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SBREFA review process update

Posted in CFPB Rulemaking

The CFPB has now convened a second Small Business Regulatory Enforcement Fairness Act (SBREFA) panel. The second panel was asked to provide input on the mortgage servicing rules proposal that the CFPB is developing. (The first panel was convened to consider the proposal the CFPB is developing for integrated TILA and RESPA disclosures and the rules governing those disclosures.)

SBREFA requires the CFPB to convene a small business panel before rolling out regulations that the CFPB director expects to have a significant impact on a substantial number of small business entities. The 12 Small Entity Representatives (SERs) who met with the second panel represented community banks, credit unions, small servicers, and one small nonbank mortgage lender. Within 60 days of the convening meeting, the panel must issue a report. (For details on the servicing rules being considered, see our earlier post.)

The SBREFA review process was also the subject of a letter dated April 24, 2012  sent by the American Bankers Association to Director Cordray, Cass Sunstein, Office of Information and Regulatory Affairs administrator for the Office of Management and Budget, and Winslow Sargeant, Chief Counsel for the Small Business Administration’s Office of Advocacy. The letter contains suggestions for improving the review process. It suggests that that the CFPB should:

  • provide background and contact information on nominated SERs to trade associations sufficiently in advance of the panel meeting to allow adequate time for the association to assist the SER in identifying other small entity members who can provide valuable input
  • provide more time for SERs to prepare for the panel meeting and provide written comments after the meeting. (The ABA observed that the two weeks allowed before the first two panels’ convening meetings for the selection and preparation of the SERs and the one week allowed after the meetings for providing written comments was inadequate.)
  • gather and share with SERs any real information from third-party service providers about anticipated system and software changes (and potential costs) required by the proposals under consideration
  • encourage consideration by SERs of alternatives by suggesting options in written materials and allowing sufficient time for discussion of such alternatives throughout the convening meeting.

We hope the CFPB will give due consideration to the ABA’s very sound suggestions.