Bureau of Consumer Financial Protection (CFPB) – Consumer Financial Services Watch

COVID-19: CFPB’s Proposed Mortgage Servicing Amendments Add Loss Mitigation Protections for Borrowers and Signal Heightened Expectations for Mortgage Servicers’ Operational Loss Mitigation Efforts

Apr 24 2021

By: Phoebe S. Winder, Ryan M. Tosi, and Stacey L. Gorman

On 5 April 2021, the Consumer Financial Protection Bureau (CFPB) solicited comments on proposed amendments to Regulation X,[1] which amendments are intended to assist mortgage borrowers impacted by the COVID-19 pandemic.[2] Though the proposal to extend the current foreclosure moratorium to January 2022 is gaining the headlines, it is important to note that the proposed amendments, if adopted, once again require modification to servicers’ existing loss mitigation programs in order to “maximize the likelihood that borrowers exiting forbearances have sufficient time to complete a loss mitigation application.”[3]

Potential Major Change for U.S. Prepaid Products: PayPal vs CFPB Court Vacates Two Significant Restrictions in CFPB’s Prepaid Account Rule

Jan 12 2021

By Judith Rinearson, Andrew C. Glass, Gregory N. Blase, and Hollee M. Boudreau

On 30 December 2020, the United States District Court for the District of Columbia entered an order invalidating two provisions of the “Prepaid Account Rule” (the Rule) promulgated by the Consumer Financial Protection Bureau (CFPB). Specifically, the order invalidated the Rule’s mandatory short form disclosure requirement and the requirement for a thirty-day delay before linking prepaid products to credit, on the basis that the CFPB had exceeded its statutory authority.[1]

COVID-19: Credit Reporting in the Age of COVID-19

Apr 30 2020

The CARES Act’s Impact on Furnisher Liability Under the Fair Credit Reporting Act

By Brian M. Forbes and Robert W. Sparkes, III

As part of the federal government’s efforts to provide relief from the economic impact of the COVID-19 pandemic to consumers, Congress took aim at financial services companies that provide consumer account information to credit reporting agencies (CRAs). The reporting activities of those companies, which are known as “furnishers” and include, among others, creditors, mortgage loan servicers and credit card account servicers, are governed by the Fair Credit Reporting Act (FCRA). [1] The Coronavirus Aid, Relief, and Economic Security (CARES) Act, [2] enacted on March 27, 2020, expressly amends FCRA and alters the duties of furnishers when reporting the status of accounts provided with COVID-19-related payment relief. [3] Despite the potential exposure carried by a violation of FCRA generally—either through private civil litigation, most notably class actions, or government enforcement—key defenses remain in place for furnishers to mitigate FCRA liability.

COVID-19: Impact on Consumer Financial Service Providers

Apr 01 2020

A Summary of Federal and State Statutes, Rules and Orders

By David E. Fialkow, Brian M. Forbes, and Jeffrey S. Patterson

The coronavirus (“COVID-19”) pandemic has been and will continue to be a major business disrupter that will have a substantial impact on the consumer financial services industry in the weeks and months to come. Notably, federal, state and local governments and agencies are acting swiftly and changing the rules by which consumer financial services companies are to do business in the short and long term. K&L Gates LLP (“K&L Gates”) has developed a COVID-19 Task Force to closely monitor these developments and is tracking them in several jurisdictions across the firm’s footprint. Below is a summary, current as of March 30, 2020, of key new and proposed statutes, rules, and orders that are likely to impact consumer financial services companies. Keeping track of these almost daily developments to foreclosure, eviction, debt collection, student loans and other business lines, which vary state to state, is critical for consumer financial services companies to respond to their customers. As with previous nationwide crises, how these companies implement and apply these changes will have a substantial impact on post-pandemic compliance, litigation, and risks. K&L Gates has team members assigned to each of the states listed below who are able to help answer your questions and help companies address ongoing issues associated with the pandemic. Please click on a jurisdiction below for more information:

The CFPB and the Fed Adjust Regulation CC for Inflation

Aug 28 2019

By John ReVeal and Daniel S. Cohen

On June 24, 2019, the Consumer Financial Protection Bureau (“CFPB”) and the Federal Reserve Board (“Fed”) (collectively, the “Agencies”) amended Regulation CC, which implements the Expedited Funds Availability Act (the “EFAA”), to adjust for inflation the amount of funds depository institutions must make available to their customers after funds have been deposited and the civil liabilities for failing to meet these obligations (the “Amendment”). However, depository institutions will not need to adjust their compliance procedures right away. To “help ensure that institutions have sufficient time to implement the adjustments,” the Agencies set July 1, 2020 as the compliance deadline. Below is a summary of the key funds availability rules and how they are changed (or not) by the Amendment.

