The CFPB’s recently finalized “no action” policy towards market innovators that come up with new financial services products will probably depress the development of new mortgage loan products, numerous industry legal experts say. Under the policy, bureau staff would issue no-action letters (NALs) to specific applicants, stipulating that the CFPB staff “has no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter.” Also, such a letter could be modified or revoked at any time at the discretion of bureau staff. Further, issued NALs would be publicly disclosed as a general practice, and they would not be binding on the bureau, other regulators or parties in litigation. Former CFPB official ...

The CFPB took two separate actions against Citibank last week for alleged illegal debt sales and debt collection practices. In its first action, the CFPB ordered Citibank to cough up nearly $5 million in consumer relief and pay a $3 million penalty for allegedly selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers. The second action was taken against both Citibank and two debt collection law firms it used that allegedly falsified court documents filed in debt collection cases in New Jersey state courts. The CFPB ordered Citibank and the law firms to comply with a court order that Citibank refund $11 million to consumers and forgo collecting about $34 million ...

he CFPB initiated its first data security enforcement action last week, ordering online payment platform Dwolla, based in Des Moines, IA, to pay a $100,000 penalty for allegedly deceiving consumers about its data security practices, to stop misrepresenting those practices and to fix them. According to the bureau, from December 2010 until 2014, Dwolla claimed to protect consumer data from unauthorized access with safe and secure transactions. The company also claimed that it encrypted all sensitive personal information and that its mobile applications were safe and secure. As a result of its investigation, the CFPB said that, among other issues, Dwolla misrepresented its data-security practices by falsely claiming they exceed or surpass industry security standards. “Contrary to its claims, Dwolla ...

Mass Defection of Top Financial Services Attorneys at K&L Gates. A total of 26 top attorneys – including Laurence Platt, Phillip Schulman, Steven Kaplan, Melanie Brody and Jonathan Jaffe – have jumped ship from the K&L Gates law firm in Washington, DC, to the rival Beltway law shop of Mayer Brown. Their new Consumer Financial Services Group will advise leading financial services companies – including banks, investment banks, private equity funds, hedge funds, mortgage companies, marketplace lenders, emerging payment companies and start-ups –as well as various types of participants in the consumer credit and real estate finance arenas. Their specialized focus will include counseling clients on federal and state laws governing the making, servicing, purchase and sale of residential mortgage loans and the ...

Fannie Mae and Freddie Mac are private companies, according to a recent Ninth Circuit Court of Appeals case that dismissed an argument stating that the mortgage giants are federal instrumentalities as it relates to them being liable under the False Claims Act. Now some say this ruling may influence and stir up reaction about a case in Delaware involving GSE shareholders who argue that the Treasury sweep of the GSEs’ profits was illegal. In the United States ex rel. Adams v. Aurora Loan Services, Inc., et al., a whistleblower case, James Adams, on behalf of the government, named 16 banks, lenders and servicers as defendants in a FCA breach of representations-and-warranties lawsuit. It was alleged...

FHFA Ramps Up HARP Social Media Efforts. The Federal Housing Finance Agency kicked off a new social media campaign in late February, #HARPNow, to let more than 367,600 homeowners across the country know about the Home Affordable Refinance Program before it expires on Dec. 31, 2016. FHFA will use Twitter, LinkedIn and YouTube to reach homeowners in the 10 states with the greatest concentration of HARP-eligible borrowers. Fannie Names Winner of Second NPL Community Impact Pool. Fannie Mae announced that New Jersey Community Capital is the winning bidder of the company’s second Community Impact Pool of non-performing loans. This pool of loans was structured to attract diverse participation from non-profits, smaller investors and minority- and women-owned businesses. The transaction...

Mortgage industry groups continue to rail against the disruptions they insist are being caused by the Consumer Financial Protection Bureau’s integrated disclosure rule known as TRID. Respondents to a February survey by the American Bankers Association indicated that TRID compliance is still a relevant problem, continues to impose a heavy compliance burden, and causes customer dissatisfaction through delayed closings and increased fees and costs, the trade group ...

The five largest mortgage servicers that got into trouble because of their flawed servicing and foreclosure practices have passed their final test for compliance with the 2012 National Mortgage Settlement, according to the Office of Mortgage Settlement Oversight. The OMSO report summarizes a set of five compliance reports filed by NMS Monitor Joseph Smith with the U.S. District Court for the District of Columbia for five servicers that were subject to the $25 billion ...

The CPFB it will continue to work with institutions to support implementation of its mortgage rules and “begin to assess the effectiveness of significant rules.”

A working group led by potential investors in new non-agency MBS detailed principles for the role of a deal agent this week, signifying some progress in reform efforts. However, a revival of the non-agency MBS market looks a ways off as other industry participants consider how a deal agent will actually function. “We are now at a transition point for non-agency MBS reform efforts, where some market participants can start moving from a principles-level discussion to contractual negotiations,” Monique Rollins, deputy assistant secretary at the Treasury Department, said at the ABS Vegas conference produced by Information Management Network and the Structured Finance Industry Group. The Treasury helped facilitate...