Consumer Financial Protection Bureau Overview
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Questions and Answers

What is the primary role of the Consumer Financial Protection Bureau (CFPB)?

  • To regulate state financial institutions
  • To provide loans to consumers directly
  • To enforce federal consumer financial laws (correct)
  • To guarantee mortgages for consumers

    • Which of the following is NOT a function of the CFPB?

  • Managing the Federal Reserve's monetary policy (correct)
  • Monitoring financial markets for consumer risks
  • Supervising non-depository residential mortgage lenders
  • Accepting and analyzing consumer complaints

    • Under the Dodd-Frank Act, which of the following is a core function of the CFPB?

  • Stopping discrimination in consumer finance (correct)
  • Issuing government-backed loans to consumers
  • Regulating the stock market
  • Overseeing commercial banks only

    • What type of financial institutions does the CFPB primarily regulate?

    <p>Non-depository residential mortgage lenders (D)</p> Signup and view all the answers

    The Department of Housing and Urban Development (HUD) was created to address issues mainly related to:

    <p>Substandard and deteriorating urban housing (D)</p> Signup and view all the answers

    Which function is associated with the CFPB that involves consumer interactions?

    <p>Presenting reports on consumer complaints to Congress (D)</p> Signup and view all the answers

    Which group retains authority over licensees in the financial sector while the CFPB supervises them?

    <p>States (C)</p> Signup and view all the answers

    What does the CFPB maintain to monitor and resolve consumer complaints?

    <p>An online consumer complaints reporting system (A)</p> Signup and view all the answers

    What was the primary purpose of the Federal Housing Administration (FHA) when it was established?

    <p>To make homeownership possible for first-time homebuyers (A)</p> Signup and view all the answers

    What is the key function of the Government National Mortgage Association (Ginnie Mae)?

    <p>To create a secondary market for government-insured loans (B)</p> Signup and view all the answers

    Which organization primarily protects lenders from borrower defaults on FHA-insured mortgages?

    <p>Federal Housing Administration (C)</p> Signup and view all the answers

    What requirement must be met for federally related purchase transactions according to HUD?

    <p>Borrowers must receive notice of available counseling organizations (A)</p> Signup and view all the answers

    Under the Fair Housing Act, which of the following is NOT considered a discriminatory practice?

    <p>Offering better rates based on financial status (D)</p> Signup and view all the answers

    What financial protection does FHA mortgage insurance provide to lenders?

    <p>Protection against borrower defaults (B)</p> Signup and view all the answers

    Which program is the most common reverse mortgage program offered by FHA?

    <p>Home Equity Conversion Mortgage (HECM) (C)</p> Signup and view all the answers

    What aspect does the Office of Fair Housing and Equal Opportunity address?

    <p>Discriminatory practices against protected classes (B)</p> Signup and view all the answers

    Which agency oversees public housing within HUD?

    <p>Office of Public and Indian Housing (B)</p> Signup and view all the answers

    What is one method HUD uses to support homebuyers?

    <p>Offering educational workshops and counseling (B)</p> Signup and view all the answers

    Flashcards

    CFPB's Role

    The CFPB enforces federal consumer financial laws, protecting consumers in the financial market.

    CFPB's Responsibilities

    The CFPB regulates mortgage lenders/brokers/servicers, and supervises large banks/credit unions. It also oversees firms handling consumer reporting, debt collection, and more.

    CFPB's Complaint Handling

    The CFPB collects and responds to consumer complaints, forwards them to relevant companies, and monitors resolutions.

    CFPB's Consumer Protection Focus

    Stopping unfair, deceptive, or abusive acts, preventing discrimination, and offering financial education.

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    HUD's Purpose

    The Department of Housing and Urban Development (HUD) coordinates federal efforts to address urban housing issues.

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    HUD's Focus

    Improving urban housing conditions, aiming to help with substandard and/or deteriorating housing.

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    CFPB's Data Analysis

    The CFPB analyzes complaint data to inform supervision, enforcement, and rulemaking.

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    CFPB's Financial Research

    The CFPB researches consumer experiences with financial products and monitors emerging financial risks.

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    FHA's role in mortgage lending

    The Federal Housing Administration (FHA) insures mortgages on homes, multi-family properties, and other relevant buildings. This protects lenders and creates a standard product in the secondary mortgage market.