California Continues Its Role as a Privacy Vanguard: California Consumer Privacy Act Of 2018

Aug 03 2018

By Julia B. Jacobson, Jeffrey S. King, Alidad Vakili

On June 28, 2018, California Governor Jerry Brown signed into law the California Consumer Privacy Act of 2018 (“CCPA”).[2] CCPA grants new privacy rights to Californian residents and applies a notice and consent framework to most businesses operating in California that collect personal information from those residents.

CFPB Left with Rulemaking to Modify or Delay Payday Rule

Jun 14 2018

By: Jennifer Janeira Nagle, Robert W. Sparkes, Scott B. Hefferman

On Tuesday, June 12, 2018, a Texas federal judge denied a joint request from the Consumer Financial Protection Bureau (“CFPB”) and two payday-lending trade groups to stay the August 2019 deadline for industry compliance with the Payday Loan Rule (the “Rule”). The decision was issued in Community Financial Services Association of America, Ltd., v. Consumer Financial Protection Bureau, No. 1:18-cv-295-LY, an action that was filed in April 2018 by the trade groups against the CFPB, seeking to invalidate the Rule as arbitrary and capricious in violation of the Administrative Procedures Act (“APA”), among other things. (For more about the litigation, click here.) In late May 2018, the plaintiff trade groups and the defendant CFPB jointly asked the Court to stay the Rule’s compliance deadline, but the Court’s decision Tuesday quickly and summarily rejected that request. The Court stayed only the litigation, leaving August 2019 as the operative date for industry participants to comply with the Rule.

Another Shot at the Target: CFPB Payday Loan Rule Faces New Challenge from Trade Groups

Apr 11 2018

By Jennifer Janeira Nagle, Robert W. Sparkes, III, Hayley Trahan-Liptak

The Consumer Financial Protection Bureau’s Payday Loan Rule (the “Rule”), with a looming compliance deadline in August 2019, is facing yet another attack—this time from trade groups seeking relief directly from the courts. On April 9, 2018, two payday lending industry trade associations — the Community Financial Services Association of America, Ltd. and the Consumer Services Alliance of Texas — filed suit in the U.S. District Court for the Western District of Texas against the Consumer Financial Protection Bureau (“CFPB”) and its Acting Director, Mick Mulvaney, seeking an order enjoining and setting aside the Rule.

SAVED BY THE EN BANC: CFPB Appears Here To Stay

Feb 12 2018

By Andrew C. Glass, Daniel F. C. Crowley, Jennifer Janeira Nagle, Brandon R. Dillman

The Consumer Financial Protection Bureau (“CFPB” or “Bureau”) has been an agency under fire. Acting Director Mick Mulvaney has begun to institute significant changes at the Bureau. And last year, a panel of the D.C. Circuit Court of Appeals held that the Bureau’s leadership structure – a single director who can be removed only for cause – violates the separation of powers requirement of Article II of the U.S. Constitution. But in a long awaited en banc decision, the D.C. Circuit reversed that panel’s decision. Rather, in PHH Corp. v. Consumer Financial Protection Bureau, the court held that the Bureau’s structure is consistent with separation of powers principles. As discussed below, businesses subject to the CFPB’s supervisory and enforcement authority will need to continue to remain vigilant.

To read the full alert, click here.

Back from the Dead: The D.C. Circuit Breaths Life Into RESPA Section 8 Safe Harbor

Feb 05 2018

By Brian M. Forbes, David D. Christensen and Matthew N. Lowe

Through its recent en banc decision in PHH Corp. v. Consumer Financial Protection Bureau, the D.C. Circuit reinstated the holding of the three-judge panel regarding the safe harbor provision in Section 8(c) of the Real Estate Settlement Procedures Act (RESPA). Specifically, the court reaffirmed that under Section 8(c), payments made by one settlement service provider to another do not violate Section 8(a), even if made in connection with a captive relationship or a referral, when the payments are reasonably related to the market value of the goods, services, or facilities provided. Although potentially overshadowed by the portion of the en banc court’s holding that the leadership structure of the Consumer Financial Protection Bureau (CFPB) is constitutional, the panel court’s reinstated holding regarding RESPA’s Section 8(c) safe harbor is notable and important for the simple confirmation that the safe harbor “is what it is.”

To read the full alert, click here.

Catagory:Bureau of Consumer Financial Protection (CFPB)