Loopholes in the current Military Lending Act rules are allowing lenders to offer high-cost consumer loans to military families by skirting the 36 percent rate cap – in some cases, charging more than 300 percent – as well as sticking them with excessive fees for the products they use, according to recent comments and a report by the CFPB. The MLA is implemented by the Department of Defense, and is enforced by the bureau and other federal regulators. The CFPB filed a comment letter in support of the DOD’s recent proposal to broaden the scope of the MLA rules to cover deposit advance products, and more types of payday, auto title and installment loans. Currently, the MLA rules provide service members and ...

The strong growth in issuance of jumbo mortgage-backed securities seen since 2010 stumbled in 2014, according to a new ranking and analysis by Inside Nonconforming Markets. Some $9.79 billion in jumbo MBS were issued last year, down 25.4 percent from activity in 2013. Issuance has been constrained by bank portfolio demand for jumbo mortgages. The spike in interest rates in 2013 led to nine months of very low issuance. Rates have since fallen and a number of new jumbo MBS issuers have entered the market, but quarterly volume has struggled to reach the levels seen in early 2013. Those looking for a silver lining could...[Includes one data chart]

In another example of multi-agency, multi-jurisdictional legal action, the CFPB and Florida’s Attorney General Office brought an enforcement against two student debt-relief companies accused of tricking borrowers into paying upfront fees for federal loan benefits. “We allege that both companies exploited vulnerable student loan borrowers, made false promises about their debt-relief services, and charged illegal upfront fees,” said CFPB Student Loan Ombudsman Rohit Chopra. The bureau and the Florida AG shut down Tampa-based student loan debt-relief company College Education Services, and its owners, Marcia Elena Vargas and Frank Liz, for allegedly scamming students into paying upfront fees for student loan debt consolidation, loan forgiveness, and relief from garnishments, services that were never provided or not performed as promised, according to ...

The CFPB sued a Dallas-based company, Union Workers Credit Services, for allegedly deceiving consumers into paying fees to sign up for what it advertises to be a general-use credit card that actually can only be used to buy products from the company. “The business model for Union Workers Credit Services is built on duping consumers into signing up for a sham credit card,” said CFPB Director Richard Cordray. “Hundreds of thousands of people, including a great many union members who were specially targeted, have been tricked into spending millions of dollars for a so-called credit card that can really only be used to buy the company’s own products, ” he added. “From the misleading photos of nurses and firemen on ...

The CFPB’s proposed rule, “Defining Larger Participants in the Automobile Financing Market,” didn’t win many friends in the auto finance sector during the public comment period which closed earlier this month. The proposed rule would generally allow the bureau to supervise larger nonbank auto finance companies – those that make, acquire or refinance 10,000 or more loans or leases in a year – for the first time at the federal level. The bureau also indicated that it considered, and is continuing to consider, the establishment of a higher threshold – 50,000 annual originations, and one that is lower – 5,000 annual originations.The National Independent Automobile Dealers Association told the CFPB it should decline to establish any threshold that is lower than the 10,000 ...

Wall Street analysts are generally projecting a year of stability for most asset classes in the consumer ABS space for 2015, despite a few more losses and an anticipated increase in interest rates. The one exception might be subprime auto. Analysts at Standard & Poor’s Ratings Services cited a favorable overall environment characterized by a strengthening economy, healthy consumer credit fundamentals, and robust structural protections in ABS transactions. “We expect...

Michael Levitis, principal of the Mission Settlement Agency (a debt-settlement company), was slapped with a nine-year prison sentence and ordered to pay $2.2 million in restitution and a fine of $15,000 after pleading guilty to several charges brought in response to the CFPB’s first publicly announced criminal referral to the U.S. Department of Justice last year. Levitis pled guilty to one count of conspiracy to commit mail fraud and wire fraud, and another count of conspiracy to commit wire fraud. He has been ordered to surrender for service of his sentence on Feb. 23, 2015, at an institution to be determined by the state Bureau of Prisons. Upon release from imprisonment, Levitis will be on supervised release for a term ...

Last week, the CFPB asked the U.S. District Court for the Southern District of New York to enter a consent order requiring Premier Consulting Group to pay a civil penalty of $69,075 – accusing the firm of charging consumers illegal upfront fees for debt-settlement services they never received – and to take other steps to prevent future legal violations. That sum represents the amount of advance fees the company took from consumers who did not have any debt settled, according to the bureau. Included in the CFPB’s legal action was the law office of Michael Lupolover. Both firms are based in Englewood Cliffs, NJ. Premier Consulting “took advantage of consumers in financial distress, charging tens of thousands of dollars for services they ...

Toyota Motor Credit Corp., the captive finance arm of Toyota, recently revealed that it has received a letter from the CFPB and the Justice Department alleging that certain practices related to discretionary dealer markup resulted in discriminatory lending aimed at minorities and low-income borrowers. In a recent Form 8-K filing with the Securities and Exchange Commission, TMCC said the agencies have requested certain information about the company’s purchases of auto finance contracts from dealers as well as related discretionary pricing practices. “On Nov. 25, 2014, we received from the agencies a letter alleging that such practices resulted in discriminatory pricing of loans to certain borrowers in contravention of applicable laws, and informing us that they are prepared to initiate an ...