While President Biden’sexecutive order issued last week on competition is targeting large technology companies using their market power to force mergers and crush smaller rivals, mortgage-related businesses need to be aware of its specific requests of the Consumer Financial Protection Bureau regarding competition.
The order asks CFPB to usethe unfair, deceptive abusive acts and practices portion of the Dodd-Frank Act “to ensure that actors engaged in unlawful activities do not distort the proper functioning of the competitive process or obtain an unfair advantage over competitors who follow the law.”
However, as it is written, UDAAP is not a statute that typically deals with businesses using their market power to stifle competition, Jenny Lee, a partner in Arent Fox’ Complex Commercial Litigation group pointed out.
But it can have some applicability when it comes to consumer harm, she said.
“If business practices involve something that was allegedly a material misrepresentation to the consumer and the consumer was reasonable in relying on it, than that would be the kind of thing that falls under the UDAAP umbrella, but not the kind of thing that would be straight-up anti-competition like antitrust litigation or monopolies or tying arrangements,” Lee said.
So the Biden administration could be using UDAAP “in order to attack, indirectly, the problem of lack of fairness in the marketplace,” Lee said. That is actually a throwback to the mission of the CFPBas conceived by now-Sen. Elizabeth Warren, D.-Mass.
“If I’m mortgage company A, and my competitor company B over there is violating consumer protection laws, it’s actually not competitive for me, a law abiding company,” said Lee. “So in other words, it’s just the concept that the marketplace really needs everyone to play by the same rules of the road; it’s not that cheaters are competing in a way that gives them an unfair advantage over other businesses.”
Another section of Dodd-Frank specifically mentioned in the order deals with consumer dataand the right to access information. That is in addition to the call to the Federal Trade Commission to monitor “unfair data collection and surveillance practices that may damage competition, consumer autonomy and consumer privacy.”
While Attom Data Solutions might not be directly affected by the order, “where it may impact us is if it impacts some of our customers, our customers are very large enterprises,” said CEO Rob Barber. “And to the extent that they are impacted, that could trickle down and impact us in some ways.”
Many relationships in the mortgage technology business are not straight forward. “The data world tends to be a world where companies have kind of multi-dimensional relationships,” Barber said. “A company could be a customer of yours in one area and a competitor in another area, and a supplier in the third area.”
Attom has partnerships withICE Mortgage Technology, the dominant player in loan origination systems, and Black Knight, which occupies the same space for servicing platforms.
“What the government is paying attention to now is vertically integrated companies that are moving up and down a particular value chain,” Barber said.
Attom’s role in the chain is as a data aggregator and distributor. “We are not a heavy product and application company, which means that we are not trying to build end to end solutions for end user customers,” Barber said. “So you don’t see Attom out there acquiring companies that all contribute somewhere in the mortgage origination value chain.”
Attom recently purchased GeoData Plus, a property database that provides its customers access to property reports, valuation and prospecting tools.
The data side of the technology realm doesn’t have a competition problem; if anything, the ability to aggregate data at scale is increasing, not decreasing, Barber explained.
“You’re seeing many more companies come into various corners of the data worlds that didn’t exist five or 10 years ago,” he continued. “And, we think that’s just going to continue as barriers come down to aggregate data at scale.”