In case you were unaware, Joe Garrett has never been a big fan of the CFPB, but unlike some advisors, he is willing to state his feelings on-the-record…
There is limited good news to report for lenders in terms of industry efforts to secure regulatory relief from a variety of rules from the CFPB. Among the good news is that the transportation funding legislation that President Obama is expected to sign shortly includes language that will grant the CFPB greater flexibility to treat a balloon loan as a “qualified mortgage” if it was extended by a community bank or creditor operating in rural or underserved areas. Other language will institute a process for banks and other stakeholders to petition the bureau to designate an area as “rural” or “underserved” for the purposes of the CFPB’s ability-to-repay rule. Another provision will expand the bureau’s ability to exempt creditors serving ...
New information provided to Moody’s Investors Service suggests nearly every lender reviewed in a limited sample has violated the CFPB’s so-called TRID, the Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule, at the start of the implementation period, which began Oct. 3, 2015. “Several third-party review (TPR) firms have revealed to us that their reviews of more than 90 percent of the first pipeline of residential mortgage loans subject to the CFPB’s recently enacted TRID had TRID compliance violations, although many of them were only technical in nature,” said Moody’s in a new credit outlook. “These results suggest that some lenders are having difficulty complying with the rules, a credit negative because it increases the likelihood that ...
The CFPB’s new Home Mortgage Disclosure Act (Regulation C) final rule is likely to increase costs for the mortgage industry – and by extension, homebuyers – while raising the stakes for lenders on the compliance front, according to a recent analysis by attorneys with the Morrison & Foerster law firm.“Among the largest costs of the new Regulation C will be necessary updates to data-collection systems, including integration of those systems with application, underwriting, disclosure, origination, and purchased-loan intake platforms, as applicable,” said the attorneys. In addition, HMDA compliance management will take on a whole new significance. “The need for monitoring and controls tied to new HMDA protocols is a few years off, but the preparation curve promises to be steep,” they ...
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 ...
RSS