Two news items relating to the CFPB hit back-to-back recently. As we are approaching the 4th of July, the irony of this struck me and should strike you or anyone else who cares about having a safe and free society, regardless of a person's politics.

Let's share two quick thoughts that tee up the issue.

First, America was founded by immigrants who risked much to come here for political, social, religious, personal and economic freedom. The revolution against England was fought to protect the life, liberty and property of "we, the people" from unjust government incursion. The entire concept of constitutional government is precisely to limit government power, not people. The founders believed that one's own government was the greatest risk, but they also wanted a restrained government to do certain functions that likewise were to protect the life, liberty and property (think income, assets, etc.) of the people.

Next, it worth mentioning that in state such as Texas, their industry regulator – Joe Garcia from the TDHCA – and the TxMHA have a good working relationship. Is there a role for reasonable regulation? One that is fair and balanced for consumers, business and all involved? Many readers say, "Sure," again within the notion that such laws and regulations ought to protect life, liberty and property to the highest degree possible.

But just as “the power to tax is the power to destroy” – Chief Justice John Marshall – so too may the power to over-regulate be destructive too.

It wasn't Thomas Jefferson or Barry Goldwater who said (as some mistakenly cite) the quote below, but President Gerald R. Ford during a joint session of Congress, who stated:

“They know that the government that is big enough to give you everything you want is also
big enough to take from you everything that you have.”

I'm from the CFPB and I'm here to help

Against that backdrop, concerned messages came in – not for publication – from industry pros – some shocked, others furious – at the cease and desist (C&D) rule promulgated by the CFPB.

Barbara S. Mishkin posted on June 18th, 2014 in CFPB Enforcement the following:

“In a notice published in today’s Federal Register, the CFPB has announced that it has adopted its interim final rule on temporary cease-and-desist orders (C&Ds) without change. The final rule takes effect on July 18, 2014.

The CFPB is authorized to issue temporary C&Ds under Section 1053(c) of Dodd-Frank. That provision authorizes a temporary C&D as an adjunct to a cease-and-desist proceeding brought under Section 1053 against a covered person or service provider. A temporary C&D is effective immediately upon service and remains in effect unless modified or terminated administratively by the CFPB or set aside on judicial review.”

What does this mean? That the CFPB can shut you down immediately, by serving the “C&D.” What happened to due process under the law, as safeguarded by our Constitution?

Imagine if YOU or your operation got a C&D from the CFPB. You could be effectively put out of business, and then would have to fight big brother with their huge war chest, in order to change that outcome.

But that's not all.

No Safe Harbor?

Ari Karen in National Mortgage News wrote,

“We already knew that the safe harbor for qualified mortgage loans did not protect lenders from common law and statutory claims that predated the ability to repay laws. In other words, those liabilities that existed prior to ATR laws continued to apply to QM loans. However, lenders believed that by originating QM loans they were protected from ATR claims. After last week, that may not be true.”

Aren't we seeing precisely the kinds of over-reach in federal authority the founding fathers resisted when framing the Declaration of Independence? Quoting:

“…But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

This is not a partisan issue, it is a freedom issue! Due process under law offers safeguards that an administrative ruling such as a C&D does not.

We must hope that Governor Bobby Jindal – and other similar thinkers – are correct in saying that we will soon witness an awakening as a result of these and other abuses against our Constitution.

Jim Clayton selected his words carefully, but he made it clear in his interview with us that this time around, it won't be so easy to correct the over-reach found in Dodd-Frank. As Jim said, crafters of the bill anticipated that a correction would come, and they deliberately made it difficult for Congress to regulate the CFPB or to change the law.

But that doesn't mean we should roll over and play dead. As Sam Zell said last year, we are strongly motivated to protect the property line. You and I, all should be no less motivated to safeguard our rights.

I want to point you back to Shawn Fuller's guest column, A Grassroots Call to Action. Now, more than ever, we need to band together as business professionals.

We need to do that in concert with our millions of home owners and residents, as former CFPB attorney, Bill Matchneer, said in a guest column.

Let's not forget what David Sterns, who served in the federal government and now heads up the Mortgage Bankers Association, told us how CFPB regulations are negatively impacting lending, which harms home sales, home values, the economy and so on. This is a good time to revisit his column, State of the Industry, Affordability is the key to Housing Recovery.

There is lots more we could talk about today, but the implications of these announcements are so serious, and it is occurring ever-more routinely in the U.S. government, that I want to focus your attention for today on these federal 'over-reach' issues. They will be tamed only by us pulling together.

What follows is part of a longer quote, and frankly a shade out of context. But Thomas Jefferson warned of the consequences of failure of the American people to control certain institutions:

“…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”

The lady who taught our high school typing class had us drill on the following sentence:

“Now is the time for all good people to come to the aid of their country.”

Let's not lose sight of the need for HR 1779 or S. 1828, but let's also get to work on the broader forces that are driving the need for such bills in the first place. ##

(Image credits: WikiCommons, posters (c) 2014 Lifestyle Factory Homes, LLC and CFPB spoof logo, Plus1Properties)

L. A. 'Tony' Kovach ManufacturedHomeLivingNews.com | MHProNews.com | Business and Public Marketing & Ads: B2B | B2C Websites, Contract Marketing & Sales Training, Consulting, Speaking: MHC-MD.com | LATonyKovach.com | Office 863-213-4090 Connect on LinkedIN: http://www.linkedin.com/in/latonykovach