The CFPB has ratcheted up its scrutiny of the domestic auto finance industry, subpoenaing a number of U.S. auto lenders over the sale of extended warranties and other financial products, according to a report in the May 3 edition of the Wall Street Journal. Bureau officials said they would not comment on or confirm any potential subpoenas or requests for information. The CFPB interacts with the car-buying public and auto lenders in a variety of different ways. These can include educating consumers, examining and possibly...
Late last week, the CFPB published a small entity compliance guide on its final rule implementing an amendment to the Equal Credit Opportunity Act that has to do with furnishing copies of appraisals and other written valuations to applicants for first-lien loans secured by a dwelling. The final rule, known as the ECOA Valuations Rule, was issued in January and becomes effective Jan. 18, 2014.The guide summarizes the new rule, but it is not a substitute for the rule, the document states. As the guide points out, the ECOA...
The CFPB also issued a small entity compliance guide on its high-cost mortgage rule, otherwise known as the 2013 HOEPA Rule, which implements the Dodd-Frank Act changes to the Home Ownership and Equity Protection Act. The 2013 HOEPA Rule, published this past January, also implements two additional Dodd-Frank counseling requirements that may apply to lenders regardless of whether or not they make high-cost mortgages. Specifically, these provisions require or encourage consumers to obtain homeownership counseling for...
The last of three compliance guides the CFPB published last week for small entities covers the agency’s final rule, promulgated in January with the other banking regulatory agencies, regarding appraisals for higher-priced (i.e., subprime) mortgage loans (HPMLs). The new guide reminds that under the HPML Appraisal Rule, mortgage loans are HPMLs if they are secured by a consumer’s principal dwelling and have interest rates above certain thresholds. Also, when lenders originate a higher-priced first-lien or subordinate-lien loan covered by the...
The Obama administration has formally requested the Supreme Court of the United States to resolve the constitutionality of the recess appointments the president made to the National Labor Relations Board, which were called into question in the Noel Canning v. NLRB decision earlier this year. Industry attorneys widely see the eventual outcome of the Canning ruling to have direct implications for the tenure of Richard Cordray as the director of the CFPB, even though the oversight of the bureau itself is unlikely to suffer...
CFPB Director Richard Cordray unapologetically defended his agency’s big move into the data collection sphere against complaints from skeptical Republicans during a hearing recently before the Senate Banking, Housing and Urban Affairs Committee. Sen. Mike Crapo, R-ID, ranking member of the committee, got this ball rolling by citing a recent press account that the CFPB has allocated more than $20 million for collecting and tracking customer credit card and spending habits for more than 10 million Americans. “The size of this data...
With the CFPB still such a relative babe in the woods as far as being a federal financial regulator, the mortgage lending industry has plenty of uncertainty to contend with when it comes to expectations about the bureau examining for fair lending compliance. “While the CFPB may be the new regulator in town, its supervisory staff comes, in large part, from those who participated in fair lending examinations for the OCC or the FRB or the FDIC or OTS or the FTC,” said Dr. Marsha Courchane, vice president and practice leader of...
Representatives of banks and credit unions urged the CFPB to amend its proposed rule on mandatory escrow accounts for higher-priced mortgage loans, including expanding the definitions of ‘rural’ and ‘underserved’ areas, which are the criteria for locales where banks are exempt from the escrow rule, as well as rules related to balloon payments and qualified mortgages. Under the January 2013 rule, small creditors that meet certain loan and asset limits and that operate predominately in rural or underserved areas will be exempt from...
The National Association of Federal Credit Unions is calling upon the leadership of the House Financial Services Committee to support legislation that would revise the definition of ‘points and fees’ used to determine what is a qualified mortgage under the CFPB’s ability-to-repay rule. H.R. 1077, the “Consumer Mortgage Choice Act,” was introduced by Rep. Bill Huizenga, R-MI, in March. The legislation would make it easier for consumers to qualify for QM loans at a lower rate by changing the definition of points and fees as it applies...
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