Reps. Robert Pittenger, R-NC, and Denny Heck, D-WA, recently introduced H.R. 4383, the Bureau of Consumer Financial Protection Small Business Advisory Board Act, which would require the CFPB to establish a small business advisory board. “Consumers, banks, and credit unions already provide valuable insight on what the CFPB proposes, but the smaller operators in finance have a tougher time being heard,” said Heck. “As a small business owner myself, I know local financial service providers in Washington state can partner with the CFPB to better protect consumers and give input on how CFPB actions affect customers and operations.” The Pittenger and Heck proposal would institute a board made up of at least 12 members who are “representatives of small business...
Sen. Dan Coats, R-IN, has introduced the Community Financial Protection Act, legislation to provide smaller financial institutions such as community banks and credit unions with some regulatory relief from financial regulations enacted after the 2008 financial crisis that many complain are crippling their businesses. The Coats bill would modify the way in which the CFPB requests information from financial institutions with less than $10 billion in assets. Under the Coats proposal, the CFPB must use publicly available information or seek the requested information from existing banking regulators. Specifically, the Community Financial Protection Act would stipulate that the CFPB must use current and existing publicly available information and data prior to requesting any information from the prudential regulator. Also, if the...
CFPB Staff Answer Bankers’ Questions on Mortgage Compliance. CFPB staff members answered mortgage compliance questions from members of the American Bankers Association during a live webcast last week. Among the key take-aways was the statement that creditors may use lender and seller credits to reduce the amounts that are calculated into the points-and-fees test. A written statement of who is providing which credits is sufficient to indicate compliance, a CFPB staffer said. Also, home equity line of credit resets do not constitute new transactions that would trigger full ability-to-repay rule underwriting.Another take-away is that loan originator bonuses deriving from funds that exclude mortgage profits are not subject to the otherwise applicable 10 percent limits on loan originator compensation. Regarding...
“The examiner-in-charge apparently thought that the owner was lying, and the CFPB now wants to question him under oath,” principal Joe Garrett writes in a note to his clients.
If you thought the CFPB was finished with the mortgage closing process when it issued its integrated disclosure rulemaking under the Real Estate Settlement Procedures Act and the Truth in Lending Act, think again. The bureau also sought public input on the “pain points” associated with getting a new mortgage, and based on the comments received to date, the agency has identified 1,480 such spots, according to Brian Webster, the originations program manager for mortgage markets at the CFPB.So last week, in a high profile public forum attended by officials of other housing-related federal agencies as well as industry representatives and consumer advocates, the bureau announced it would roll out later this year a voluntary, three-month e-Closing pilot project...
As part of the CFPB’s public forum last week during which the agency announced its forthcoming eClosing pilot project, the bureau also issued guidelines that articulate the minimum functionalities required of potential participants and spell out the features the CFPB wants to test in the pilot. To join the bureau’s pilot on electronic closings, each participant must currently have a system that meets minimal technical capabilities and requirements, as demonstrated by specific features and functionalities. “The CFPB created these minimum requirements to ensure that the pilot program is focused on the specific features and consumer outcomes that the bureau is seeking to evaluate,” the agency said.First, a pilot participant must have an eClosing solution with the ability to store...
More regulation of the private student loan sector seems likely after the CFPB issued a report last week critical of “auto-defaults” in private student lending. According to the bureau, borrowers have complained that some lenders demand immediate full repayment upon the death or bankruptcy of their loan co-signer, even when the loan is current and being paid on time. Borrowers also told the CFPB they face bureaucratic barriers to releasing co-signers from their loans, a commonly advertised benefit that could help avoid auto-defaults. “Students often rely on parents or grandparents to co-sign their private student loans to achieve the dream of higher education. When tragedy triggers an automatic default, responsible borrowers are thrown into financial distress with demands of immediate...
One option that some affiliated business arrangements can use as a mechanism to cope with the CFPB’s ability to repay rule is to change their ownership structure, according to a top industry compliance attorney. Loretta Salzano, a founding partner of Franzén and Salzano, warned attendees at the recent Real Estate Settlement Providers Council’s 2014 annual conference that, “Lenders with affiliated providers must consider the ATR’s impact on their business based on the number and type of affiliates, the break point based on fees of all affiliates, the average loan amount, and the markets served.” Part of that process means lenders have to look and see where their break point is, the point at which they will breach the 3 percent...
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