Bureau of Consumer Financial Protection (CFPB) – Page 11

K&L Gates Legal Insight: The CFPB Weighs in on Marketing Services Agreements

Oct 03 2014

By: Phillip L. Schulman, Holly Spencer Bunting

The Consumer Financial Protection Bureau (“CFPB”) has, for the first time, publicly expressed views on marketing services agreements (“MSAs”) under Section 8 of the Real Estate Settlement Procedures Act. After months of rumors regarding the CFPB’s investigation, it issued a consent order against Lighthouse Title, Inc., a Michigan title insurance agency that had entered into a series of MSAs with various settlement service providers (“Consent Order”). Although the Consent Order fails to describe the nature of the services performed under the agreements, it clarifies the CFPB’s concerns regarding methods used in determining the payments under such agreements. The Consent Order also raises troubling questions about how the CFPB interprets Section 8 of the Act, since many of those interpretations seem to be at odds with guidance previously offered by the U.S. Department of Housing and Urban Development. This alert provides a brief background regarding MSAs, highlights issues raised by the CFPB Consent Order and discusses lessons learned for structuring new and existing MSAs.

To read the full alert, click here.

2013 HMDA Data is Now Available; Mortgage Lenders Should Consider Evaluating Redlining Risk

Sep 25 2014

By: Melanie Brody, Anjali Garg*
*Ms. Garg is not admitted in D.C. She is supervised by Stephanie Robinson, a member of the D.C. Bar.

It has been a busy week in the fair lending space. Last week, the CFPB issued a white paper describing its proxying methodology for imputing race and ethnicity when analyzing fair lending compliance on non-mortgage credit products along with a proposed rule to oversee nonbank auto finance companies. This week, the Federal Financial Institutions Examination Council released the 2013 Home Mortgage Disclosure Act (“HMDA”) data, and the Federal Reserve released its own analysis of the data.

CFPB Proposes New Rule to Oversee Nonbank Auto Finance Companies

Sep 19 2014

By: Melanie Brody, Anjali Garg*
*Ms. Garg is not admitted in D.C. She is supervised by Stephanie Robinson, a member of the D.C. Bar.

The CFPB proposed a new rule on September 17, 2014, that would enable the Bureau to oversee nonbank auto finance companies. With the proposal, the CFPB takes another step toward expanding its supervisory authority over nonbanks. The Bureau released the proposed rule along with a report on recent examinations of bank auto lending activities and a white paper describing its proxying methodology for imputing race and ethnicity when analyzing fair lending compliance on non-mortgage credit products.

Big Data takes a Big Step: CFPB Offers Insight into Its Fair Lending Proxy Methodology

Sep 18 2014

By: Melanie Brody, Anjali Garg*
*Ms. Garg is not admitted in D.C. She is supervised by Stephanie Robinson, a member of the D.C. Bar.

The Home Mortgage Disclosure Act requires residential mortgage lenders to collect race and ethnicity information about loan applicants, and lenders, regulators and others routinely use this information to statistically evaluate whether there is a risk that a lender has discriminated against borrowers on a prohibited basis. With regard to other types of credit, with respect to which federal law generally prohibits the collection of demographic information, lenders and other interested parties must impute credit applicants’ race and ethnicity using proxies. For example, a lender could use the racial composition of the census tract in which a consumer resides to assign an assumed race to the consumer. Although proxying provides a way to evaluate fair lending risk in the absence of actual demographic data, there historically has not been a generally-accepted methodology for performing the proxy process, and this has made it particularly challenging to evaluate fair lending compliance for non-mortgage credit products.

Developments in Cybersecurity Law Governing the Investment Industry

Aug 20 2014

By: Luke T. Cadigan, Sean P. Mahoney

The Investment Lawyer, Vol.21, No. 8, August 2014
Reprinted with Permission

Regulatory focus on cybersecurity is intensifying. Unlike other compliance matters, the deterrent effect of enforcement actions following data security breaches may be insufficient to achieve regulators’ purpose of ensuring that technology platforms are secure before an event occurs. Thus, in the area of cybersecurity, regulators appear to be shunning granular, prescriptive rules and instead insisting upon more holistic management of cybersecurity risk. Read More

What’s the Deal With the CFPB and Bitcoin?

