When the Consumer Financial Protection Bureau unveiled a rulemaking intended to merge the mortgage disclosures required under the Real Estate Settlement Procedures Act and the Truth in Lending Act last month, the first thing everybody noticed was the length of the rule release. At 1,099 pages, the release is vast even by Dodd-Frank rulemaking standards. For instance, last year’s Volcker Rule proposal — highly criticized by the banking industry for its length and complexity — was a relatively scant 298 pages in length.
Recently, the bureau explained why it took so many pages to describe the forms. The agency noted that the proposed regulation is not 1,099 pages long. Most of those pages, 684 to be exact, make up the preamble to the rule.
“The preamble provides context for the proposed forms and regulatory changes,” the agency wrote in a July 31 blog post. “The mortgage market is big, and mortgage disclosure regulation has 43 years of history. Also, before writing the rule, we spent a lot of time talking to the industry and consumers and analyzing costs and benefits. That’s a lot of context, and that means a long preamble.”
CFPB Director Richard Cordray echoed those sentiments during a July 24 hearing before the U.S. House Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs.
“Some of our rules are longer than I would like because, in part, we are engaging in careful cost-benefit analysis,” Cordray said. “Moreover, the courts require, and are increasingly requiring the ability to review very careful analysis on this subject.”
The CFPB said some of the context it provided in the lengthy preamble is required by law. The agency also wanted to provide as much information as possible on its work in the interest of open government and to facilitate comments from the public.
“Explaining what we considered in writing the proposal makes it easier to craft specific responses or to draw our attention to something you think we’ve said,” the agency wrote. “Comments that provide new insight or information can be the ones that have the greatest impact on what we do next.
Guidance discussing the application of the regulations takes up 205 pages of the rule release, while the new regulations themselves and amendments intended to ensure the regulations don’t conflict with other regulations total 209 pages.
The CFPB noted Cordray’s signature gets its own page.
“We don’t expect a lot of comments on that page,” the agency wrote.