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Inside the CFPB

October 29, 2012

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Will Small, Community Lenders Get a QM Safe Harbor Carve Out?

Smaller mortgage lending institutions remain apprehensive about their legal liability when it comes to originating qualified mortgages under the CFPB’s pending QM/ability-to-repay rule, and hope they’ll get a full safe harbor. Recent talk has mounted that the bureau is considering a two-tier approach to its QM rule: a safe harbor for mortgages that will be defined as “prime,” and the lesser rebuttable presumption for subprime or nonprime. Elizabeth Eurgubian, vice president and regulatory counsel for the... Read More

U.S. Brings Precedent-Setting Action Against Bank of America

Last week, the Department of Justice raised eyebrows in a $1 billion legal action against Bank of America as successor to Countrywide Financial by filing the first civil fraud suit alleging violations of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in the sale of mortgages to Fannie Mae and Freddie Mac. The federal government asserts that since the Treasury Department has had to bail out Fannie and Freddie, approximately $1 billion in losses suffered by the companies... Read More

CFPB Issues its Ability-to-Repay Proposed Rule for Credit Cards

The CFPB has released its proposed credit card ability-to-pay rule, an effort by which the bureau intends to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. The Credit Card Accountability Responsibility and Disclosure Act (CARD Act), enacted in 2009, requires that card issuers evaluate a consumer’s ability to make the necessary payments before opening a new credit card account. Under current CARD Act regulations issued by the Federal Reserve, a card issuer... Read More

Crackdown on L.O. Comp Would Hurt Consumers, Industry Says

The mortgage lending industry told the CFPB that limiting the upfront points and origination fees borrowers pay to the providers of mortgage credit could inadvertently harm the market and the borrowers who are the intended beneficiaries. The American Bankers Association said in a comment letter to the bureau that “the overly stringent Dodd-Frank Act prohibitions that ban borrowers’ options to pay upfront points and origination fees to creditors will greatly damage the availability of financing alternatives for consumers.”... Read More

Industry Frets About Complexity Of Hi-Risk Mortgage Appraisal Rule

Representatives of the mortgage lending and financial services industries jointly told federal regulators they strongly support efforts to prevent property “flipping,” but they are also concerned that the regulators’ proposed rule to implement requirements for property appraisals in connection with “higher-risk mortgage” loans might be far too complicated. “[T]he main complexity of the proposed rule relates to the fact that Congress defined higher-risk mortgages based on the spread of the annual percentage rate (APR) over... Read More

Fair Lending Compliance Management Critical: CFPB Rep

The new cop on the financial services beat is strongly encouraging lenders and other financial services providers to make sure they have a robust compliance management system in place to closely monitor their fair lending activities in light of the letter and spirit of various consumer protection laws. Anna-Marie Tabor, the acting head of the CFPB’s Office of Fair Lending and Equal Opportunity, told participants in a recent fair lending webinar sponsored by the Federal Reserve that an adequate compliance... Read More

Lender Reps Call for Greater Clarity, More Time From Bureau

Lender and financial services industry representatives, commenting on the CFPB’s recently released five-year strategic plan, called for clear, comprehensive guidance to the industry along with enough time to ensure full compliance, given the sheer volume of all the other rulemakings being promulgated in the wake of the financial crisis. The American Financial Services Association, the Consumer Mortgage Coalition and the Mortgage Bankers Association said they were pleased that the first goal in the strategic plan is to prevent... Read More

Student Loan Gripes Resemble Mortgage Servicing Complaints

A report recently issued by CFPB Student Loan Ombudsman Rohit Chopra likens complaints in the massive student loan sector to complaints related to problems in mortgage servicing. “The complaints and input received by the bureau resemble many of the same issues experienced by mortgage borrowers, such as improper application of payments, untimeliness in error resolution, and inability to contact appropriate personnel in times of hardship,” the report stated. Read More

Service Members Struggling to Access Student Debt Protections

Last week, the CFPB released a report entitled, “The Next Front? Student Loan Servicing and the Cost to Our Men and Women in Uniform,” outlining the unique servicing obstacles reported by U.S. military service members seeking to pay off student loan debt. “Since I began this job almost two years ago, I’ve visited over 40 different military installations – talking to senior leaders, military service providers and thousands of service members and spouses,” said Holly Petraeus, head of the bureau’s Office... Read More

Credit Reporting Agencies Now In CFPB Complaint Crosshairs

The CFPB announced last week that it is now accepting consumer complaints about credit reporting agencies, another indication that the bureau is aggressively expanding its efforts to protect consumers throughout the financial services sector. “Credit reporting touches the financial lives of nearly each and every American,” said Scott Pluta, head of the bureau’s Office of Consumer Response. “Credit reports affect whether or not you are able to get a credit card, a home loan, an auto loan, or a student loan... Read More

Bureau Includes Attorneys Within Scope of Debt Collection Oversight

Last week, the CFPB issued its final rule for overseeing debt collectors – which will allow the agency to supervise the larger consumer debt collectors – and included attorneys among those who are going to be subject to direct federal supervision for the first time. That leaves some observers wondering if enforcement actions will be next. Also, with this expansion of the supervision program to oversee nonbanks that are larger participants in the consumer debt collection market, the bureau is now going to be able to... Read More

CFPB Issues Small Entity Compliance Guide for Transfers

The CFPB recently put out its small business compliance guide for the bureaufs international electronic money transfers rule (also known as the remittance rule), which will take effect Feb. 7, 2013. The publication summarizes the remittance rule, and includes information to assist a business in determining whether it will be subject to the rule, along with details on the rulefs requirements. The guide is not a substitute for the rule, but it highlights issues that businesses, in particular small businesses and those that... Read More

GSEs Provide Input on Integrated Mortgage Disclosure Project

Representatives of Fannie Mae, Freddie Mac, the Federal Housing Finance Agency and the CFPB had a meeting late last month to discuss the bureau’s integrated mortgage disclosure rule proposal. The two government-sponsored enterprises told the CFPB they have learned a great deal about data standardization and the electronic capture of data in the course of the three years they have been working on the Uniform Mortgage Data Program, according to a document filed with the bureau. The GSEs “are interested in providing this... Read More

Worth Noting

More Talk Heard About Changing Dodd-Frank. Senate Banking, Housing and Urban Affairs Committee member Mark Warner, D]VA, recently told the Bipartisan Policy Center that he has hope the 113th Congress will be able to put together a technical corrections bill to the Dodd-Frank Wall Street Reform and Consumer Protection Act. gCongress never gets it right, when youfre looking at massive reform legislation the first time through,h Warner said. gYou directionally head in an area and then you come back two years, three years... Read More

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