It looks like the last little bit of legal ground upon which someone could launch a challenge to a rule or other action from the CFPB has been chewed up for good. Late last month, CFPB Director Richard Cordray formally ratified his prior actions as director before being confirmed by the Senate in July. “I believe that the actions I took during the period I was serving as a recess appointee were legally authorized and entirely proper,” Cordray wrote in a brief “Notice of Ratification” in the Aug. 30 Federal Register. “To avoid any...

Late last month, the Township of Mount Holly, NJ, as petitioner, filed its opening merits brief with the Supreme Court of the United States in a closely watched disparate impact case, despite continuing settlement discussions. The crux of the case, Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc. et al., No. 11-1507, is whether disparate impact claims are cognizable under the Fair Housing Act. The township argues that they are not. In its brief with the SCOTUS, the township asserted that under the ordinary meaning of...

The CFPB recently urged the Seventh Circuit Court of Appeals to uphold a lower court’s refusal to dismiss a class-action lawsuit alleging that a debt collector’s letter offering a settlement of the plaintiff’s credit card debt was in violation of the Fair Debt Collection Practices Act because it failed to disclose that the debt was time‐barred. In Delgado v. Capital Management Services, LP, et al., the debt collector allegedly sent the plaintiff a dunning letter with a limited-time offer to settle a debt upon which the statute...

Mortgage lenders and servicers are increasingly worried about a number of aspects of the CFPB’s mortgage servicing rules that were issued earlier this year, including some that could interfere with various state laws. The fear is that will cause unnecessary litigation, conflicting judicial decisions and prolonged uncertainty for the industry. One of the bureau’s new regulations will require mortgage servicers to provide an opportunity to seek loss mitigation before foreclosure initiation is permitted, with a private right of...

The Mortgage Bankers Association recently warned the CFPB that a move by the Federal Housing Finance Agency to lower loan limits for the government-sponsored enterprises could negatively affect qualified mortgage status and borrower access to credit. “Given that we are in the early, fragile stages of a housing recovery, we urge the bureau to consider additional refinements to the QM requirements to mitigate the combined impact of the rule and the FHFA’s action on loan limits,” the MBA said. The trade group noted that the QM rule...

The American Bankers Association recently urged the CFPB to withdraw a generic clearance under the Paperwork Reduction Act for “information collections” – intake forms, questionnaires and other documents – related to its consumer complaint system, arguing that the request covers “substantial policy issues” that should be subject to public review and comment. Specifically, the CFPB is seeking generic clearances for information collections that will permit it to pilot new consumer complaint and inquiry intake forms; to gather...

As of June 30, 2013, the end of the third quarter of fiscal year 2013, the CFPB had received $323.2 million in transfers from the Federal Reserve, far below the $598 million the bureau is entitled to in funding under the Dodd-Frank Act, according to the CFPB’s latest financial update. Of the $308 million it spent, approximately $140.2 million was allocated to employee compensation and benefits for the 1,226 employees on board by the end of the quarter. Other than payroll expenses, the largest obligations for the quarter were...

Thursday, Sept. 12: Now that Richard Cordray is “street legal” as the confirmed director of the CFPB, House Financial Services Committee Chairman Jeb Hensarling, R-TX, has decided to invite him before the panel to testify on the bureau’s third semi-annual report to Congress, which was released back in late March and covers the period from July 1, 2012, to Dec. 31, 2012. “The director of the CFPB is required by law to appear before the committee on a semi-annual basis to deliver a report on the CFPB,” says a hearing notice on the...

Securities issuers won a major victory as the revised proposed rule on risk retention issued by federal regulators last week removed the requirement for a premium capture cash reserve account. The highly controversial PCCRA was replaced with a fair value calculation requirement for retention which regulators said will increase the value of retained risk compared with the original proposal. “The ASF is extremely pleased to see the elimination of the premium capture cash reserve account provisions from the re-proposed rule,” said Tom Deutsch, executive director of the American Securitization Forum. “The provisions would have completely eliminated the economic incentives of securitizers to issue residential MBS and commercial MBS.” The original proposal generally measured...

Revised risk-retention requirements proposed last week by federal regulators for certain non-mortgage ABS and commercial MBS are somewhat looser than the standards initially proposed in 2011. Perhaps most significantly, “blended pools” would be allowed for commercial mortgages, commercial real estate loans and auto loans, allowing issuers to mix qualifying loans and non-qualifying loans in the same security. Securitized loans that don’t meet qualifying underwriting standards will be subject to the 5 percent risk retention as required by the Dodd-Frank Act. Blended pools would be eligible for reduced risk retention, as low as 2.5 percent. “The agencies believe...