The House Financial Services Committee held an oversight hearing last week on the Financial Stability Oversight Council, of which the CFPB is a voting member. In response to a softball question tossed in his direction by Rep. Nydia Velázquez, D-NY, CFPB Director Richard Cordray took advantage of the opportunity to tout the work the bureau does and its relation to addressing systemic risk in the U.S. economy. Velázquez stated: “The CFPB’s core mission is consumer protection, which may not seem linked to systemic risk. However, I don’t think that’s the case. Can you elaborate on what role consumer financial protection plays in the stability in the economy and how your agency’s work helps inform FSOC?” Cordray replied: “It’s worthy of ...

Sage Bank, a Lowell, MA-based financial institution with less than $200 million in assets, will pay $1.18 million to settle allegations brought by the U.S. Department of Justice that it violated the Fair Housing Act and the Equal Credit Opportunity Act by discriminating in the pricing of its mortgage loans to African-American and Hispanic borrowers. The government accused Sage Bank of charging African-American and Hispanic borrowers higher prices for residential mortgages than similarly situated white borrowers for reasons that had nothing to do with their creditworthiness. “Specifically, under Sage Bank’s pricing policy, each of its loan officers was assigned a target price, which was the price a loan officer was required to achieve on each home loan, regardless of a ...

The ability of mortgage servicers to call struggling borrowers and help them resolve their problems is being compromised by an order from the Federal Communications Commission and needs to be overturned, a trio of industry groups argued in a recently submitted legal brief. The FCC’s order, released June 18, 2015, aims to bolster consumer protections against unwanted telephone calls and texts by, in part, restricting the ability of mortgage servicers, debt collectors and others to make autodialed or prerecorded phone calls without prior express consent of the person called. Violators can be subject to fines of $500 per phone call. A challenge to the FCC’s order is being led by ACA International before the U.S. Court of Appeals for the ...

The CFPB recently brought an $8 million enforcement action against Clarity Services, a national credit reporting firm based in Clearwater, FL, and its owner, Tim Ranney, for allegedly obtaining consumer credit reports illegally and for failing to appropriately investigate consumer disputes. Clarity focuses on data reporting for the under-banked, near prime, and subprime consumer segments, and provides information that is not available from traditional reporting agencies. Instead, its reports are derived from a variety of financial service providers, including auto financers, check cashers, prepaid card issuers, short-term installment lenders, peer-to-peer micro lenders, small-dollar credit lenders, and online small-dollar credit lenders. “Credit reporting plays a critical role in consumers’ financial lives,” said CFPB Director Richard Cordray. “Clarity and its owner mishandled ...

The CFPB recently filed a $2.59 million federal complaint against EOS CCA, a debt collection firm based in Norwell, MA, accusing the company of reporting and collecting on old cellphone debt that consumers disputed and EOS did not verify. The company also allegedly provided inaccurate information to credit reporting companies about the debt and failed to correct reported information that it had determined was inaccurate. The bureau’s action appears to revolve around the firm’s handling of just one large portfolio. According to the CFPB, in 2012, EOS paid AT&T $35.4 million for a portfolio of more than three million cellphone accounts with a total face value of $2.3 billion. “Many of these debts were old accounts that had been previously ...

Early this month, the CFPB denied a petition made by UniRush, the program manager for RushCard, a prepaid debit card, to modify a civil investigative demand (CID) the firm had received from the bureau near the end of October. The CID seeks documents, written reports and answers to interrogatories in connection with the bureau’s investigation into whether prepaid debit card issuers, processors, card networks, service providers to prepaid debit card issuers, or other unnamed persons “have engaged in or are engaging in unlawful acts and practices in connection with the offering, operating or servicing of prepaid debit cards.” UniRush seemed to shoot itself in the foot, according to the bureau’s decision and order. The CFPB’s account of the chronology suggests ...

Republican leadership on the House Financial Services Committee is accusing the CFPB of engaging in a cover up, slamming the agency for deliberately using flawed data that falsely suggests auto dealers are discriminating in the pricing of loans to minority buyers. The Republican staffers on the committee released a number of documents that appear to show the officials at the CFPB not only were aware their data was flawed but also that they discussed how to prevent people outside the agency from discovering it. For instance, a May 2013 draft of a memo to CFPB Director Richard Cordray revealed that bureau staff had “reason to believe that our proxy is less accurate in identifying the race/ethnicity of particular individuals than ...

The more consumers complain to the CFPB about their financial services providers, the more likely those providers are to be fined, and the higher those fines are likely to be, new research suggests. For instance, lenders and other financial services providers face a 58 percent chance of being fined when complaints to the CFPB breach the 2,000 threshold for a company, according to an analysis by PerformLine, a “software-as-a-service” marketing compliance company based in Morristown, NJ. Among the other key findings were a 34 percent increase in the number of consumer complaints year-over-year since 2012, and average fines ranging from $134 million (for companies that received 2,000-10,000 complaints) to $758 million (for companies with 10,000+ complaints). Sliced another way, the ...

Consumers appear to have more to complain about to the CFPB when it comes to their various bank account products and services and less when it comes to money transfers these days. According to the latest analysis by Inside the CFPB of third quarter 2015 information from the bureau’s consumer complaint database, consumer gripes about bank accounts rose 5.4 percent at the nine-month mark in the year versus the same period in 2014. However, consumer kvetching fell by 4.6 percent from the second quarter. Things seem to be much better in the money transfer space, which saw end-user grumblings drop a big 25.4 percent year over year as of the end of September, and down a significant 12.6 percent quarter ...

Do TRID-Related Loan Delays Bolster Warehouse Profits? It Looks That Way. Thanks to loan closing delays caused by the new “TRID” integrated disclosure rule, mortgages are staying on warehouse lines longer, increasing profits for banks that play in that space. David Frase, president of warehouse lending for Southwest Bank, Dallas, told IMFnews, an affiliated email newsletter, that “loans are staying on lines longer so we make more money.” Frase, however, said he expects that, in time, the TRID kinks will be worked out and that loan closing times will become more normalized. Southwest’s specialty entails mini-correspondent or “broker to banker” lines of credit. “Turn times are slower and processing times are longer,” said Frase. According to figures compiled by Inside ...