House Financial Services Committee Approves the Consumer Financial Protection Agency (CFPA) Act of 2009

The House Financial Services Committee, by a 39-29 vote, approved H.R.3126, the Consumer Financial Protection Agency (CFPA) Act of 2009. All regulation of businesses that offer financial services including lenders would be consolidated under the CFPA, which would be charged with devising consumer protection regulations that would apply to those businesses.

As reported last week, at the request of MHI, Rep. Joe Donnelly (D-IN) offered an amendment to this legislation that would exclude manufactured and modular housing retailers from the CFPA’s jurisdiction. The amendment was passed by voice vote in the Financial Services Committee, and represents a major victory for industry retailers.

MHI was also able to convince the Committee to drop language from the bill that would have required toxic disclosures and liability exposure for any lender that offered financial products not considered “plain vanilla” by the CFPA. The danger posed by that provision was that the CFPA could have deemed only 30 year fixed rate loans as plain vanilla, thus placing chattel loans with shorter terms of years in a category requiring the toxic disclosures with attendant liability exposure. The removal of the plain vanilla provision represents a major victory for industry lenders.

During the bill’s markup this week, the committee also approved an amendment from Rep. Gary Miller (R-CA) to sunset the Home Valuation Code of Conduct (HVCC). The HVCC is a set of rules for choosing appraisers, and prohibits lenders from accepting reports from appraisers selected by mortgage brokers, realtors or lenders’ own production staff. The HVCC program has been identified by many trade groups, including MHI, as additional regulation which has lengthened underwriting times, increased costs to the buyer and seller, and slowed the housing market recovery.

MHI will continue to work this legislation as it moves to the Senate for consideration.

Source: MHI Newswire

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