By: Kristie D. Kully , Anaxet Y. Jones
Earlier this week, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule (the “Final Rule”) that attempts to fix the double-counting problem when including loan originator compensation in the points and fees calculation for Qualified Mortgages (“QMs”) and high-cost loans under Section 1026.32 (“HOEPA Loans”). Read More
By: Melanie Brody , Stephanie C. Robinson
On March 21, 2013, the CFPB issued CFPB Bulletin 2013-02: Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act. In this bulletin, the CFPB describes its understanding of how the indirect auto lending industry works, and describes its view on how ECOA applies to indirect auto lending—including its theory on lender liability for disparities in dealer markups. The guidance offers advice to bank and nonbank indirect auto lenders within the CFPB’s jurisdiction on how they can limit their indirect auto fair lending risk. Read More
By: Jonathan D. Jaffe , Amanda D. Gossai
The CFPB recently released a Bulletin directed to residential mortgage servicers and subservicers (servicers). The purpose of the Bulletin is to put servicers on notice that the CFPB intends to focus its supervisory process on mortgage loan servicing transfers. If the CFPB determines that a transferor or transferee servicer has engaged in any acts or practices that are unfair, deceptive, or abusive, or that otherwise violate federal consumer financial laws and regulations (including RESPA, FCRA, and FDCPA), the CFPB indicated its intent to take appropriate supervisory and enforcement actions and seek all appropriate corrective measures, including remediation of harm to consumers. Read More
By: Stephanie C. Robinson, Rebecca Lobenherz
This week the Consumer Financial Protection Bureau (“CFPB”) released an addendum to its Supervision and Examination Manual focused on the examination of private student lenders. The Student Lending Examination Procedures, available on the CFPB’s website, provide guidance to CFPB examiners on how to review private student lenders for compliance with consumer financial protection laws. The CFPB has supervisory authority over both very large banks and nonbanks that make private student loans. Read More
By: Jonathan D. Jaffe , Amanda D. Gossai
Last week, the Consumer Financial Protection Bureau (the “CFPB”) released its first Supervisory Highlights report, featuring issues that CFPB examiners discovered in the supervision period between July 21, 2011 and September 30, 2012. One issue upon which the CFPB focused was effective compliance management systems (“CMS”). This is not surprising given the CFPB’s focus since its inception on CMSs. Read More
The Consumer Advisory Board (“CAB”) held its inaugural meeting on September 27th in St. Louis. Composed of bank and credit union executives, consumer advocates and community development officials (click here to view the biographies), the CAB is required by the Dodd-Frank Act, which mandates that the CAB “provide information on emerging practices in the consumer financial products or services industry” to the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”). The CAB replaces the Consumer Advisory Council, which for 35 years advised the Federal Reserve Board on consumer financial services matters.
By: Nanci L. Weissgold, Kerri M. Smith
Although Congress mandated the sunset of the Home Valuation Code of Conduct (HVCC) in the Dodd-Frank Act, Congress effectively codified many of its requirements, including the obligation to furnish a copy of an appraisal to borrowers. To implement this statutory change to ECOA, the CFPB proposes to amend Regulation B to make the furnishing of “any and all written appraisals and valuations” developed in connection with the application for a first-lien loan mandatory, rather than at the consumer’s request. Comments to the ECOA proposed rule are due on October 15, 2012.
By: David L. Beam
The gift card provisions of the Electronic Funds Transfer Act (“EFTA”) and Regulation E (which implements the EFTA) do not allow funds on most gift cards to expire sooner than five years after issuance (or, if the card is reloadable, five years after the last load). But the unclaimed property laws in some states require gift card issuers to turn over the funds on dormant gift cards sooner than five years after the last activity. The state unclaimed property laws generally relieve the issuer of the obligation to honor a card after it has turned the funds over to the state. Instead, the owner of the card must apply to the state treasurer to recover the funds. (If the card issuer decides to honor the card anyway—and many do for customer service reasons—then the issuer may apply to the state for reimbursement.)
For those who wondered how the Consumer Financial Protection Bureau (the “Bureau”) would seek to convert portions of the global foreclosure settlement into federal law, last Friday’s proposed servicing rules provide an answer. The Dodd-Frank Act (“DFA”) amended the Real Estate Settlement Procedures Act (“RESPA”) in several ways to address discrete loan servicing issues, such as escrow accounts, flood insurance, and qualified written requests. What it did not do, however, is address loss mitigation or foreclosure. Many thought that the Bureau would use its general authority to issue regulations prohibiting unfair, deceptive or abusive acts and practices to craft loss mitigation requirements, but that authority would not afford consumers with a federal private right of action. Read More
In one of the most anticipated actions of the Consumer Financial Protection Bureau’s “Know Before You Owe” campaign, on July 9, 2012, the CFPB published 1,099 pages of a proposed regulation to combine mortgage disclosure forms required under the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending Act (“TILA”). As the Dodd-Frank Wall Street Reform and Consumer Protection Act charged the CFPB with creating combined disclosure forms and proposing regulations implementing such forms by July 21, 2012, the Bureau met that deadline with a few weeks to spare. Now mortgage companies, title insurance and settlement agents, real estate brokers, and all other interested parties are digging in to the proposed regulations in an attempt to understand how the Bureau’s proposed changes could impact their businesses. Industry participants should have plenty of time to digest the proposed regulations; public comments on the proposed changes to the calculation of the finance charge are due on September 7, 2012, while all other comments on the proposed combined disclosures are due on November 6, 2012. Read More
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