D.C. Federal Court Deep-Sixes Morgan Drexen Lawsuit Against CFPB. The federal district court in Washington, DC, has denied without prejudice the lawsuit Morgan Drexen, a legal services firm, and attorney Kimberly Pisinski filed against the CFPB, which asserted that the bureau’s structure was unconstitutional because it violated the U.S. Constitution’s separation of powers. The court concurred with the bureau’s argument that the sought-for injunctive relief was not justified because Morgan Drexen could raise its constitutional...

The CFPB recently updated its Small Entity Compliance Guide to the ability‐to‐repay/qualified mortgage rule, which takes effect in January. The updated guide reflects clarifications and changes – formally known as the June 2013 ATR/QM concurrent final rule, the July 2013 final rule, and the October 2013 final rule – made to the rule since it was issued in January 2013. Among the most notable changes in the October 2013 final rule reflected in the updated guide is the exclusion of compensation that is paid by a retailer of...

The Federal Reserve Office of Inspector General – the IG for the CFPB – completed an evaluation of the bureau’s fiscal year 2013 budget and concluded the CFPB could improve some of its budget-related practices.“Overall, our evaluation showed that the CFPB has a budget process in place to facilitate the achievement of its goals and performance objectives, including transparency to the public,” the OIG said. “However, we noted opportunities for the CFPB to enhance its practices related to preparing funding requests and posting budget...

The CFPB’s recent decision to no longer bring enforcement attorneys along for the ride in routine examinations may bring a sigh of relief to many in the industry, but it’s important to avoid reading too much into the move, according to a consultants’ analysis. For one thing, examiners will no longer be distracted by the need for additional legal review. “Assigning an enforcement attorney to support every exam was the CFPB’s most meaningful break from the practices of its prudential peers as it forged its own interdisciplinary approach to...

The parties in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., currently pending before the Supreme Court of the United States, have reached a tentative settlement, the Wall Street Journal reported late last week, citing people involved in the dispute. The prime question before the SCOTUS in Mount Holly is whether disparate-impact claims are cognizable under the Fair Housing Act. Mount Holly challenges the legal position of the Department of Housing and Urban Development that disparate impact can be used to...

CFPB Director Richard Cordray tried to reassure the mortgage lending community that the CFPB’s ability-to-repay rule with its qualified mortgage standard will provide all the legal protections they are expecting. One issue “that some consultants and lawyers have raised is whether the law and our rule will deliver the assured and predictable legal protections even for QM loans,” Cordray said in an address recently before the annual convention of the Mortgage Bankers Association in Washington, DC. “We believe strongly that they will...

The complaints that consumers filed with the CFPB about their mortgages fell for the second straight quarter during the third quarter of 2013, and with a bigger drop – 16.8 percent – than was seen in 2Q13, when the fall off was at 9.2 percent, according to a new analysis of consumer complaint data by Inside the CFPB. Leading the way again were gripes about loan modifications, which fell 25.5 percent in the third quarter, versus a drop of 10.3 percent in 2Q13. Complaints related to applications and other aspects of the...{includes 1 chart]

The long arm of the law being enforced by the new consumer sheriff in town is extending to EBay Inc., which is facing an investigation by the CFPB over a loan program that resembles a structure used by high-interest lenders to bypass state regulations before the practice was eradicated by regulators. The program at issue, known as Bill Me Later, is a service provided by EBay’s PayPal unit that derives funding from Comenity Capital Bank, based in Salt Lake City, UT, to make loans that are subsequently purchased and managed by EBay...

A bipartisan group of 22 members of the U.S. Senate wrote CFPB Director Richard Cordray late last month to raise concerns about the bureau’s guidance affecting the indirect auto financing market and auto dealers’ ability to negotiate retail margins with consumers. Back in March, CFPB Bulletin 2013-02 instructed bank and nonbank indirect auto lenders about complying with federal fair-lending requirements when it comes to auto dealers “marking up” the lender’s risk-based buy rate and receiving compensation based on the...

The CFPB has filed a lawsuit in federal district court against a Kentucky law firm, Borders & Borders, PLC and its principals, for illegally paying kickbacks for real estate settlement referrals through a network of shell companies. The CFPB alleges that Borders & Borders and principals Harry Borders, John Borders, Jr., and J. David Borders violated the Real Estate Settlement Procedures Act by operating a network of affiliated companies to pay kickbacks for referrals of mortgage settlement business. RESPA prohibits giving...