As Inside the CFPB was going to press, the bureau announced a $35 million enforcement action against Flagstar Bank for allegedly blocking borrowers’ attempts to save their homes, in violation of the CFPB’s mortgage servicing rules. This is the first enforcement action the bureau has initiated based on the new regulation. The regulator alleged that the bank closed borrower applications due to its own excessive delays. “Flagstar took excessive time to review loss mitigation applications, often causing application documents to expire,” said the agency. “To move its backlog, Flagstar would close applications due to expired documents, even though the documents had expired because of Flagstar’s delay.” The CFPB also accused the bank of delaying the approval or denial of borrower ...

The mortgage industry has about a month left to officially weigh in on the CFPB’s pending Home Mortgage Disclosure Act proposed rule, and a top official at the bureau urged lenders to raise important issues now. “Because we’re opening HMDA up, we’re taking the opportunity to try to streamline the reporting process for you,” said Kathleen Ryan, deputy assistant director in the CFPB’s Office of Regulations, in comments before the Mortgage Bankers Association’s regulatory compliance conference on Monday. The bureau also is looking “for ways to ease some of the pain around geocoding and these other ‘translation’ issues that you have in your reporting systems by trying to align to the extent possible” with existing industry standards for data points ...

The CFPB issued its long-awaited proposed rule to define larger participants in the auto finance sector –as well as its underlying proxy methodology – to a decidedly mixed reaction from rival sectors of the financial services industry. Bill Himpler, executive vice president of the American Financial Services Association, said his organization remains concerned that the bureau continues to issue larger participant rules that capture market participants “that, for lack of a better term, are not large by any stretch of the imagination. “Many of the market players that will be subject to the proposed rule have well below 1 percent of market share,” he added. Citing data from Experian, Himpler said that companies below the top 30 have less than a ...

Joint supervisory examinations by the CFPB and the Office of the Comptroller of the Currency have led an enforcement action that will require U.S. Bank to pay $57 million to settle allegations it illegally charged for “add-on” products, harming more than 420,000 consumers. The government agencies accused U.S. Bank, headquartered in Minneapolis, of unfairly charging consumers for certain identity protection and credit monitoring services that they did not receive. These services were sold as “add-on products” for credit cards and other bank products, such as mortgage loans and checking accounts. Part of the problem could have been a breakdown in vendor management, which is an area of increasing importance to the CFPB. According to the findings contained in the consent ...

In a case that highlights the sensitivity of personal financial information and the firms that trade in it, the CFPB convinced a federal judge last week to freeze the assets of the Hydra Group, an online payday lender, and to put a receiver in place to stop an alleged illegal “cash-grab scam” at the business.According to the bureau, the Hydra Group used information purchased from online lead generators to access consumers’ checking accounts to illegally deposit payday loans – usually $200 to $300 – and withdraw fees ranging from $60 to $90 without consent. The organization then allegedly used falsified loan documents to claim that the consumers had agreed to the phony online payday loans. The CFPB’s lawsuit alleges that Richard ...

Corinthian Colleges accused the CFPB earlier this month of wrongly disparaging the career services assistance the for-profit company offers and of mischaracterizing both the purpose and practices of its “Genesis” lending program. The CFPB filed a lawsuit against the company earlier this month. In a statement provided to Inside the CFPB, Corinthian Colleges said the bureau’s complaint ignores “clear, easily obtainable evidence” that thousands of its graduates are hired into permanent positions by large and small employers across the U.S. every year. Instead, the complaint cites isolated incidents at Corinthian’s 97 U.S. campuses that violated company policy regarding job placement policies, the firm added. “The CFPB is aware of these cases because Corinthian identified the issues, took strong action to ...

State-licensed mortgage companies – and the agencies that oversee them – are on the verge of receiving the same kind of protections against waivers of privilege for information provided to the CFPB that was previously extended to depository mortgage lenders supervised by federal agencies. Before adjourning for the November elections, the U.S. Senate passed H.R. 5062, the Examination and Supervisory Privilege Parity Act of 2014. The bill would require the CFPB to coordinate its supervisory activities with state agencies that license, supervise or examine those non-depositories that offer consumer financial products or services. It also would provide that when someone shares information with those same state regulators, or with prudential regulators and state banking regulators, that sharing does not waive attorney-client privileges. ...

Before members of Congress left the nation’s capital for their final push before the November elections, diverse efforts were underway for making changes to aspects of the qualified mortgage definition under the CFPB’s ability-to-repay rule, either through legislation or persuasion. Earlier this month, the U.S. House of Representatives passed H.R. 5461, a package of legislation which includes the text of H.R. 3211, the Mortgage Choice Act, which passed the House unanimously in June. The legislation would make it easier for mortgages to fit under the ATR rule’s cap on points and fees by providing equal treatment to title charges, regardless of whether or not a consumer chooses a title company affiliated with the lender. “This provision is narrowly focused to ...

Members of the Senate and House Grand Old Party wasted no time in seizing upon a new report from the Government Accountability Office that confirmed the huge scope of the CFPB’s data collection initiative and cited weaknesses with data security and privacy. “The CFPB’s massive data collection effort is an unwarranted, unwelcome intrusion into the private financial lives of millions of Americans,” said Senate Banking, Housing and Urban Affairs Committee ranking member Mike Crapo, R-ID, who requested the study. “This GAO report confirms what the bureau would not – that it has been collecting information on up to 600 million American financial accounts, and it does not have the proper safeguards in place to protect the information it is collecting,” he ...

Most of the mortgage finance trade associations wrote to the CFPB recently with a handful of suggestions to improve implementation of the bureau’s TRID – the pending Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure rule. At the top of the list: more written guidance, please.“We appreciate the bureau offering oral guidance through webinars and other channels,” said the groups in a joint letter. However, due to the complexity of the rule, “we strongly recommend that the bureau also provide reliable, written guidance on issues.” Such input is “essential for lenders, settlement service providers, insurers, investors and other secondary market entities, regulators and ultimately, consumers themselves.” The groups also encouraged the CFPB to deepen its engagement in industry ...