal consumer financial laws

• The power to make rules, issue orders, and issue guidance

Title X gives the CFPB:

• Exclusive supervisory and primary enforcement authority over insured depository institutions with assets over $10 billion.

• Authority to enforce federal consumer laws against non depository covered persons.

• Authority to mandate studies on issues that may need additional legislation.

• Authority to conduct investigations, issue subpoenas or civil investigative demands, including cease and desist orders, conducts hearings, and commences civil actions in federal court.

• Must refer criminal cases to the Department of Justice and potential tax law violations to the Internal Revenue Service.

Title X:

• Gives states increased regulation over national banks, federal thrifts, and their subsidiaries

• Created increased requirements for data collection and reporting.

• Provides for improved financial disclosures, and integrates mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act.(5)