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Inside the CFPB

February 3, 2014

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CFPB Accuses PHH of Receiving Mortgage Insurance Kickbacks

The CFPB last week initiated an administrative action against PHH Mortgage, accusing the firm of participating in a multi-million-dollar kickback scheme involving captive mortgage insurance reinsurance. The regulator said an investigation it conducted showed “that when PHH originated mortgages, it referred consumers to mortgage insurers with which it partnered. In exchange for this referral, these insurers purchased ‘reinsurance’ from PHH’s subsidiaries.” The bureau continued, “PHH took the reinsurance fees as kickbacks, in violation... Read More

House GOP Takes a Page Out of CFPB’s Consumer Complaint Book

Republicans on the House Financial Services Committee last week unveiled a new data form on their website, inviting anyone who has been affected by the bureau’s work to “come forward and tell their story” via the new online feature. The GOP members said the webpage function is a part of their efforts to “hold the CFPB accountable.” Perhaps revealingly, one of the webform instructions reads, “please explain any limitation on how we might use your story in our investigation.” Even though the new function had only been operational for... Read More

GOP Raises Concerns with CFPB, FHFA Mortgage Database Project

With the recent data breach at the Target national retail chain and the disclosures about the National Security Administration by whistleblower Edward Snowden still fresh in mind, House Republicans are pressing the CFPB over the integrity and security of its various database initiatives. Rep. Ed Royce, R-CA, took issue in particular with the national mortgage database project the CFPB is engaged in, along with the Federal Housing Finance Agency, the regulator of housing finance giants Fannie Mae and Freddie Mac. “I think you... Read More

Don’t Hate the CFPB Because of The Dodd-Frank Act, Critic Says

The CFPB has certainly borne the brunt of a lot of criticism since its inception, but even some of its critics say it’s not right to blast the bureau for something lawmakers are responsible for – in this case, all of the mandates from the Dodd-Frank Wall Street Reform and Consumer Protection Act. “I’ve been relatively critical of the CFPB, but I’m the first to say you can’t blame an agency if the issue is in the statute,” said Mark Calabria, director of financial regulation studies at the libertarian Cato Institute in Washington, DC. “I don’t... Read More

CFPB Highlights Violations in Mortgage Servicing Market

The CFPB issued a report last week highlighting problems such as unfair and deceptive practices in the mortgage servicing market that the bureau uncovered through its supervision program in 2013. The CFPB’s supervisory report describes several instances where servicers violated the Dodd-Frank Act’s ban on unfair, deceptive or abusive acts and practices. For instance, examiners found that two servicers engaged in unfair practices by failing to honor existing permanent or trial loan modifications after a servicing transfer, which resulted in... Read More

Bureau Denies CheckSmart Request to Modify Legal Probe

In a development that could be quite instructive for any recipient of a CFPB civil investigative demand, the bureau has denied the petition filed by CheckSmart Financial Company this past September to modify or set aside a CID it received from the agency in 2013. First, CheckSmart argued that the bureau’s CID does not provide sufficient notice of a lawfully authorized purpose because it did not adequately describe the conduct under investigation, and thus fails to comply with relevant portions of the Dodd-Frank Act. However, citing its rules relating... Read More

CFPB Proposes to Oversee Larger Nonbank Money Transfer Firms

The CFPB has issued a proposed rule that would allow it to supervise “larger participant” nonbank international money-transfer providers for the first time. The CFPB’s proposed rule would subject any nonbank international money transfer provider that provides more than 1 million international money transfers annually to the bureau’s supervisory authority under the agency’s remittance rule, which took effect in October 2013. Under the proposal, bureau examiners would be able to examine larger nonbank international money-transfer providers... Read More

No Need to Reinvent the Wheel To Comply with New Disclosures

As mortgage lenders begin preparing for the new mortgage disclosure regime being instituted by the CFPB’s final rule, they should revisit lessons learned during their previous adventures with the Truth in Lending Act and the Real Estate Settlement Procedures Act. “RESPA reform from January 1, 2010, is still close in many of our minds, and we remember back to ’09 being a year that we spent a massive amount of time implementing that new regulation,” said Amy Thoreson Long, senior counsel in the consumer lending division at Wells Fargo. Then in 2010... Read More

CFPB Review of Auto Dealer Markups Expected to Raise Costs

Heightened scrutiny by the CFPB of potentially discriminatory auto lending practices is probably going to end up raising lender regulatory costs in 2014, according to analysts at Fitch Ratings.“Fitch believes the CFPB is currently in discussions with various auto finance players, including banks, captive finance arms of auto manufacturers and independent finance companies regarding their lending practices,” the rating agency said. The regulatory actions have to do with the auto lending industry’s widespread practice of making... Read More

Will QM Provide Less Transparency To the Mortgage Consumer?

The qualified mortgage is here, and while the rotation of the earth has yet to slow, there are still several areas of the regulation that are not crystal clear to much of the industry, including some questions having to do with Fannie Mae and Freddie Mac purchases of mortgages being originated under the new regime. For instance, “If lenders bake the loan-level price adjustments into the interest rate, are they allowed to show those adjustments to the originator? If they show them, will the CFPB count them into the points and fees?” asked Tammy... Read More

CFPB Passes OIG Muster on Civil Penalty Fund Internal Controls

The Federal Reserve Office of Inspector General has completed its audit of the CFPB’s consumer financial Civil Penalty Fund, giving the bureau a passing grade. “Overall, our audit determined that the CFPB has been implementing internal controls for the CPF since June 2012,” said the OIG, citing the bureau’s development of the CPF rule and various internal procedures. “During our audit of the CPF, which was conducted from June 2013 to November 2013, we identified an opportunity to improve the controls developed to implement the CPF,” the OIG said... Read More

Worth Noting/Tech Roundup

Public Comments on the Mortgage Closing Process are Due Feb. 7. Early in January, the CFPB solicited consumer comments on the mortgage closing process, specifically asking consumers to identify the key “pain points” associated with mortgage closing and how they might by addressed by market innovations and technology. The bureau specifically said it wanted comments on how to increase the use of technology and promote inventions that encourage a more streamlined mortgage closing process while also improving consumer knowledge. The CFPB... Read More

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