It may just be a matter of time before CFPB Director Richard Cordray accuses the mortgage industry of “crying wolf” again, this time over inflated warnings about the damage to the housing markets the industry said would result from the bureau’s much-ballyhooed integrated disclosure rule. The CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule kicked in Oct. 3, 2015. And even though some industry vendors were scrambling to deliver software updates into the evening the night before, it looks like the rule has had little immediate effect on the markets, according to the results of the latest HousingPulse survey sponsored by Inside Mortgage Finance, an affiliated publication, along with Campbell Surveys, which performed the survey. “While ...
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The U.S. House of Representatives voted 255 to 174 recently to expand the CFPB’s qualified mortgage safe harbor to include all residential mortgages held in the originating lender’s portfolio. Similar legislative language exists in S. 1484, the Financial Regulatory Improvement Act of 2015, the regulatory relief bill pushed by Senate Banking, Housing and Urban Affairs Committee Chairman Richard Shelby, R-AL, which is going to be incorporated into appropriations legislation shortly. The big questions now are whether those QM provisions will remain attached to the next spending bill as it moves through the nation’s legislature, and if so, whether congressional Republicans can again succeed in using the appropriations process to bypass Democrat opposition. Now the bad news: The White House has ...
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The new and modified data required under the CFPB’s recently released Home Mortgage Disclosure Act final rule will probably result in greater regulatory and legal scrutiny of mortgage lenders, so covered institutions should take a proactive approach to implementation, according to top legal experts. In a recent client alert, the attorneys in the mortgage banking and consumer financial services groups at the Ballard Spahr law firm noted that the new and modified data will include “much more detail about applicants, borrowers, credit, collateral, loan type, pricing, fees, charges, the originator, and the covered institution. The new and modified data will enable regulators and private parties to analyze a lender’s practices in much greater detail than is currently possible.” Analyses of ...
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The CFPB indicated in its recently released 2015 rulemaking agenda that it is continuing to finalize a proposal it published in December 2014 to amend certain aspects of the bureau’s 2013 mortgage servicing rules. The proposal addressed, among other things, enhanced loss mitigation requirements and compliance with certain rules when the borrower is a potential or confirmed successor in interest or is in bankruptcy. “We have been conducting testing of periodic statements for consumers in bankruptcy and are working to develop the final rule for issuance in mid-2016,” the CFPB said. The bureau also will continue working to support implementation of the multiple mortgage rules required by the Dodd-Frank Act, such as the Home Mortgage Disclosure Act rule, the integrated ...
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The CFPB brought an administrative action earlier this month against a now-defunct online lender, Integrity Advance, and its CEO, James Carnes, for allegedly deceiving consumers about the cost of short-term loans – particularly the costs consumers would pay under the default terms of the contracts.The unlawful practices alleged by the CFPB include hiding the total cost of loans. According to the bureau, the lender gave consumers contracts with disclosures based on repaying the loan in a single payment, even though the default terms of the contract called for multiple rollovers and additional finance charges. “For example, under Integrity Advance’s default payment schedule, a consumer borrowing $300 would ultimately pay $765 in finance charges – $675 more than the $90 finance charge ...
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The CFPB recently petitioned the U.S. District Court for the District of Columbia to enforce a civil investigative demand (CID) it issued back in August to the Accrediting Council for Independent Colleges and Schools (ACICS), despite congressional objections and arm-twisting. The CID was issued during a bureau probe of possible violations of the Consumer Financial Protection Act of 2010 or other federal consumer financial protection laws. “The CID issued to ACICS relates to a bureau investigation to determine whether any entity or person has engaged or is engaging in unlawful acts and practices in connection with accrediting of for-profit colleges” in violation of CFPA provisions addressing unfair, deceptive or abusive acts or practices, the CFPB told the court. The demand ...
