Last week, the CFPB ordered GE Capital Retail Bank – a financial institution in New Jersey now known as Synchrony Bank – to provide approximately $225 million in relief to consumers harmed by alleged illegal and discriminatory credit card practices. Under the terms of a consent order brought by the bureau, GE Capital is required to refund $56 million to approximately 638,000 consumers who were subjected to allegedly deceptive marketing practices. As part of the joint enforcement action by the CFPB and Department of Justice, GE Capital must also provide an additional $169 million to about 108,000 borrowers excluded from debt relief offers because of their national origin. The consent order represents the federal government’s largest credit card discrimination settlement in history...
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SunTrust Mortgage, based in Richmond, VA, agreed to pay a total of $968 million to settle allegations of origination and servicing wrongdoing under a consent order brought by the CFPB. The Department of Justice, the Department of Housing and Urban Development and state attorneys general from 49 states and the District of Columbia joined in the settlement, which stemmed from the National Mortgage Servicing Settlement. The company will provide $500 million in loss-mitigation relief to underwater borrowers. The order also will require SunTrust to pay $40 million to approximately 48,000 consumers who lost their homes to foreclosure, and $10 million to cover losses it caused to the FHA, the Department of Veterans Affairs, and the Rural Housing Service. The order...
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The CFPB recently ordered a New Jersey company, Stonebridge Title Services Inc., to pay a $30,000 civil penalty to the bureau for allegedly paying illegal kickbacks for referrals. According to the CFPB, Stonebridge paid commissions to more than 20 independent sales representatives who referred title insurance business to Stonebridge. Stonebridge solicited people to provide it with referrals of title insurance business, offering to pay commissions of up to 40 percent of the title insurance premiums Stonebridge itself received, the bureau alleged. “These practices violated Section 8 of the Real Estate Settlement Procedures Act, which prohibits kickbacks and payment of unearned fees in the context of residential real estate transactions,” the CFPB said. Paying commissions for referrals is allowed under RESPA ...
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To minimize the risk that their newly minted mortgage loans will fail to comply with the CFPB’s ability-to-pay rules, originators, correspondent lenders and purchasers have begun using independent advisors to perform various quality control functions. Among those functions are ATR/qualified mortgage review, mortgage risk assessment and a mortgage defense package, according to Ron D’Vari, CEO of NewOak, an independent financial services advisory firm in New York City. The ATR/QM review consists of a three-step process (aimed at compliance with ATR/QM requirements) run in conjunction with a credit review or stand-alone, D’Vari said in an online blog post recently. “The first step is diagnostics involving standard due diligence review aimed at identifying deficiencies leading to potential liability for non-compliance with ATR ...
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Later this summer, the CFPB plans to release a white paper on the proxy methodology it employs to identify alleged discrimination in indirect auto financing, CFPB Director Richard Cordray told the House Financial Services Committee last week. This is one of a few bipartisan hot potatoes the bureau has been contending with on Capitol Hill. Back in March 2013, the CFPB issued a bulletin asserting authority to hold indirect auto lenders accountable for illegal, discriminatory pricing markups, and provided guidance to such lenders within the bureau’s jurisdiction as to how to appropriately handle fair lending risk. Consumer advocates were quick to embrace the bulletin, but the auto lending industry and its supporters in Congress have been pressing the bureau ever ...
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If compliance professionals are fortunate enough to discover a compliance issue before the CFPB does, they’ll likely be best served by self-reporting to the CFPB – after they get to the root cause of the problem and begin remediation efforts. That was perhaps the single most important take-away from one of the breakout sessions at the American Bankers Association’s 2014 regulatory compliance conference, held in New Orleans earlier this month. According to Christopher Spellman, corporate compliance director for Heartland Financial USA, the first step in the process is, what is the issue and how was it discovered? “The answer to that question can impact the remediation process,” Spellman said. “Obviously, it’s best if you discover it yourself internally,” said John Podvin ...
