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Inside the CFPB

October 1, 2012

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CFPB Makes a Statement in Discovery Enforcement Action

The CFPB said it wants to make it more expensive for lenders to break the law than to obey it. That message was sent loud and clear last week when the bureau and the Federal Deposit Insurance Corp. announced a $200 million joint enforcement action against Discover Bank over some of the company’s credit card marketing practices.Discover will also have to pay $14 million in a civil money penalty to be split 50/50 by the CFPB and the Department of the Treasury. The $200 million is to be divided among more than 3.5 million... Read More

Republican State AGs Resist Info-Sharing Agreement with CFPB

Prospects for the long-awaited information-sharing agreement between the state attorneys general and the CFPB are suddenly noticeably darker. Not only has a group of Republican state AGs apparently refused to sign the pending memorandum of understanding, three GOP state AGs have joined a lawsuit that challenges the constitutionality of the law that created the bureau. News accounts emerged last week that a number of Republican state AGs have reportedly refused to sign the MOU that was developed to protect... Read More

CFPB Still Deciding Its Course Of Action on Qualified Mortgages

Just exactly how the CFPB plans to define “qualified mortgages” in its forthcoming ability-to-repay proposed rule remains uncertain after the bureau’s chief, Richard Cordray, testified before the House Financial Services Committee last month. Cordray indicated the bureau has not yet decided whether it plans to adopt a safe harbor, which is the industry’s preferred standard, or the rebuttable presumption approach, which is the standard consumer advocates are pushing for. He also suggested that some of the differences... Read More

CFPB Five-Year Strategic Plan Has 4 Key Goals, 11 Desired Outcomes

The CFPB has released its five-year strategic plan, including four key goals, 11 desired outcomes, and 25 strategies that indicate the actions the bureau plans to take to accomplish its outcomes. The plan also features 27 performance measures that the CFPB will track against specific targets in order to assess its progress toward achieving those outcomes, as well as four performance indicators that do not reflect specific targets. Its first two goals are to prevent financial harm to consumers while promoting good... Read More

Fed Inspector General Is Auditing The CFPB on Numerous Fronts

The Federal Reserve Office of Inspector General has a number of audits and evaluations of various aspects of the CFPB underway, and more are in the pipeline, according to the latest OIG work plan, which was updated recently. The reviews are a regular part of the Fed OIG’s responsibilities under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The OIG has one project underway that it expects to complete sometime during the third quarter of the year, and that is an evaluation of the bureau’s Consumer... Read More

CFPB Suggests Some Consumers Can’t Rely on Their Credit Scores

A new study by the CFPB of different credit scoring models found that for “a substantial minority” of consumers, different scoring models gave meaningfully different results. The study found that for 73 to 80 percent of consumers, different scoring models place consumers in the same category of credit quality. Different scoring models place consumers in credit-quality categories that are off by one category 19 to 24 percent of the time. And from 1 to 3 percent of consumers are placed in categories that are two or more... Read More

CFPB Helping Borrowers Feel More Comfortable. Lenders? Not Yet.

The CFPB appears to be helping borrowers feel better about taking out a mortgage over the Internet, according to a top industry technology firm. Mortgage Marvel, the online mortgage shopping service of mortgage technology firm Mortgagebot, recent conducted an examination of its application history and data to help answer the question: Is the CFPB friend or foe? “According to the data, applications are up significantly when compared to last year’s data,” said Rick Allen, senior vice president of client services... Read More

CFPB Sends Industry a Warning Regarding Its Investigations

The CFPB is playing hardball with PHH Corp. – and by extension, the rest of the mortgage lending industry – by recently refusing to amend, let alone withdraw, the civil investigative demand it issued earlier this year to the firm. “PHH’s petition to modify or set aside the Civil Investigative Demand in this matter is denied,” CFPB Director Richard Cordray said in a ruling recently. That means PHH will soon have to produce “all responsive documents, items and information within its possession, custody or control that... Read More

Regulation by CFPB, States to Be More Coordinated, Official Says

Mortgage lending oversight by the CFPB and the states will likely be far more interrelated and integrated in the future than might be expected – this in response to the rulemaking and enforcement jurisdictional shake out that occurred as a result of the Dodd-Frank Act, a top regulator told industry participants at a recent mortgage lending conference. “The CFPB can’t cover everything, because of resources – it isn’t that big of an agency. But more importantly, it lacks the legislative authority to cover everything that... Read More

U.S. District Court Sides With Lender in Disparate Impact Case

The U.S. District Court for the District of Massachusetts recently decertified a class of borrowers who claimed that their mortgage lender violated the Equal Credit Opportunity Act and the Fair Housing Act by allowing its brokers to impose charges not related to a borrower's creditworthiness. In Barrett v. Option One Mortgage Corp., No. 08-10157, 2012 WL 4076465, the borrowers, who are African-American, claimed that the lender’s loan pricing policy had a disparate impact on African-American borrowers who... Read More

Collateral Remained Biggest Hurdle to Getting Mortgage

Low house prices remained the biggest obstacle to borrowers being approved for mortgage credit in 2011, according to a new Inside the CFPB analysis of Home Mortgage Disclosure Act data. Some 23.4 percent of application rejections in 2011 were because of insufficient collateral, roughly even with the 23.8 percent rate back in 2010. Although there was some firming up of house prices in a number of markets last year, the overall market continued to be under significant stress. Low house values were a bigger... Read More

Worth Noting

√House Financial Services Committee Member Patrick McHenry, R-NC, apparently believes there could be an overhaul of the Dodd-Frank Wall Street Reform and Consumer Protection Act if Republican presidential contender Mitt Romney beats President Obama in next month’s election, according to one credit union industry lobbyist. McHenry recently appeared before a meeting of credit union representatives where he reportedly made the remarks. … Read More

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