Politics

As millions of Americans fall behind on mortgages, CFPB nominee Rohit Chopra wants to stave off

Staving off another housing crisis is a top priority for the nominee to head the Consumer Financial Protection Bureau. Rohit Chopra, President Joe Biden’s pick for the job, told the Senate Banking Committee during a confirmation hearing Tuesday the agency charged with making sure financial institutions treat customers fairly needs to be ready for housing fallout due to the coronavirus pandemic.

“My intuition is we have to be ready for potentially looming problems when it comes to forbearances that might flip to foreclosures,” said Chopra. “I don’t want to see another foreclosure crisis in this country. And we need to do everything we can to make sure the laws are being followed and homeowners can navigate their options.” 

The agency on Monday released a report warning that more than 11 million families are at risk of losing their housing amid the coronavirus pandemic. The report says 8.8 million families are behind on rent and another 2.1 million families have fallen at least three months behind on their mortgages last year, an increase of 250 percent. Homeowners owe nearly $90 billion in missed payments, a level not seen since the height of the Great Recession. A federal ban on housing foreclosures runs through June, but it’s unclear what will happen when it ends. 

“Many families are going to struggle. They have lost income, they may not be able to resume and we should make sure that they can stay in their homes when they have that ability to do so and not be deceived about what their options are,” said Chopra, who is currently a commissioner on the Federal Trade Commission and was announced as the president’s nominee for CFPB director in January. “No one should be kicked out during a quarantine, particularly if they’ve been lied to.”

He said unlike in 2007, the CFPB, which was created in response to that housing crisis, has been entrusted to monitor mortgage markets, work with regulators at every level and has tools to help ward off risks. 

While millions are facing mounting housing concerns across the United States, another growing challenge is the student loan crisis. Chopra noted during his previous time serving in CFPB during the Obama administration, the agency announced student loan debt had crossed the $1 trillion threshold. The Federal Reserve estimates Americans now owe more than $1.7 trillion in student loans. 

“It’s one of the biggest consumer credit markets in our country after mortgages and we have to make sure that the law is being followed,” he said. 

Chopra also said that if confirmed, he would focus on data collection and how that data is being used. 

“I think there’s real questions about transparency,” Chopra said, acknowledging concerns about discrimination. “Looking at how big data, particularly by large platforms who have detailed behavioral data on all of us, is something we must carefully look at because it will change financial services fundamentally.”

Chopra is seeking to lead an agency that has been highly criticized since its inception under President Barack Obama. During the hearing, Republicans took issue with its authority, including enforcement capabilities, as well as its structure. 

“It was created by our Democratic colleagues through the Dodd-Frank Act as arguably the most unaccountable agency in the history of the federal government,” said Ranking Member Pat Toomey of Pennsylvania during opening remarks. “It’s an agency with a single director who until recently even the president of the United States Could not remove.”

That changed after the Supreme Court found it unconstitutional in a 5-4 decision in 2020. Toomey argued it is still not accountable to Congress through the appropriations process. 

Meanwhile, Democrats took issue with the leadership of the agency over the past four years under the Trump administration. Senator Elizabeth Warren accused appointees of acting like they worked for big banks and gutting enforcement powers.

Chopra indicated there would be increased enforcement under the new administration.

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