(Austin, Texas) - The Texas Bankers Association (TBA) and co-plaintiffs, [Bank], Texas, and the American Bankers Association (ABA), have been successful in their motion to halt implementation of the Consumer Financial Protection Bureau's (CFPB) Section 1071 Finale Rule.

Watch for the press releases.

As I understand it, it will spare TBA and ABA members from having to devote time and resources complying with the rulemaking until the Supreme Court resolves a separate case involving the constitutionality of the CFPB's funding.

ABA's link to the Order:
https://www.aba.com/advocacy/policy...tm_content=SPECIAL_EDITION-20230731.html

Ya-Hoo!

If you are not a member of the ABA or TBA, I would not get too excited yet. You need to read the ruling.

For the foregoing reasons, the Court ORDERS that Plaintiffs’ Motion (Dkt. No. 13) is GRANTED IN-PART and DENIED IN-PART. The Court DENIES Plaintiffs’ request for nationwide injunctive relief, and GRANTS Plaintiffs’ request for relief as to Plaintiffs and their members.

We're an ABA member, so Ya-hoo and all, but that seems to make absolutely no sense at all.

Well, you have to have "standing" in a suit like this. Only Rio Bank, the ABA and TBA were plaintiffs. Since the court did not even opine on the standing of the ABA and TBA to bring suit, I am surprised they even extended it to their members.

We are ABA members-that was my YaHoo. The injunction was approved pending the other CFBP case in front of SCOTUS. With recent action coming from the Minnesota Bankers Association and this action, it is nice to see trade groups going to bat like this.

Yeah, that case is going to be interesting. So, if they are successful, what does that actually mean. All rules issued by the CFBP become null and void? I have not read the case, so I am not that familiar with the details.

Be careful what you wish for if that is the case, because then you are going to have to pull out the old GFE's and HUD-1's for a starter.

I like the old GFE's and HUD 1's. I was just explaining a GFE to a younger staff member the other day! Some of us remember back in the day you would be doing revisions on the HUD 1 up until the actual closing time. Yeah, I think if that SCOTUS case goes the way it is looking and against the CFBP funding mechanism, then the CFBP could be null and void.

It will be a mess that no one really wants in the real world, if that is the case. Who really wants for everything to unwind back to 2010? The costs involved in that pale in comparison to any costs associated with 1071, plus it would tip the entire mortgage industry on its head. Half the people currently involved in compliance probably started after 2010.

I've made that argument many times over the past decade. Still, things were way better before, both for consumers and traditional mortgage lenders.

As for most compliance folks who jumped in post 2010; who could blame them? This has become a "cottage industry," for sure.

My biggest concern has been that most of the folks newer to compliance never learned the original regulations from the ground up. What I have seen since is mass conflation of regulatory risk perception growing much bigger than it really is, which has only exacerbated industry consolodation. The 1071 rulemaking will most certainly facilitate this, which is not good for the broader U.S. economy (we need a network of de-centralized community banks).

I am happy for this little win for the time being.

1071 was ill conceived. I get the idea that our regulators en masse, want to ensure fair lending across consumer, commercial and residential lending. Really, we all get that as an industry. Community Banks are the ultimate small business lenders. But at the same time the CFBP wants to regulate small commercial lending to make sure our industry is playing fair, the SBA wants more competition for community banks by opening the 7(a) program to fintech lenders. Yeah, one arm of the government wants to make sure community banks are doing everything correctly and another arm wants to throw more non-bank players into the mix who won't have the same regulatory issues. Brilliant!

1071 is not going anywhere without an act of Congress . . . because it was created by an act of Congress. Whatever the result of the constitutionality of the CFPB, we will someday have a 1071 rule unless Congress repeals it. Remember, it's called "1071" because that's the section of the Dodd Frank Act that required the CFPB to issue it.

Remember the CFPB was under court order to enact the rule quickly, so we'll see how this all plays out. It'll be interesting/chaos for a while if they rule the CFPB is unconstitutional. I don't think it'll go as well as some people seem to think. Risk escalates quickly with uncertainty.

I was around pre-2010 and i don't want to return to separate RESPA/TIL disclosures.

I'm maybe a little more measured than others. Personally, I think the structure of the Bureau was ill-conceived from the start, and there were ways it was designed that almost ensured that the mess we are dealing with today would come to pass. Saying that, I will also say that if the structure has to be reworked, I'm not entirely convinced that would result in every rule being vacated, especially since a lot of these rules were mandated by DFA. Remember, the courts didn't direct the CFPB to act quickly on 1071, they ran out of patience because the CFPB drug its feet for over a decade on a rule that was mandated by legislation. Will there be pain if the funding mechanism is found unconstitutional? Probably yes, but does that mean we go back to 2010? I highly doubt it. I would suspect that rules mandated by DFA would be permitted to stand, but rules without clear Congressional mandate would be vacated.

Then the fights can begin on whether the implementing regulations exceeded the intent of the legislation...

Just sat in on a 1071 update call from ABA. Attorneys intrepreting the injunction stated that they believe banks who now become full (voting) members of ABA before the Supreme Court opines may be granted the benefits of the stay.

Also, if they reverse, a bank benefiting the stay will be able to tack on 10 months for the effective date(s).

These are my main takeaways (what I heard). Of course, there are many nuances based on FI structure (subsidiaries, FinTech relationships, etc.).

They will be doing a follow up call available to all banks this Friday, inlcuding non-members. Again, what I heard.

Hard disagree that things were way better for consumers pre-CFPB.

Interesting take. Sounds to me like ABA making a sales pitch to increase membership. I have a hard time believing that banks who were not members when the stay was enacted can come in after the fact and receive the benefits.

What I paraphrased were comments from an attorney interpreting the injunction. They (ABA & TBA) advocated for the entire industry.

Here is the link to this Friday's webinar summarizing it.

https://www.aba.com/training-events...tm_content=2023_1071_Webinar_8.4.23.html

"Please join us for a free webinar open to bankers at all of America’s banks to learn more about recent developments in the legal fight over the CFPB’s Section 1071 Final Rule. Legal experts and senior leaders from ABA, Texas Bankers Association and Rio Bank will provide more details on this week’s court order from a federal judge in Texas delaying the CFPB’s implementation and enforcement of the rule for ABA and TBA members."

I am sitting in on the ABA webinar in about a half hour. I just don't feel comfortable with this. I am planning on still moving forward with preparation for implementation.

Same here.

At the end of the day there are many unanswered questions. Regardless, Compliance needs to be aware of the speculative outcomes so it can discuss options with management.

It will be interesting to see if the court clarifies more specifically who its order applies too. I know the ABA and TBA are interpreting it to apply to any ABA/TBA members, even if they joined post-order, but there's really nothing in the order that supports (or arguably goes against) that position. I wonder if the Bureau will issue a new regulation enacting a broader exemption, or if we'll see additional law suits by other trade associations trying to get in on a stay. What a mess... Sometimes the cure is worse than the disease.

There are already other lawsuits filed to expand the injunction: https://ibat.informz.net/InformzDataService/OnlineVersion/Pub/bWFpbGluZ0luc3RhbmNlSWQ9MTExODAxMDg=