CFPB – Page 3 – Consumer Financial Services Watch

LIGHT READING FOR THE DOG DAYS OF SUMMER: CFPB FINALIZES AMENDMENTS TO MORTGAGE SERVICING REGULATIONS

Aug 08 2016

By Brian M. Forbes, Andrew C. Glass, Gregory N. Blase, Robert W. Sparkes III and Matthew N. Lowe

On August 4, 2016, the Consumer Financial Protection Bureau (“CFPB”) issued its final rule setting forth amendments and clarifications to mortgage servicing regulations. These changes follow a prior round of revisions to mortgage servicing regulations that went into effect in January 2014. Since proposing the amendments to the regulations in November 2014, the CFPB received and reviewed hundreds of comments. At just over 900 pages in length, the final rule addresses numerous areas of mortgage servicing, including the following:

Bridging the Great Divide: Collaboration Considerations for Banks and Marketplace Lenders

Jul 20 2016

By Anthony R.G. Nolan, Edward Dartley, Sonia R. Gioseffi, Joseph A. Valenti, Christopher J. Scully and Christopher H. Bell

Marketplace lending has grown dramatically over the last several years, but it still remains a nascent industry. As it continues to expand its reach, players in the industry and the traditional banking/investment sector are discovering the mutual benefits of cooperation. While marketplace lending often has been heralded as a disruptor of traditional banking, industry participants are being presented with opportunities to collaborate with banking institutions as the industry matures.

To read the full alert, click here.

It’s Time For An Upgrade — Outdated Technology Puts Mortgages Servicers At Risk For Increased CFPB Scrutiny and Potential Servicing Violations

Jun 27 2016

By Brian M. Forbes, Soyong Cho, and Hollee M. Watson

More than two years have passed since the Consumer Financial Protection Bureau (“CFPB”) implemented comprehensive amendments to the loan servicing provisions of Regulation X. Mortgage servicers have had to invest in technology and human capital to keep up with new regulatory requirements while saddled with expanded duties to respond to borrower inquires, disputes, and requests for information, in addition to new and extensive loss mitigation requirements. Outdated technology has put servicers at risk for increased enforcement and litigation issues. But, as the CFPB has noted, the problems are not “insurmountable.”

U.S. District Court (Again) Rules that Parties Can Challenge a CFPB Information Request Without Revealing Their Identities

Jun 20 2016

By: Ted Kornobis

Last week, a federal court issued an opinion supporting the ability of an entity to file a court challenge to Consumer Financial Protection Bureau (“CFPB”) information requests without necessarily needing to “out” itself as a potential investigation target. Specifically, the court reaffirmed a prior ruling that recipients of a CFPB civil investigative demand (“CID”) who were potential targets of an enforcement action could challenge the CFPB’s attempt to take certain testimony by proceeding as “John Doe” plaintiffs in a federal injunctive action. The district court first allowed the plaintiffs to proceed pseudonymously late last year, and last week’s order denied the CFPB’s motion for reconsideration. A description of the case background and judge’s original decision may be found in our earlier post on this case.

Payday Loans Under Attack: The CFPB’s New Rule Could Dramatically Affect High-Cost, Short-Term Lending

Jun 06 2016

By Jennifer J. Nagle, Robert W. Sparkes, III, Gregory N. Blase, and Hayley Trahan-Liptak

On June 2, 2016, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) proposed a new rule under its authority to supervise and regulate certain payday, auto title, and other high-cost installment loans (the “Proposed Rule” or the “Rule”). These consumer loan products have been in the CFPB’s crosshairs for some time, and the Bureau formally announced that it was considering a rule proposal to end what it considers payday debt traps back in March 2015. Over a year later, and with input from stakeholders and other interested parties, the CFPB has now taken direct aim at these lending products by proposing stringent standards that may render short-term and longer-term, high-cost installment loans unworkable for consumers and lenders alike. At a minimum, the CFPB’s proposal seriously threatens the continued viability of a significant sector of the lending industry.

To read the full alert, click here.

