The CFPB’s internal control over financial reporting was not effective as of September 30, 2014, because of a material weakness related to the reporting of accounts payable, according to a new study by the U.S. Government Accountability Office. The material weakness is a result of serious control deficiencies that affected CFPB’s determination and reporting of accounts payable. “Specifically, GAO found that CFPB did not have effective procedures in place to determine and record an appropriate amount for goods and services received but not yet paid for as of Sept. 30, 2014,” said the congressional watchdog agency.Additionally, CFPB did not have effective review procedures to timely detect and correct inaccuracies in the accrual amounts. “Despite the material weakness, CFPB made ...

An unspecified number of counties would have been assigned lower loan limits, based on house price trends, but the FHFA weighed “other factors” and left them unchanged.

Consumer complaints to the CFPB about their money transfer transactions fell a sharp 28.4 percent industry-wide during the third quarter of 2014, according to a new analysis by Inside the CFPB. From a short-term perspective, that’s a fairly good performance. The longer-term results are more iffy. The CFPB only started collecting complaints from this sector in the second quarter of 2013, so there are just a handful of reporting periods that can be reviewed. That being said, comparing two six-month periods – the second and third quarters of 2013 versus the same periods this year – the data show an industry-wide jump of 93.7 percent. On the other hand, there are only 1,409 total complaints that have been received [with exclusive chart] ...

The mortgage servicing settlements the CFPB obtained with Ocwen, SunTrust Bank and Flagstar Bank have much to teach the rest of the industry about landmines to avoid. During a webinar sponsored last week by Inside Mortgage Finance, an affiliated newsletter, Allyson Baker, a former CFPB attorney and partner at the Venable law firm in Washington, DC, highlighted the importance of trends seen in the three enforcement cases. “Number one is the bureau’s and other law enforcement agencies’ ongoing joint monitoring of the space,” which suggests the industry is likely to see more joint enforcement actions in the future, Baker told event participants. The second important trend is the very large civil money penalties and restitution that are resulting in tens ...

A new study commissioned by the American Financial Services Association found significant bias and high error rates in the proxy methodology used by the CFPB to determine discrimination in the indirect auto finance market. Central to the study was an examination of the Bayesian Improved Surname Geocoding (BISG) proxy methodology used by the CFPB to determine a disparate impact to legally protected groups. BISG estimates race and ethnicity based on an applicant’s name and census data. AFSA’s study calculated BISG probabilities against a test population of mortgage data, where race and ethnicity are known. One of the primary findings was that when the proxy uses an 80 percent probability that a person belongs to an African American group, the proxy ...

The CFPB put out a bulletin last week advising lenders not to create illegal hurdles for recipients of Social Security Disability Income who apply for mortgages, warning that requiring unnecessary documentation from such consumers could raise fair lending risk. The new bulletin discusses standards and guidelines on verification of SSDI, including those under the CFPB’s ability-to-repay rule, the Department of Housing and Urban Development’s standards for FHA loans, the Department of Veterans Affairs’ standards for VA-guaranteed loans, and guidelines from Fannie Mae and Freddie Mac. The bureau begins by noting that to verify income for qualified mortgage debt-to-income ratios under the ability-to-repay rule, lenders are required to look at whether the Social Security Administration benefit verification letter or equivalent document ...

The CFPB last week proposed sweeping changes for the booming prepaid card market, aiming to mandate new disclosures, error-resolution procedures, consumer liability limits for unauthorized transactions, fee limits, and added requirements for cards with overdraft or credit features. This proposal would apply a number of specific federal consumer protections to broad swaths of the prepaid market for the first time. The proposal would cover traditional plastic prepaid cards, many of which are general purpose reloadable cards. In addition, the proposal would cover mobile and other electronic prepaid accounts that can store funds. The prepaid products covered by the proposal also include: payroll cards; certain federal, state and local government benefit cards such as those used to distribute unemployment insurance, child ...

Under current rules, a servicer cannot explain on the notice itself that the borrower’s hazard insurance is insufficient rather than expired or expiring...

Last week, the CFPB initiated its first enforcement action against a “buy-here, pay-here” car dealer, DriveTime, which it accused of harming consumers by allegedly making harassing debt collection calls and providing inaccurate credit information to credit reporting agencies. DriveTime must pay $8 million as a civil money penalty, end what the bureau characterized as unfair debt collection tactics, revise its credit reporting practices, and arrange for harmed consumers to obtain free credit reports. Phoenix-based DriveTime Automotive Group Inc. and its finance company, DT Acceptance Corp., make up the largest buy-here, pay-here car dealer in the nation, according to the CFPB. “Buy-here, pay-here” means that the dealer sells the car as well as originates and services the auto loan. These kinds ...

The CFPB recently ordered Franklin Loan Corp., an independent, residential mortgage banker in Palm Desert, CA, to pay $730,000 to consumers the bureau alleges were harmed by the company’s practice of giving employees bonuses for steering consumers into loans with higher interest rates. The bureau also has asked a federal district court to approve a consent order requiring the company to end its allegedly illegal compensation system and refund the consumers it harmed. This is the second loan originator compensation settlement the CFPB has obtained, the first being the case involving Castle & Cooke Mortgage. In this case, according to the CFPB, Franklin Loan originated approximately $887 million in loans between 2011 and 2013. “From June 2011 to October 2013, ...