Lender-placed insurance continues to simmer amid regulatory scrutiny and ongoing court battles, according to a recent BuckleySandler analysis. While the largest LPI class-action lawsuits have settled, servicers and LPI providers remain entangled in appeals of those settlements and in individual borrower lawsuits, said authors Robyn Quattrone and Stephen LeBlanc, partner and associate, respectively, with the Washington, DC, law firm. In addition, federal ...

The CFPB recently warned financial institutions under its supervisory authority not to hide behind third-party non-disclosure agreements (NDAs) as a way of blocking the bureau’s access to all the supervisory information it needs from those under its charge. “The CFPB is aware that some supervised financial institutions may have entered into non-disclosure agreements that purport to restrict the institution from sharing information with a regulator, or to require the institution to notify a third party when it shares information,” the agency said. However, NDAs “neither alter the legal restrictions on the disclosure of confidential supervisory information (CSI) nor impact the CFPB’s authority to obtain information from covered persons and service providers in the exercise of its supervisory authority.”Further, a ...

Last week, the CFPB ordered Continental Finance Company, LLC, a subprime credit card originator, marketer and servicer based in Newark, DE, to refund approximately $2.7 million to consumers who were charged allegedly illegal fees. The bureau also imposed a $250,000 civil penalty on Continental. The CFPB alleged that Continental “engaged in deceptive acts or practices by making false statements regarding certain fees charged consumers in connection with credit cards,” and by “representing, expressly or impliedly, that certain security deposits consumers provided for certain credit cards” would be insured by the Federal Deposit Insurance Corp. The company also violated the Truth in Lending Act and its implementing Regulation Z by requiring some consumers to pay fees exceeding the 25 percent limit ...

Numerous current and former heavily indebted student borrowers who attended schools previously owned by Corinthian Colleges will see the outstanding amount they owe reduced by 40 percent, under the terms of a deal struck by the CFPB, the Department of Education and ECMC Group, the new owner of a number of the schools. The total debt relief amounts to $480 million. Back in September, the CFPB sued Corinthian Colleges Inc. for allegedly luring tens of thousands of students to take out private loans, known as “Genesis loans,” to cover expensive tuition costs by advertising bogus job prospects and career services. The bureau also alleged that Corinthian used illegal debt collection tactics to strong-arm students into paying back those loans while ...

Following up on a lawsuit it filed late last year, the CFPB last week filed a proposed consent order with a federal district court to require a Texas-based company, Union Workers Credit Services, to pay a penalty of $70,000, and to permanently ban it from offering any consumer credit products or services.The bureau alleges Union Workers duped thousands of consumers into signing up for a sham credit card. The CFPB is tapping its authority under the Consumer Financial Protection Act of 2010 to allege unfair, deceptive, and abusive acts or practices on the part of the company. The complaint also alleges violations of the Fair Credit Reporting Act. In December 2014, the CFPB sued the company over allegations that ...

The Mortgage Bankers Association notched a win for small, independent issuers after the Financial Accounting Standards Board agreed with the group’s position on the accounting of seriously delinquent loans in Ginnie Mae pools. At issue is whether companies that service pools with loans that are 90 days or more delinquent should put those loans on their balance sheet even if they have no intention of buying the loans out of the pool. According to the MBA, a Big Four accounting firm issued controversial guidance which would have been burdensome for small mortgage-backed securities issuers that have limited funding and no incentive or history of buying defective loans out of pools. After months of exchanges, FASB staff finally agreed with the MBA’s view that the decision process involves two steps. First, a loan must be 90 days or more delinquent and trigger ...

Wells Fargo and JPMorgan Chase settled with the CFPB and the Maryland Attorney General last week, resolving allegations of participating in an illegal marketing kickback scheme with Genuine Title, a title company that has since gone out of business. The government agencies alleged that Genuine Title gave the banks’ loan officers cash, marketing materials and consumer information in exchange for business referrals. The CFPB and the Maryland AG also took action against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, both of Baltimore, for their alleged involvement. The two government agencies are seeking $24 million in civil penalties from Wells Fargo and $600,000 in civil penalties from JPMorgan Chase. They also want $10.8 million from Wells ...

Ginnie Mae will soon introduce the third prong of a strategy to improve its oversight of participants in its mortgage-backed securities program – a performance scorecard for issuers – and monitoring of its risk. Essentially a “scorecard,” the Issuer Operational Performance Profile (IOPP) will enable issuers to better understand and comply with Ginnie Mae’s expectations. It also provides a way for issuers to measure and improve their performance and compare it to the performance of their peers. Final testing and training for IOPP began this winter, with deployment expected “in early 2015,” the agency said. Issuers will be scored monthly based on a series of metrics. Each issuer will be rated against its peers by applying a weighting algorithm and, in some cases, adjusting for certain control factors. Each issuer will receive two scores: one for operational management and ...

The CFPB is likely to throw its weight around just as much this year as it did last year, only its focus and intensity will be more diverse in terms of the industries that will be affected. Back in 2014, much of the regulatory concern among lenders had to do with the bureau’s ability-to-repay rule with its qualified mortgage standard, and to lesser extents its rules on mortgage servicing and loan originator compensation. Make no mistake. The mortgage industry is still in the CFPB’s crosshairs. The biggest payload to be delivered in this regard in 2015 is the long-awaited and much discussed integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. That rule ...

The CFPB’s proposal to reduce regulatory uncertainty for financial innovation through the selective use of “no-action” letters is based on a good idea but is likely to fail to meet its objective unless important changes are made, according to three industry trade groups. For instance, when it comes to submitting requests for a “no-action” letter, the set of products and services to which the bureau’s proposal may apply is difficult to identify, the American Bankers Association, the American Bankers Insurance Association and the Consumer Bankers Association said in a joint comment letter to the regulator. “On the one hand, the proposal requires that the product must not be well established; on the other, it may not cover ‘hypothetical products that ...