A rebuttal to 'CFPB goes rogue under Rohit Chopra'

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As a previous United States president, much revered by the financial industry, once said: “There you go again.” Well, now the same must be said about Christopher Whalen’s latest diatribe against the CFPB. In a 2014 article in HousingWire (apparently no longer available online), he accused the CFPB of “legal extortion” in its supervisory work with the mortgage servicers. The premise of his claims was that the CFPB’s enforcement actions against miscreant mortgage servicers and work of those of us battling to keep them honest on a daily basis were responsible for making mortgage credit widely unavailable. Events since Whalen’s 2014 critique suggest that there has been no disruption in the availability of mortgage credit. I responded to Mr. Whalen in 2014 and feel compelled to do so again.

Mr. Whalen responded to another critique of this 2014 article by a law professor by intimating that his response disserved including him among the “intolerant fascists who populate the liberal spectrum of American Politics.” That kind of rhetoric does nothing to open the doors to meaningful discussion, but we will probably see more of the same now.

Mr. Whalen is back at it. In a Dec. 13, 2021, article for National Mortgage News captioned “CFPB goes rogue under Rohit Chopra,” Mr. Whalen reprises his old baseless claims and some new ones. He accuses the CFPB, when under the management of Richard Cordray of “inflict[ing] punishment on the mortgage industry often without any basis in fact.” But he cited no support for that baseless claim in 2014 and does not do so now in 2021. The numerous multimillion-dollar consent judgements against the mortgage servicers under Cordray’s administration, and even after, suggest that there was ample basis in fact for its enforcement actions.

In his new claims, Mr. Whalen asserts that the recent CFPB discoveries of improper actions by the servicing industry in handling homeowners’ attempts to exit from COVID-19 forbearance plans in accordance with the programs of the GSEs, the FHA and the VA do not have “any substance or merit” and are evidence of the “poisonous and contentious political environment in Washington created under President Joe Biden.” I know that Mr. Whalen’s accusations about the CFPB are false, but I leave it to you to decide who is responsible for creating the contentious environment in Washington, since that issue is just not relevant to the actions of the CFPB attacked by Mr. Whalen.

I have represented homeowners with foreclosure issues on a full-time basis for over 12 years now, following a private practice career devoted to representation of financial institutions. I also consult regularly with homeowner lawyers across the country. I can say as a matter of firsthand knowledge (something which Mr. Whalen lacks), there are significant problems with the servicing industry’s handling of forbearance exits.

For example, I just concluded one case involving an FHA insured loan where the servicer took six months to properly complete a simple FHA Partial Claim resolution of the arrearages accumulated during forbearance. The servicer ignored or mishandled efforts by the homeowner to resolve the matter, then mishandled efforts by a housing counselor to whom the homeowner turned for more help, and then mishandled efforts by me after the housing counselor could not resolve the matter. It took over 50 hours of legal work to get this simple FHA Partial Claim properly implemented and to stop the improper negative credit reporting by the servicer. This is not an isolated example. I have other cases with similar issues and hear from lawyers across the country also facing these issues.

The multiple and constantly changing forbearance exit programs of the federal loan owners, insurers and guarantors surely makes it difficult for servicers — as well has those of us advising homeowners — to navigate the forbearance exist process smoothly. But there is no room for Mr. Whalen to unfairly criticize the determination of the CFPB to properly fulfill its regulatory roll in this area. The National Mortgage News does a disservice to its readers and the public at large by providing a platform for Mr. Whalen to dispense his incendiary, unsupported and unsupportable allegations and attacks on civil servants doing their jobs.