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U.S. Rep. Nydia Velázquez, D-NY, the ranking member on the House Small Business Committee, recently wrote to CFPB Director Richard Cordray for information about the role his agency has in regulating online lending to small businesses. She also wanted to know what federal laws under the bureau's jurisdiction apply to small business borrowers and retail investors participating in the online lending marketplace. Additionally, Velázquez inquired about what resources the CFPB has devoted to the regulation of online lending marketplaces. She also asked if the bureau has the necessary legal authority to protect small business borrowers and retail investors when it comes to online lending. Further, Velázquez inquired of Cordray what statutory changes, additional legal authorities and resources are necessary to ...
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The U.S. House of Representatives recently passed bipartisan legislation, H.R.1737, the Reforming CFPB Indirect Auto Financing Guidance Act, which would declare “without force or effect” the bureau’s controversial guidance on indirect auto finance. At issue is CFPB Bulletin 2013-02 (Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act), which the bureau published on March 21, 2013. The bill also would direct the CFPB, when proposing and issuing guidance primarily related to indirect auto financing, to provide for a public notice and comment period before issuing the guidance in final form; make publicly available all information relied on by the CFPB; and redact any information exempt from disclosure under the Freedom of Information Act. The bureau also would have ...
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The CFPB more than doubled the amount of money it collected in civil penalties in fiscal year 2015 compared with FY 2014, $183.1 million versus $77.5 million, according to the bureau’s recently released FY 2015 financial report. Total cash collections in the fund from its inception, as of Sept. 30, 2015, amount to $342.14 million. Of that total, $190.12 million has been allocated to victim compensation. An additional $13.38 million has been allocated to consumer education and financial literacy programs, the default destinations of a certain amount of the penalties when victims can’t be found or identified, or when payment isn’t “practicable,” according to the bureau. Meanwhile, approximately $2.07 million has been used by the CFPB as an “administrative set-aside.” ...
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State Mortgage Regulators Bring $10.2 Million Enforcement Action Against Prospect Mortgage. The Multi-State Mortgage Committee recently announced a $10.2 million settlement agreement and consent order between 50 state mortgage regulators and Prospect Mortgage over allegedly inappropriately assessed third-party settlement fees charged by an affiliate. According to the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, a multi-state examination performed by eight states revealed a pattern of charging improperly disclosed and unsupported fees paid to the company’s affiliate, C2C Appraisal Services. Under the terms of the agreement, Prospect is to pay restitution to every borrower in all participating states that was assessed a C2C Settlement Service Fee in the amount of $40 with interest of 10 ...
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Industry Groups Call for Restructuring Bureau With Commission Leadership Structure. Two dozen industry trade groups sent a letter to the House and Senate chairmen and ranking members of the appropriations committees recently in support of legislation restructuring the CFPB with a five-member board leadership mechanism, instead of its current sole directorship structure. Their focal point is H.R. 1266, the Financial Product Safety Commission Act, bipartisan legislation approved on a bipartisan basis by the House Financial Services Committee. Similar legislation was included in Section 505 of S. 1910, the Fiscal Year 2016 Financial Services and General Government appropriations bill. “Looking ahead, the current sole director structure at the CFPB jeopardizes the foundation of the bureau as an objective, neutral consumer protection ...
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CFPB, Fed, OCC Announce Threshold for Smaller Loan Exemption from Appraisal Requirements for Higher-Priced Mortgage Loans. Last week, the CFPB, the Federal Reserve and the Office of the Comptroller of the Currency announced that the threshold for exempting loans from special appraisal requirements under the Dodd-Frank Act for higher-priced mortgage loans during 2016 will remain $25,500.The threshold amount will be effective January 1, 2016, and is the same threshold that applied in 2015 – based on the annual percentage decrease in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as of June 1, 2015. ...
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CFPB Attorney James Kim Joins DC Law Firm. James Kim, formerly a senior enforcement attorney with the CFPB, recently joined the Ballard Spahr law firm in its Washington, DC, office. “While at the CFPB, James led nationwide investigations involving consumer credit, mobile financial services, emerging payment systems, mortgage origination, and debt collection,” said new colleague Alan Kaplinsky, a partner at the law firm. “He was lead counsel in the CFPB’s first enforcement actions involving mobile payments and was a member of the credit card/prepaid card/emerging payments issue team that helped coordinate enforcement activity with other offices at the CFPB.” ...
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