Aug 14 2014

By: David L. Beam

The Consumer Financial Protection Bureau just released an advisory for consumers on digital currencies (a.k.a. “virtual currencies”) like Bitcoin. But the thing that’s most extraordinary about the advisory on digital currency is what it doesn’t say. Read More

CFPB Issues Proposed Rule to Impose Additional Reporting Requirements Under Regulation C

Jul 28 2014

By: Melanie Brody, Stephanie C. Robinson, Jay M. Willis

On Friday, the CFPB released a proposed rule that would significantly expand the scope of financial institutions’ mortgage lending data reporting requirements under the Home Mortgage Disclosure Act, or HMDA.

First enacted in 1975, HMDA was originally intended to allow both regulators and the public at large to examine whether lenders were effectively serving the credit needs of the communities in which those lenders were located. To that end, the Act required covered institutions to collect and publicly disclose data regarding their mortgage lending activities, thus allowing both public officials and the mortgage lending industry the means necessary to respond to areas of need. Subsequent amendments to the Act, designed to assist regulators in monitoring compliance with fair lending laws, required that covered financial institutions also report the race, ethnicity, sex, and annual income of both applicants and borrowers for home mortgage loans (and mortgage loans purchased by the institution). Read More

Mortgage Broker or Mini-Correspondent: CFPB Issues Policy Guidance on Questions for Consideration

Jul 18 2014

By: Holly Spencer Bunting, Anaxet Y. Jones

In response to what the CFPB views as an increasing trend among mortgage brokers shifting to a mini-correspondent lender model, the CFPB recently issued “Policy Guidance on Supervisory and Enforcement Considerations Relevant to Mortgage Brokers Transitioning to Mini-Correspondent Lenders” (“Policy Guidance”) regarding the application of Regulations X (RESPA) and Z (TILA) to transactions involving mini-correspondent lenders. In addition to providing background on the differences between brokers and mini-correspondents and certain requirements of Regulations X and Z, the Policy Guidance identifies questions the CFPB may consider when reviewing mini-correspondent transactions and the relationship between the mini-correspondent lender and the investor as part of CFPB examinations or enforcement actions. The CFPB, however, stops short of drawing any lines in the sand between what it considers to be brokered transactions and bona fide secondary market transactions under the mini-correspondent model. Read More

K&L Gates Webinar: What’s What with Marketing and Services Agreements under RESPA

Jul 08 2014

By: Phillip L. Schulman

Interest in Marketing and Services Agreements (MSAs) has skyrocketed. No doubt, the Qualified Mortgage 3 percent cap calculations have somewhat dampened enthusiasm for affiliated businesses. As a result, real estate brokers and builders see MSAs as a viable option — and that means lenders, title companies, and closing agents have taken notice. While MSAs are lawful, the RESPA requirements for these arrangements, like many aspects of RESPA, are not crystal clear. A HUD Interpretive Rule issued in June 2010 provides some guidance, but until the Consumer Financial Protection Bureau makes its intentions known, settlement service providers must take care to adhere to the exemption standards set forth in Section 8(c)(2) of RESPA. Read More

Recent Force-Placed Insurance Initiatives by FHFA & CFPB Suggest Divergent Priorities

Jun 12 2014

By: Nanci L. Weissgold, *Christopher Shelton
* Mr. Shelton is not admitted in D.C. Supervised by Nanci Weissgold, member of D.C. Bar.

Force-placed insurance is under continuing scrutiny by the Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB). However, each agency’s focus is slightly different. FHFA, perhaps galvanized by a New York enforcement action, has focused on conflicts of interest between servicers and insurers. The CFPB has focused on erroneous placing of insurance and excessive charges. Read More

Catagory:Bureau of Consumer Financial Protection (CFPB)