CFPB Takes Aim at Marketplace Lenders

May 16 2016

By David Christensen

Last Fall, in its 2015 Rulemaking Agenda, the Consumer Financial Protection Bureau (“CFPB”) signaled its intent to “to develop rules to define larger participants in markets for consumer installment loans.”[1] Under the Dodd-Frank Act, the CFPB is authorized to issue “larger participant” rules to define entities in a particular market for consumer financial products or services. The issuance of such rules opens the door for supervisory and examination authority over such entities. Fast forward to Spring 2016, when the CFPB announced that it is accepting complaints from consumers regarding alleged problems with online marketplace loans, and it appears that the CFPB has marketplace lenders squarely in its sights.[2]

CFPB’s Proposed Rule Would Put the Brakes on Pre-Dispute Arbitration Clauses in Consumer Financial Contracts

May 12 2016

By Andrew C. Glass, Robert W. Sparkes, III, Roger L. Smerage, Joshua Butera

Congress enacted the Federal Arbitration Act (“FAA”) in the 1920s to deter hostility toward arbitration. Despite numerous Supreme Court rulings over the decades upholding that goal, arbitration continues to face hostility. The Consumer Financial Protection Bureau (“CFPB”), for example, recently issued a proposed rule that would significantly expand the scope of the Dodd-Frank Act’s restrictions on arbitration agreements. The rule would severely restrict the use of pre-dispute arbitration clauses by providers of consumer products and services, primarily by prohibiting the use of class action waivers. And under the proposed rule, the CFPB would exercise close scrutiny over arbitration proceedings by requiring consumer financial services providers to report certain information about arbitrations to the CFPB.

To read the full alert, click here.

More To Know About “Know Before You Owe”: CFPB Acknowledges TRID Challenges and Announces July 2016 Notice of Proposed Rulemaking

May 10 2016

By Jennifer Janeira Nagle and Hollee Watson

The TILA-RESPA Integrated Disclosure rule (“TRID”) went into effect on October 3, 2015, and has posed significant implementation challenges industry-wide. Those challenges have been articulated to the Consumer Financial Protection Bureau (“CFPB”) by industry participants, trade groups, and congressional leaders alike. In response, the CFPB has issued guidance in the form of letters, webinars, educational videos, guides, and factsheets. Notwithstanding this informal guidance, and despite the CFPB’s assurances that its initial compliance examinations would be “diagnostic and corrective, not punitive,” see December 29, 2015 Letter from CFPB Director Richard Cordray to the Mortgage Bankers Association, the mortgage industry continues to experience uncertainty and risk in its efforts to implement TRID’s sweeping changes to TILA and RESPA. See January 29, 2016 Mortgage Industry Trade Group Letter to CFPB; March 11, 2016 Sen. Bob Corker Letter to CFPB.

In the wake of pressure for more formal guidance, the CFPB recently announced that it will issue a Notice of Proposed Rulemaking (“NPRM”) on TRID in late July. In an April 28, 2016 letter to mortgage industry trade groups, Director Richard Cordray acknowledged that “the implementation of the Know Before You Owe rule poses many operational challenges” and that “there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity.”

“A Bridge Too Far:” CFPB’s Authority Grab Rejected by Federal Judge

Apr 22 2016

By Soyong Cho and Ted Kornobis

Judge cautions new agency against “plow[ing] head long” beyond its jurisdiction

On April 21, 2016, the Consumer Financial Protection Bureau’s investigatory powers and civil investigative demand (“CID”) authority were soundly checked by federal district court judge Richard J. Leon. The Court denied the CFPB’s petition to enforce a CID issued to the Accrediting Council for Independent Colleges and Schools (“ACICS”) seeking information regarding accreditation of for-profit colleges, because the subject of the CID fell squarely outside of the CFPB’s enforcement authority. [1] Judge Leon’s ruling demonstrates that the right to judicial review can provide a backstop to an overly-aggressive and broad investigation.

D.C. Circuit Appears Poised to Overturn First CFPB Enforcement Action to Reach the Court: Five Key Takeaways From Yesterday’s Oral Argument

Apr 13 2016

By Jon Eisenberg and Irene C. Freidel

Yesterday, the U.S. Court of Appeals for the D.C. Circuit heard oral argument in the first CFPB enforcement case to reach the court. The court appears poised to reverse the CFPB’s decision and also to rule that the concentration of power in a single CFPB Director not subject to removal at will by the President violates the Constitution’s separation of powers. We discuss five key takeaways from the oral argument that are important not only to the parties in the case but potentially to others facing enforcement actions by the CFPB or other government agencies.

To read the full alert, click here.

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