The Consumer Financial Protection Bureau (CFPB) has a new head, with Rohit Chopra finally confirmed by the Senate as its next director. The confirmation vote was 50-48 along party lines.
Chopra, a noted financial watchdog, helped Sen. Elizabeth Warren, D-Mass., initially establish the bureau before officially joining in 2011 as student loan ombudsman. Prior to taking the CFPB director post, Chopra has served as one of two Democratic commissioners on the Federal Trade Commission (FTC), taking office in 2018.
Chopra’s confirmation is the culmination of a tumultuous, uncertain nomination, with President Joe Biden initially announcing his choice to helm the CFPB in February. However, with Republicans criticizing his hawkish approach to financial oversight, the Senate Banking Committee was deadlocked after his original confirmation hearing in March, bringing Chopra’s candidacy to the full Senate and casting doubt on whether his nomination would advance.
Now, Chopra is set for a five-year term at the head of the bureau, which could spell headaches for lenders. During his first spell at the CFPB, Chopra was known for his aggressive investigation and regulation of the student lending market, developing a reputation for targeting private student loan servicers for alleged borrower mistreatment. During a contentious debate over Chopra’s confirmation on the Senate floor, Sen. Pat Toomey, R-Pa., claimed that Chopra has cultivated “a hostile relationship with lenders” during his time at both the CFPB and the FTC.
Progressives, however, are looking for Chopra to return the CFPB to a more assertive approach to consumer finance regulation after a more relaxed period during the Trump administration.
Rep. Maxine Waters, D-Ca., who chairs the House Financial Services Committee, praised Chopra’s track record and lauded his confirmation.
“At a time when consumers need a strong watchdog, Mr. Chopra will be an advocate for working families,” she said in a statement.
Chopra evoked the mortgage industry during his initial March confirmation hearing, saying that “in the mortgage market, fair and effective oversight can promote a resilient and competitive financial sector, and address the systemic inequities faced by families of color.” He also expressed concern about the forbearances becoming foreclosures and keeping homeowners in their homes.
“I don’t want to see another foreclosure crisis in this country. And we need to do everything we can to make sure the laws are being followed and homeowners can navigate their options.”
Chopra also alluded to other priorities during that hearing, including broader oversight of big tech — one of his focuses during his time at the FTC.
“I think there’s real questions about transparency,” Chopra said in March. “Looking at how big data, particularly by large platforms who have detailed behavioral data on all of us, is something we must carefully look at because it will change financial services fundamentally.”
For its part, the mortgage industry welcomed Chopra as one of its new regulators with measured openness. Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), assured the incoming CFPB head of the security and stability of today’s home lending environment.
“Today’s mortgage market is the safest it has been in decades,” he said. “MBA looks forward to working with Director Chopra to sustain this progress, protect consumers, and provide clarity and consistency in the guidance given to lenders.”
The Community Home Lenders Association (CHLA) congratulated Chopra on his confirmation and, not wasting any time, urged the new director to close alleged loopholes in the licensing of bank mortgage loan originators.
In a letter addressed to Chopra, the group renewed its “longstanding request that the CFPB appropriately implement the Dodd-Frank statutory requirement that all mortgage loan originators (LOs) must be ‘qualified.’”
Specifically, the CHLA pushed Chopra and the CFPB to address a rule it originally adopted in 2013 by adopting uniform standards that require all mortgage loan originators, including those at banks, to pass the basic SAFE Act test; pass an independent background check; complete 20 hours of SAFE Act required pre-licensing courses; and complete eight hours of SAFE Act required continuing education courses each year.
Per the CHLA, it has “for years questioned how the CFPB could claim it is complying with the Dodd-Frank requirement that all loan originators must be ‘qualified’ — when thousands of bank mortgage loan originators registered to originate mortgage loans for consumers failed (and never passed) the basic SAFE Act qualifications test — and when only 5% of registered bank loan originators have even taken the test.”
Clearly, as rocky as his confirmation process was, Chopra will have more interesting days ahead when it comes to navigating the mortgage lending landscape.