The CFPB’s new mortgage servicing rule might bring clarity and consistency to the industry – but at a cost of increased litigation and enforcement actions, a top attorney said recently. “There has been and will continue to be a focus on the fact that the rule grants borrowers a private right of action associated specifically with loss mitigation and early intervention provisions,” said Michael Waldron, a practice leader in the mortgage banking group at Ballard Spahr. However, the reality is, the risk here is much broader. “The rules...
During last week’s meeting of the CFPB’s Consumer Advisory Board, Director Richard Cordray revealed a handful of consumer problems his agency plans to address in the future. The first class of problems is “the deceptive and misleading marketing of consumer financial products and services,” Cordray said. “Sometimes the problem that consumers face is not out-and-out misrepresentation, but instead that critical product information is presented to them in a manner they cannot readily understand and compare,” he explained.…
The CFPB published a final rule on disclosure of records and information earlier this month in which it did not back off of its insistence that it has discretionary authority to share confidential information with state attorneys general. Under the final rule, the CFPB is allowed to provide discretionary disclosures of confidential information to state AGs “to the extent that the disclosure of the information is relevant to the exercise” of the AG’s statutory authority. And the rule enables the bureau to similarly disclose...
The CFPB recently put out a request for information seeking public input on ways to provide struggling private student loan borrowers with more flexible, more manageable repayment options. Federal student loans frequently provide for income-based repayment options for borrowers with partial financial hardship, as well as rehabilitation options for borrowers in default, according to the bureau’s notice. However, “In general, private student loans do not offer similar modified repayment options.” In July, the director...
Some mortgage servicers face capacity issues when it comes to the plethora of new regulatory requirements and need outsource assistance, but the rest of the industry will need help with the process requirements and planning, according to a compliance service provider. “While all mortgage servicers are facing challenges in staying compliant with the industry’s many changing regulations, the nature of those challenges varies by the organization’s size and require varying solutions,” said Loren Morris, senior vice...
Various segments of the financial services industry are struggling with the CFPB’s trial disclosure programs proposal, with some of the trade representatives appealing to the bureau for some changes or assistance. The proposed policy would allow companies to test new consumer disclosures on a case‐by‐case basis. The CFPB would approve limited‐time exemptions from federal disclosure laws to enable the companies to conduct the trials, and the bureau would use the resulting information to improve its disclosure rules and model...
Federal regulators should consider aligning the pending risk retention rule’s “qualified residential mortgage” standard with the “qualified mortgage” standard under the ability‐to‐repay rule the CFPB finalized on Jan. 10, Federal Reserve Governor Daniel Tarullo said. Defining QRMs as QMs would eliminate the downpayment requirement initially proposed for QRMs and allow greater access to credit for borrowers than a more stringent QRM definition, he said at a Senate Banking, Housing and Urban Affairs Committee hearing on...
CFPB Remains on Radar of Hostile House GOP. The activities and influence of the CFPB will be a subject of keen interest to hostile Republicans on the House Financial Services Committee, according to the committee’s recently published agenda for the 113th Congress. The committee said it will scrutinize the CFPB’s regulatory, supervisory and enforcement initiatives to make sure they protect consumers against unfair and deceptive practices without stifling economic growth, job creation or reasonable access to credit. “In...
Monday, February 25: Comments are due on the CFPB’s proposed amendments to Regulation Z (ability-to-repay rule). Tuesday, February 26: Federal Reserve Board Chairman Ben Bernanke is scheduled to appear before the Senate Banking, Housing and Urban Affairs Committee to deliver the central bank’s Semiannual Monetary Policy Report to the Congress. The Senate Finance Committee is scheduled to vote on President Obama’s nominee for Treasury Secretary, Jack Lew, the president’s former chief of staff and a former official at...
The Department of Justice and the Securities and Exchange Commission are likely to pursue more mortgage-related lawsuits due to pressure from Congress, according to former federal attorneys. “The fact that the attorney general now speaks of financial fraud enforcement as one of the top three priorities of the Department of Justice, just after terrorism and keeping people safe in their communities, trickles down to the lowest levels of the department and elsewhere in terms of the dedication of resources, the coordination, the training, the case referrals,” said Andrew Schilling, a partner at the law firm of BuckleySandler and a former chief of the civil division of the U.S. Attorney’s Office for the Southern District of New York. The latest pressure came...
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