In a development that could inject turmoil and chaos into the CFPB’s regulatory sphere of influence, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit has declared the three recess appointments President Barack Obama made to the National Labor Relations Board early last year to be unconstitutional. The judges said the appointments were illegitimate because the Senate was not actually in recess when they were made. “Considering the text, history and structure of the Constitution, these appointments were invalid from their inception,” the ruling stated. Here’s why this is...
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A day before a federal appeals court declared his three recess appointments to the National Labor Relations Board to be unconstitutional, President Barack Obama again nominated Richard Cordray to be the director of the CFPB, setting the stage for another potentially bitter confrontation with Republican opponents in the Senate. Obama made a recess appointment of Cordray to his current position at the same time he made his NLRB moves, early last year, bypassing the traditional Senate confirmation process in an end-around to fierce opposition from GOP members in the chamber. The problem for the president is...
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Although the CFPB is done – for now – with its regulations governing what servicers can do regarding their residential mortgage customers, there’s still one area they intend to explore: servicing transfers. At a regulatory field hearing in Baltimore earlier this month, agency officials said they will look into the issue. How far it will go is another matter. “They’re definitely working...
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The CFPB has promulgated its loan originator compensation final rule, perhaps most notable for what it didn't include. Industry groups had urged the bureau to drop from the final rule its proposed "zero-zero alternative that would have required lenders to offer a loan option with no discount points or origination fees any time they offered a mortgage with such payment features. Industry representatives said...
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The CFPB has issued its voluminous new national mortgage servicing final rules, including a host of required loss mitigation rules and processes and bringing a substantial amount of uniformity to a sector much maligned because of its controversial “robo-signing” practices. Under the rule, servicers will have to follow specified loss mitigation procedures for a mortgage loan secured by a borrower’s principal residence. If a borrower applies for a loss mitigation option, the servicer is generally required to acknowledge, within five days and in writing, that it has received the application and inform the borrower whether the application is complete. If the application is...
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The CFPB decided to exempt small entities that service fewer than 5,000 loans and service only mortgages that they or an affiliate originated or own from a number of the requirements of its new mortgage servicing final rule. For instance, the bureau exempted small servicers from having to create and maintain new general servicing policies and procedures, and from having to issue monthly statements that would include more information than most community banks currently provide. The new rule also permits...
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The American Bankers Insurance Association is calling upon the CFPB to reconsider the "force-placed" insurance notice provisions in the bureau's newly issued mortgage servicing rules, arguing they go beyond what the Dodd-Frank Act intended, could disrupt the market in unintended ways and have a negative effect on consumers. Force-placed insurance is coverage that the servicer buys on the property when the borrower no longer has property insurance. Without such coverage, whoever holds the mortgage would be at risk if the house were to be damaged or destroyed. But often the borrower may be responsible...
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The CFPB has responded to a variety of mortgage appraisal issues on two different fronts, publishing a final rule all its own in conjunction with the Equal Credit Opportunity Act, and participating in an interagency rulemaking in the context of the Truth in Lending Act. On the ECOA front, the bureau issued a final rule that requires mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates, although a lender generally may still charge the consumer a reasonable fee for the cost of conducting the appraisal or other estimate. In essence, then, a lender can charge...
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The CFPB’s new qualified mortgage rules will frustrate the market and adversely impact traditional supply and demand principles that could slow the sector’s recovery, according to scholars at the Heritage Foundation, a conservative think tank in Washington, DC. “Neither consumers nor creditors emerge as winners,” write research fellows Diane Katz and David John in an issue brief on the new QM rules, issued earlier this month. Irresponsible lending did in fact play...
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The CFPB has granted a request from financial institutions for extra time to prepare for the agency’s pending international remittance transfer final rule, but it may not be enough to satisfy them. Earlier this month, the bureau temporarily postponed the Feb. 7, 2013, effective date of its remittance transfer rule pending finalization of its December 2012 proposal to make changes in three narrow areas. First, the proposal would provide more flexibility when it comes to the disclosure of foreign taxes, as well as fees imposed by a designated recipient’s institution for receiving a remittance transfer in an account. Second, the proposal would limit...
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CFPB, Agencies Eyeing Social Media Contacts for Consumer Protection. The CFPB and the other five agencies that comprise the Federal Financial Institutions Examination Council are proposing supervisory guidance on federal consumer protection and compliance requirements as they apply to social media used by banks, savings associations and credit unions, as well as by nonbank entities. “Upon completion of the guidance, and after consideration of comments received from the public, the federal financial institution regulatory agencies will issue it as supervisory guidance to the institutions that they supervise and the State Liaison Committee of the FFIEC will encourage state regulators to adopt the guidance,” the proposal stated. “Accordingly, institutions will be expected to use the guidance in their efforts to ensure that their policies and procedures provide oversight and controls commensurate with the risks posed by their social media activities.” Bureau Considers Helping Americans with Retirement Savings. The CFPB is contemplating whether to get involved in helping Americans manage the $19.4 trillion they have put into retirement savings, Bloomberg News reported recently. “That’s one of the things we’ve been exploring and are interested in, in terms of whether and what authority we have,” Director Richard Cordray said in an interview with the news organization. CFPB Proposes...
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