Bureau of Consumer Financial Protection (CFPB) – Page 3

CFPB to Section 8 of RESPA: Will You Be My Valentine?

Feb 16 2015

By: Holly Spencer Bunting, Phillip L. Schulman

The love affair continues between the Consumer Financial Protection Bureau (“CFPB”) and enforcement under Section 8 of the Real Estate Settlement Procedures Act (“RESPA”). On February 10, 2015, the CFPB announced a consent order with NewDay Financial, LLC (“NewDay” or the “Company”) involving alleged violations of the referral fee prohibitions under Section 8 of RESPA and deceptive marketing practices. Specifically, the CFPB alleges that NewDay paid “lead generation” fees to an unnamed veterans’ organization and a third-party company for the endorsement of the Company and referral of the organization’s veteran members to NewDay for mortgage financing. While the Company neither admitted nor denied the CFPB’s findings, the CFPB assessed a $2 million civil money penalty under the consent order. The facts as described in the consent order do not involve a typical marketing services agreement or lead generation agreement, but the consent order makes clear that endorsements of a company expressed through direct mail and email advertisements are considered to be referrals by the CFPB.

To read the full alert, click here.

CFPB Issues Guidance to Mortgage Lenders on Verifying Disability Income

Nov 20 2014

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

On Tuesday, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) issued a compliance bulletin, CFPB Bulletin 2014-03, to help lenders avoid discrimination against recipients of Social Security Administration (“SSA”) disability income in violation of the Equal Credit Opportunity Act and its implementing regulation, Regulation B.

Creditors may occasionally feel stuck between a rock and a hard place when underwriting mortgage loans for disability income recipients. On the one hand, creditors have a legal obligation to ensure that applicants are able to repay any credit extended. When an applicant receives public assistance, Regulation B expressly allows creditors to consider the length of time that such assistance is likely to continue. On the other hand, while SSA provides recipients with disability benefits documentation, that documentation generally does not detail how long benefits will last. Creditors seeking to responsibly underwrite mortgage loans must somehow make that determination on their own.

A Hard Rain Has Started to Fall A Product-by-Product Review of the CFPB’S First 60 Enforcement Actions

Nov 12 2014

By: Jon Eisenberg

Between July 17, 2012 and October 9, 2014, the Consumer Financial Protection Bureau brought 60 enforcement actions. According to our unofficial tally, they resulted in settlements requiring the payment of $2.2 billion in restitution, $174 million in CFPB civil money penalties, and, in a few cases, other forms of consumer relief. In this alert, we discuss the products and alleged practices that led to those recoveries. Our purpose is simple—what’s past is likely prologue when it comes to CFPB enforcement actions. Understanding the conduct that produced the first 60 enforcement actions will help companies avoid becoming one of the next 60 enforcement actions.

To read the full alert, click here.

CFPB Finalizes Rule Permitting Financial Institutions to Post Privacy Notices Online

Oct 30 2014

By: Kristie D. Kully, David A. Tallman, Jeremy M. McLaughlin

Last week, the CFPB last week finalized its rule permitting certain financial institutions to post their annual privacy notices online, claiming it will benefit consumers and financial institutions alike. The rule became effective on October 28, 2014, and applies to banks and non-banks within the CFPB’s jurisdiction.

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.

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

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

CFPB Widens RESPA Enforcement to Focus on Affiliated Business Arrangement Disclosures

Jun 03 2014

By: Holly Spencer Bunting, Anaxet Y. Jones

The CFPB once again has taken aim at affiliated business arrangements (“AfBAs”), only this time, it is targeting AfBA disclosures. In prior enforcement actions, the CFPB focused on the validity of the AfBA, bringing actions against alleged “sham” AfBAs. However, in its most recent enforcement action, the CFPB entered into a consent order with a real estate brokerage company, alleging that it referred consumers to its affiliate, but failed to provide an adequate AfBA disclosure. The CFPB also alleged that the brokerage company improperly required the use of its affiliate title insurance agency.

The CFPB Defines Foreign Remittance Transfer “Larger Participants”

Feb 24 2014

By: David L. Beam, Christopher G. Smith

The Dodd-Frank Act provided the CFPB with examination authority over, among others, “larger participants” of consumer financial product and service markets. Almost three years ago, the CFPB issued an Advance Notice of Proposed Rulemaking targeting various industries whose larger participants it was eyeing for regular examination, including money transmission. In January 2014, the CFPB issued a proposed larger participants rule for a subset of money transmitters – those engaged in foreign remittances. Read More

CFPB Publishes New Mortgage Servicing Exam Procedures

Feb 18 2014

By: Nanci L. Weissgold, Kerri M. Smith, Christopher Shelton*

*Mr. Shelton is not admitted to the practice of law in the District of Columbia.

The CFPB has released updated exam procedures for reviewing mortgage servicers, incorporating the Mortgage Servicing Rules (“the Rules”) that became effective on January 10, 2014. These updated exam procedures still focus on nine major modules covering routine servicing, default servicing, and foreclosure. However, they frequently cross-reference the TILA and RESPA exam procedures that were updated in November 2013 to reflect the Rules. Because of the overlap in coverage and the reliance on cross-referencing, the updated servicing exam procedures are shorter than the prior version of the CFPB’s Examination Manual, although there are some notable additions. Read More

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