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    Ginnie Mae's function

    The Government National Mortgage Association (Ginnie Mae) guarantees mortgage-backed securities for FHA, VA, and USDA loans. This creates liquidity for these mortgages.

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    HUD's role in Foreclosure avoidance

    HUD offers programs to help homeowners avoid foreclosure. This includes offering homeownership counseling.

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    Fair Housing Act

    The Fair Housing Act protects categories of people from discrimination in housing-related actions.

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    HUD's role in Fair Housing

    HUD enforces fair housing laws by addressing discrimination in mortgages, appraisals, and other financial assistance.

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    FHA Mortgage Insurance

    FHA insurance protects lenders from losses if borrowers default on FHA-insured mortgages.

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    Reverse Mortgage (HECM)

    A reverse mortgage in which HUD provides insurance for lenders.

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    Home Ownership Counseling

    HUD offers and approves home-purchase counseling programs for borrowers.

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    Higher cost mortgage counseling

    When a higher cost mortgage is considered, borrowers need to receive formal written notice they've received counseling.

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    Public Housing Administration

    A previous agency that oversaw public housing programs, which is now part of HUD.

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    Study Notes

    Consumer Financial Protection Bureau (CFPB)

    • Created to enforce federal consumer financial laws and protect consumers
    • Consolidates responsibility from multiple agencies
    • Independent bureau within the Federal Reserve System, accountable to President, Congress, and judiciary
    • Primary regulator of non-depository residential mortgage lenders, brokers, and servicers
    • Supervises large banks, thrifts, credit unions, and their affiliates (assets over $10 billion) and larger companies in consumer reporting, debt collection, student loan servicing, international money transfer, automobile financing, payday lenders, and private student loan lenders (all sizes)
    • Functions under the Dodd-Frank Act to:
      • Stop unfair, deceptive, or abusive acts in consumer finance
      • Enforce laws preventing discrimination
      • Accept and address consumer complaints (online reporting system, searchable database)
      • Forward complaints to companies and monitor resolution
      • Share complaint data with other agencies
      • Report complaint data to Congress
      • Analyze data for supervision, law enforcement, and rulemaking
      • Provide financial education
      • Research consumer experiences with financial products
      • Monitor financial markets for new consumer risks
    • States retain authority over licensees and state law enforcement

    Department of Housing and Urban Development (HUD)

    • Created in 1965 to coordinate federal efforts addressing urban housing problems
    • Consolidates five existing independent agencies:
      • Federal Housing Administration (FHA) (1934): Insures mortgages for single-family, multifamily, residential care facilities, and hospitals
      • Public Housing Administration (1937): Oversees public housing
      • Federal National Mortgage Association (Fannie Mae) (1934): Created a secondary mortgage market
      • Urban Renewal Administration (1949): Led slum clearance projects
      • Community Facilities Administration (1965): Oversees various community development programs
    • Current HUD role in residential mortgage lending:
      • Houses the FHA, which insures mortgages, protecting lenders against borrower default
      • Works through the Government National Mortgage Association (Ginnie Mae), guaranteeing mortgage-backed securities for FHA, VA, and USDA-insured mortgages
      • Provides foreclosure avoidance and loss mitigation programs
      • Offers homeownership counseling programs, requiring notice of available counseling services to all federally related purchase transactions
      • Sets requirements for higher-cost mortgages (written counseling notice)
      • Has a Reverse Mortgage (HECM) counseling requirement
    • HUD's Office of Fair Housing and Equal Opportunity enforces the Fair Housing Act; addressing discrimination in:
      • Mortgage loans (making, refinancing, loan information)
      • Loan terms
      • Property appraisals
      • Loan purchasing
      • Maternity leave
      • Disability
      • Other financial assistance related to residential real estate
    • Maintains the Office of Public and Indian Housing (PIH)
    • Conducts research on housing and market trends

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    Description

    This quiz covers the key functions and responsibilities of the Consumer Financial Protection Bureau (CFPB), including its role in enforcing consumer financial laws and supervising financial institutions. Learn about the CFPB's mandates under the Dodd-Frank Act and its impact on consumers and the financial market.

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