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As the lending compliance landscape continues to evolve under the influence of multiple CFPB rulemakings, it’s critical compliance professionals keep their eyes on emerging risks as soon as they develop, compliance professionals said during the American Bankers Association’s recent 2014 regulatory compliance conference held earlier this month in The Big Easy. “Inevitably, I always have someone ask me what things keep me up at night. For me, I could pull out a list of all the issues I’ve identified and am working on,” said Carol Yee, chief compliance officer for People’s United Bank in Bridgeport, CT. “But what really keeps me at night are the things I have not detected. These are the emerging risks that are developing and that ...
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Rod Alba, senior regulatory counsel for the American Bankers Association, told attendees at this year’s ABA regulatory compliance conference it will take the mortgage industry roughly 10 years for all the new rulemakings issued and still pending at the CFPB and elsewhere to reach a point of finality, stability and certainty. “I’ve said that it would take us possibly a full decade to get through all the rulemaking we have with mortgages. We’ve started about two or three years ago with the first being proposed and now at the beginning of this year with some of the rules [taking effect],” he said. Why a decade? “Well, not all the rules are done yet. As you know, we still have the ...
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Fannie Mae and the Federal Home Loan Bank of Chicago were among the public commenters supporting – with some key revisions – the CFPB’s proposed “right to cure” a mortgage made in good faith that inadvertently exceeds the 3 percent points-and-fees cap under the bureau’s qualified mortgage standard.Earlier this year, the CFPB proposed allowing a cure for a points-and-fee violation if three criteria are satisfied, the first of which is if the creditor in good faith intended to originate the loan as a QM and the loan otherwise meets the requirements of a QM. Additionally, the creditor or the assignee has to refund to the consumer the dollar amount by which the loan's points and fees exceed the applicable limit and ...
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Multiple lender industry representatives have asked the CFPB to extend the 30-day comment period to weigh in on the bureau’s proposal to ease financial institutions’ annual privacy-notice requirement under the Gramm-Leach-Bliley Act by creating an alternative delivery method which financial institutions would be able to use under certain circumstances. “The proposal describes an alternative method for delivering privacy notices with numerous conditions and qualifications that have not been previously articulated,” the industry groups said. For example, in order to take advantage of the alternative delivery method, financial institutions must not only limit their information sharing to one of the established exceptions but must also provide an alternative annual notice, maintain a dedicated webpage, offer customers a toll-free number and institute ...
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The House Financial Services Committee passed a handful of CFPB-related bills earlier this month, after a previously scheduled markup had been delayed by the death of the mother of Rep. Maxine Waters, D-CA, the ranking member on the committee. H.R. 3770, the CFPB-IG Act of 2013, introduced by Rep. Steve Stivers, R-OH, was approved 39-20. The bill would create a separate, independent inspector general for the CFPB. The CFPB currently shares an inspector general with the Federal Reserve System. H.R. 4262, the Bureau Advisory Commission Transparency Act, introduced by Rep. Sean Duffy, R-WI, was approved by voice vote. H.R. 4262 would open up CFPB advisory board meetings to the public. H.R. 4383, the Bureau of Consumer Financial Protection Small Business ...
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CFPB Deputy Director Antonakes Plays Nice With Compliance Pros. When CFPB Deputy Director Steve Antonakes appeared before a mortgage servicing industry event some months back, he raised plenty of eyebrows – and a few hackles – with some unusually blunt comments about how unhappy the CFPB was with the industry’s practices and how aggressive the bureau planned to be in combatting them. Lingering apprehensiveness was in the air when he stepped onto a stage to deliver a lunch-time address before the American Bankers Association’s 2014 regulatory compliance conference earlier this month – so much so, in fact, that when he responded to polite applause from attendees with “Hello!,” he was greeted with a nervous silence from the crowd. Antonakes didn’t skip a beat ...
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