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Inside the CFPB

October 15, 2012

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New Bureau Initiatives, Efforts With States Likely, OIG Discloses

The Federal Reserve Office of Inspector General recently revealed that the CFPB “plans to accept complaints about additional financial products and services” and “anticipates that referrals from state agencies will increase as the CFPB begins accepting complaints regarding nonbank products.” The disclosures were provided in the OIG’s evaluation report of the bureau’s Consumer Response Unit, which was released last week. “This news should be of concern to financial institutions because it is another clear indication that the CFPB is preparing to extend its enforcement functions... Read More

Mortgages, Credit Cards Again Dominate Complaints to Bureau

Consumer complaints about mortgages and credit cards accounted for more than 70 percent of the roughly 79,200 complaints made to the CFPB from July 21, 2011, through Sept. 30, 2012, according to the latest data from the bureau. Mortgage-related complaints again led the way, with approximately 36,300 submitted during the period reviewed. Credit card complaints were next, with roughly 23,400, followed by 12,900 for bank accounts and services, and 2,900 for private student loans. The most common type of mortgage complaint is about problems consumers have when they can’t pay their... Read More

Industry Reps Wave Red Flags On Mortgage Servicing Proposal

Numerous industry representatives are calling upon the CFPB to significantly scale back its ambitious mortgage servicing rulemaking proposal ¨C with at least one trade group urging the bureau to withdraw it entirely. The proposed rules amend Regulation Z (which implements the Truth in Lending Act) and Regulation X (which implements the Real Estate Settlement Procedures Act). The CFPB¡¯s rules aim to bring greater transparency to the mortgage servicing market with: clear monthly mortgage statements, a warning before interest rate adjustments, options for avoiding costly... Read More

Proxies, “Zero-Zero” Alternative Among Concerns With LO Rule

The mortgage lending industry is now grappling with a number of potential compliance challenges with the loan originator compensation rule as currently proposed by the CFPB, with the treatment of proxies and the “zero-zero” alternative mortgage near the top of the short list. An earlier Federal Reserve rulemaking prohibited compensation based on the terms of a loan or proxies for loan terms. “The problem there is the existing rule does not define what exactly that is,” said Richard Andreano, practice group leader of the mortgage banking group at Ballard Spahr, during an... Read More

FTC Calls for More Testing on Consumer Disclosure Rule

The Federal Trade Commission has called on the bureau to do more consumer testing before it comes out with a finalized version of its streamlined, consolidated Truth in Lending Act and Real Estate Settlement Procedures Act consumer mortgage disclosure rulemaking. The FTC’s Bureau of Consumer Protection, Bureau of Economics and Office of Policy Planning submitted a comment letter to the CFPB stating that the proposed disclosures “will likely improve the information that consumers receive under current federal regulations” because they “are generally simpler and less... Read More

CFPB Brings Aggressive Enforcement Against AmEx

The bureau brought another aggressive enforcement action against a top credit card lender at the beginning of the month, requiring three American Express subsidiaries to refund an estimated $85.0 million to approximately 250,000 customers for allegedly illegal credit card practices. The settlement also requires the companies to pay a civil monetary penalty of $27.5 million, to be split by the CFPB, the Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency, and to change a number of their practices. According to the bureau ... Read More

Dodd-Frank Critics Chipping Away in Various Court Actions

Opponents of the Dodd-Frank Wall Street Reform and Consumer Protection Act that created the CFPB are finding some initial success in chipping away at various provisions of the law through legal challenges. So far, authorities of the bureau itself have escaped the crosshairs of such legal challenges. However, the legitimacy of President Barack Obama’s appointment of Richard Cordray as director of the CFPB has been challenged in a round-about manner. So far, federal regulators have twice lost in court in their efforts to defend some of the rules they put in place... Read More

CFPB Again Calls for Comment On Compliance Cost Information

The bureau last week issued another call for public comment on the request it submitted earlier this year to the Office of Management and Budget for generic clearance of its collection of information from providers of consumer financial services and products on compliance costs and the other effects of regulations. gAs outlined in the Dodd-Frank Act, among the bureaufs objectives is to identify regulations that are eoutdated, unnecessary, or unduly burdensomef in order to reduce unwarranted regulatory burdens. In order to help support this objective, the bureau must fully understand... Read More

Bureau May Be About to Issue Larger Participant Final Rule

The CFPB recently announced it plans to hold a field hearing on debt collection in Seattle on Wednesday, Oct. 24, 2012. Since Director Richard Cordray is scheduled to deliver remarks at the event, there is “considerable speculation” that release of the bureau’s final larger participant rule for the debt collection market is imminent and could be announced by Cordray at the hearing, according to Alan Kaplinsky, a Ballard Spahr practice leader. “It is expected that the release of the final debt collection rule will quickly be followed by the release of the CFPB’s debt collection examination... Read More

CFPB Taps Online Marketing Firm To Help Ramp Up Its Hiring Efforts

Earlier this month, a company named Digital Firefly Marketing, a provider of online marketing services, announced that it had been hired by the bureau to “support the online recruitment efforts for the Consumer Financial Protection Bureau.” What’s significant about the announcement is that the company said it was chosen to help the bureau “ramp up” its hiring. To attract qualified candidates to CFPB employment opportunities, Digital Firefly will lead a “high profile” marketing campaign utilizing LinkedIn’s networking tools. To further market the bureau, Digital Firefly will place advertisements... Read More

More Fed Inspector General Audits Of the CFPB in the 2013 Pipeline

A recently revised work plan from the Federal Reserve Office of Inspector General indicates it has additional audits of the bureau in its pipeline with 2013 projected completion dates. The OIG has begun an evaluation of the CFPB’s policies, procedures and practices associated with agency-sponsored conferences, the report states. The objectives of this evaluation include determining the bureau’s management controls, policies, procedures, and practices associated with agency-sponsored conferences. The OIG also intends to determine whether the CFPB’s conference-related expenses and... Read More

CFPB Publishes Remittance Rule Safe Harbor Countries List

The bureau recently put out a safe]harbor list of countries that qualify for an exception to one of the requirements of the bureaufs remittance rule, which was published in February. The remittance rule generally requires remittance transfer providers to give specified disclosures to consumers sending remittance transfers. Among other requirements, a provider generally must disclose to a sender the total amount the recipient will receive, as well as the applicable exchange rate, fees and taxes. In certain circumstances, the rule permits providers to estimate these amounts... Read More

Bureau Makes Fresh Appeal for Financial Education Initiative

The CFPB has made another call for public input on its Request for Information on Effective Financial Education initiative, which was first published in the Aug. 2, 2012, issue of the Federal Register.Specifically, the bureau’s Office of Financial Education “seeks public comment on effective financial education approaches that create opportunities for consumers to improve their financial decision-making capabilities,” the notice stated. The request “reflects the CFPB’s acceptance of a behavioral economics approach,” according to Barbara Mishkin, of counsel... Read More

Worth Noting

GOP Candidate Opines on the Qualified Mortgage. Republican presidential candidate Mitt Romney briefly delved into one of the mortgage industry’s hottest issues during the first debate he had with President Obama, citing the CFPB’s pending ability-to-repay rule, asserting that banks have become reluctant to originate new mortgage loans because of delays and uncertainty surrounding the qualified mortgage definition. “You say we were giving mortgages to people who weren’t qualified. That’s exactly right. That’s one of the big reason for the great financial calamity we had,”... Read More

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