The CFPB and the Federal Trade Commission last week issued warning letters to approximately a dozen nonbank mortgage lenders and brokers about potentially misleading advertisements geared towards military veterans and older Americans that could be in violation of the 2011 Mortgage Acts and Practices Advertising Rule. The so-called MAP rule prohibits misleading claims concerning government affiliation, interest rates, fees, costs, payments associated with the loan, and the amount of cash or credit available to the...
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In what may prove to be the first of many announcements dealing with the January 2013 mandate for changes under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has decided to give the mortgage lending industry extra time to implement certain new required consumer disclosures. Per the CFPB’s announcement in a new final rule, mortgage lenders will not be required to provide those disclosures until after the bureau’s other previously proposed mortgage disclosure rules are finalized...
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Mortgage lenders say they support the CFPB’s overall effort to integrate and simplify the consumer disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act, but they’re also urging the bureau to proceed at a more deliberate pace when it comes to implementing such integration. In a public comment letter to the bureau, the Mortgage Bankers Association made three overarching points, the first of which is that the agency should continue to focus its energy on the enormous job of...
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The CFPB has won a preliminary injunction in its first enforcement action, which was taken against a California attorney and some of his affiliated companies and partners that offered loan modification and foreclosure relief services to homeowners struggling to keep up with their mortgage payments. In Consumer Financial Protection Bureau v. Chance Gordon, et al., filed in July in U.S. District Court for the Central District of California, the judge enjoined the defendants from making various representations alleged by the...
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In a move that caught most industry observers by surprise, CFPB Deputy Director Raj Date, widely seen as a possible successor to Director Richard Cordray, has decided he will leave the agency at the end of January, with no immediate plans other than to spend more time with his family. “The timing of his departure will enable Date to help finalize several new mortgage rules this January,” according to one industry trade group source. That would include the qualified mortgage rule, according to attorney Jeffrey Jamison, an...
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Staffing levels at the CFPB grew from about 663 employees as of the end of fiscal year 2011 to 970 as of the end of FY 2012 (Sept. 30), an increase of 46.3 percent, according to the bureau’s financial report for FY 2012. By way of comparison, in the first quarter of FY11, the bureau had just 58 positions filled. The CFPB’s division of supervision, enforcement and fair lending had 46.9 percent of employed staff, the division of research, markets and regulations 9.0 percent, as of the end of FY12. The legal division...
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The CFPB has taken several steps to develop, document and implement an information security program. However, additional steps are needed if the bureau is to have an information security program that is consistent with the Federal Information Security Management Act of 2002, according to an audit report issued by the Federal Reserve’s Office of Inspector General. “We recommend that the Chief Information Officer develop and implement a comprehensive information security strategy that identifies specific goals...
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The five banks that are parties to the $25 billion national mortgage settlement have extended more than $26.11 billion in gross relief to more than 300,000 borrowers, or roughly $84,385 per homeowner, according to a new report from the Office of Mortgage Settlement Oversight. At that pace, the five participating servicers will satisfy their obligations under the settlement two years ahead of the 2015 deadline. “The report discloses that the banks have completed $21.92 billion in consumer relief to borrowers...
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The CFPB recently launched Project Catalyst, an initiative it said is designed to encourage consumer] friendly innovation and entrepreneurship in markets for consumer financial products and services. gProject Catalyst is our effort to foster consumer-friendly innovation in the marketplace,h the bureau said. Through Project Catalyst, the CFPB is calling on innovators and entrepreneurs to help it by gimprovingh financial regulation to gbetter foster consumer]friendly innovation,h and in...
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Adverse impact violations are the hardest to defend against and the ones causing the biggest settlements, according to Tammy Butler, the director of fair lending and compliance for Optimal Blue, a leading pricing engine. “In a nutshell, this means that your institution has a policy or criterion that has a disproportionate impact on the protected class population of the areas you serve,” she said in a recent blog. This can occur in the way that a lender prices loans or underwriting overlays. “So far, every lender that has been...
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Representatives of smaller financial institutions told officials at the CFPB recently they are apprehensive about regulatory overload and the fear that their ability to serve their local communities will be harmed by too much regulation coming too fast. The bureau got that message during separate meetings with its Community Bank Advisory Council and its Credit Union Advisory Council. In discussions about the challenges and opportunities in the post-financial crisis environment, advisory council members...
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Two legal cases remain in play that are challenging some controversial recess appointments made by President Barack Obama earlier this year, one directly challenging the appointment of Richard Cordray as director of the CFPB, and another that has implications for the case. In the former, State National Bank of Big Spring, Texas, et al. v. Geithner, et al., currently before the U.S. District Court for the District of Columbia, federal bank regulatory agencies last week told a judge that the lawsuit should be...
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Agencies Announce Increases in Dollar Thresholds for Exempt Consumer Credit and Lease Transactions. The CFPB and the Federal Reserve Board last week announced increases in the dollar thresholds in Regulation Z (Truth in Lending Act) and Regulation M (Consumer Leasing Act) for exempt consumer credit and lease transactions. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires yearly adjustments to these thresholds by the annual percentage increase in the Consumer Price Index for Urban Wage...
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