Letter to CFPB on Digital Mortgage Comparison

Dear Director Chopra: 

The American Bankers Association (ABA)  appreciates your acknowledgment that financial service providers and the consumers they serve benefit from clear rules. As you noted in your written testimony to Congress in April 2022, "Laws work best when they are easy to understand, easy to follow, and easy to enforce." You also promised that the Consumer Financial Protection Bureau (CFPB) would "[D]ramatically increase its issuance of guidance documents, such as advisory opinions, compliance bulletins, policy statements, and other publications."  

You have followed through on this commitment, overseeing the agency's issuance of a steady stream of guidance documents, which have had a significant impact on industry—and the products and services available in the consumer financial marketplace. However, this impact has not always been positive, and the guidance issuances have not always provided legal clarity or useful advice and information to regulated entities. 

As discussed in ABA’s white paper, Effective Agency Guidance, this is sometimes the result of a failure to follow either the mandatory process of the Administrative Procedure Act (APA),  which is required for guidance that is a binding "legislative rule." In other cases, the guidance may in fact be an "interpretive rule" or "general statement of policy" that is not subject to the APA, but the failure to confer with regulated entities to understand their interpretive questions, operational impacts, and system constraints limits the utility of the guidance, undermines its acceptance, and may limit its durability as administrations change.

Because ABA and its members welcome guidance that complies with legal requirements while providing useful information and advice, we are offering industry feedback on certain recently published guidance documents. Our goal is to provide constructive feedback on the legal and operational issues presented, the benefits and costs, and to identify interpretive questions that remain—in other words, to provide the comments industry would have offered had the CFPB sought public comment prior to issuing the guidance. Our intent is for the Bureau to issue guidance documents that are transparent, consistent with the law, and focused on promoting the interests of consumers in a strong, vibrant, and innovative market for consumer financial products and services.

Summary of the Comment

On February 13, 2023, without consultation with stakeholders, the Bureau released an Advisory Opinion (AO)  to address the applicability of the Real Estate Settlement Procedures Act (RESPA) section 8 provisions  to operators of certain digital technology platforms that enable consumers to comparison shop for mortgages and other real estate settlement services, or Digital Mortgage Comparison-Shopping Platforms (DMCSP). Prior to this advisory opinion, the only guidance on which platform operators and the lenders that use them could rely was a 1996 Statement of Policy by the U.S. Department of Housing and Urban Development (HUD) on computer loan origination systems (CLOs).  And until publication of the AO, it was unclear whether the CFPB would defer to HUD’s 1996 interpretation or to the informal advisory opinions issued by HUD in the 1980s and 1990s related to lead generation.

The AO affirms the relevancy of HUD’s 1996 Statement of Policy but seeks to clarify provisions applicable to operators of digital mortgage comparison platforms with regard to specific practices that the Bureau believes violate RESPA’s prohibitions against the payment of fees for the referral of real estate settlement services.

ABA appreciates the CFPB's efforts to clarify some of the risks arising from digital mortgage shopping platforms, which have become increasingly important lead generation tools for mortgage originators. 

Download the letter to read the full text.