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Senator Warren And Congressman Cummings Urge GAO To Study Economic Vulnerability Of Non-Bank Mortgage Servicers, Risks To Consumers
On October 20, Senator Warren and Congressman Cummings co-authored a letter to the GAO requesting that the agency investigate possible effects on the non-bank servicing industry in the event of an economic downturn. In addition, the duo urged the GAO to study the potential risks to consumers should a major non-bank servicer fail. The letter stems from a report recently issued by the FHFA-OIG. The report cites that the rise in non-bank mortgage servicers “has been accompanied by consumer complaints, lawsuits, and other regulatory actions as the servicers’ workload outstrips their processing capacity.”
Republican Committee Leaders Question CFPB On Recess Appointment Activities
On July 29, House Financial Services Committee Chairman Jeb Hensarling (R-TX) and Senate Banking Committee Ranking Member Mike Crapo (R-ID) sent a letter to CFPB Director Richard Cordray questioning the CFPB’s authority to take certain actions during the period of Mr. Cordray’s recess appointment—January 4, 2012 through July 16, 2013—which was made in the same manner and on the same day as other appointments that were subsequently invalidated by the Supreme Court. Citing the Dodd-Frank Act, the letter asserts that new CFPB authorities created by the Act—as opposed to those transferred from another agency—could only be exercised by a Senate-confirmed director. The lawmakers state that as a result of the Supreme Court’s decision on recess appointments, two primary legal questions now exist regarding the CFPB’s authority during the relevant time: (i) whether the Director had authority to exercise CFPB powers as a recess appointee; and (ii) whether the Director’s ratification of actions taken during his recess appointment is valid. The letter asks the CFPB to produce by September 1, 2014: (i) “a full accounting of all CFPB actions taken” during the recess appointment period that were not derived from transferred authorities; (ii) all documents related to the validity or standing of CFPB actions taken during the recess appointment period that were not derivative of the transferred powers; (iii) all documents justifying the CFPB’s authority and the Director’s standing to ratify past actions; and (iv) all documents related to the impact of the Supreme Court’s recess appointment decision. The requests include internal documents and those involving outside counsel.