Last week, the CFPB announced it had brought two separate actions against Cincinnati, OH-based Fifth Third Bank, one for alleged discriminatory auto loan pricing and another for alleged illegal credit card practices. In the auto-lending enforcement action, the bureau and the Department of Justice alleged that the bank violated the Equal Credit Opportunity Act by charging African-American and Hispanic borrowers higher dealer markups for their auto loans than non-Hispanic white borrowers. They also asserted that Fifth Third’s allegedly illegal discriminatory pricing and compensation structure meant thousands of minority borrowers from January 2010 through September 2015 were charged, on average, over $200 more for their auto loans. The CFPB and DOJ action requires Fifth Third to change its pricing and compensation ...

Commercial banks and savings institutions reduced their holdings of non-mortgage ABS again during the second quarter, according to a new Inside MBS & ABS analysis of call reports. Banks and thrifts held $147.55 billion of non-mortgage ABS as of the end of June, a 5.1 percent decline from the previous quarter. The banking industry’s aggregate ABS portfolio has been shrinking steadily since the end of 2013 and was down 15.2 percent over that period. Banks shed...[Includes two data tables]

A number of consumer-oriented organizations are urging members of Congress to defeat H.R. 1737, the “Reforming CFPB Indirect Auto Financing Guidance Act,” legislation they say would cripple the bureau’s ability to act against discriminatory auto lending practices. H.R. 1737, introduced this spring by Rep. Frank Guinta, R-NH, would require the CFPB to rescind its guidance from March 2013 regarding the fair lending risks associated with car dealer interest rate markups. The bill also would require the bureau to provide notice and take comments only for guidance related to auto lending through car dealers. Additionally, the legislation would make publicly available all information relied on by the CFPB, and redact any information exempt from disclosure under the Freedom of Information Act....

The FHA will not issue a new case number for any FHA-to-FHA refinance if the current mortgage has a repair or rehabilitation escrow account in FHA Connection. The change, which is one of several updates to FHA Single Family Policy Handbook 4000.1, applies only to FHA streamline refis. It aims to ensure that escrow funds of the mortgage being refinanced are properly applied as well as conform to system requirements. The updated sections become effective on Sept. 14, 2015. Another change clarifies that the payoff statement for the mortgage being refinanced is the only document required when calculating the maximum mortgage amount for simple refi transactions. In addition, guidance for loan-to-value limits for cash-out refis has been updated to clarify that the 85 percent LTV restriction applies only to cash-out refis. HUD also noted that appraisers have flexibility in regards to when inspections should ...

Standard & Poor’s ranked as the most active rating service in the non-mortgage ABS market at the midway mark in 2015, but came in last in the non-agency MBS sector. S&P provided ratings on $63.55 billion of non-mortgage ABS issued during the first half of the year, or 60.3 percent of total issuance. That was off slightly from its 64.1 percent market share for all of last year. The company has gotten more active in rating credit card deals, but has lost some of its share in vehicle finance and business loan ABS. Fitch was...[Includes two data tables]

Student loan debt is no joke in America – and mortgage bankers, in particular, know all about it, especially since it’s being singled out as the chief reason why some borrowers can’t afford to buy their first home. Each year, a new group of college graduates has to start figuring out how to pay off their student loans. There’s even a website dedicated to showing the national student debt in real time – roughly $1.2 trillion as Inside Mortgage Trends went to press – along with credit card debt and auto loans. Currently, 15 percent of mortgagors have...

Subsequent to the publication deadline for the previous issue of Inside the CFPB, American Honda Finance Corp. submitted a statement in response to the enforcement action brought against it late last month by the CFPB and the Department of Justice.“AHFC strongly opposes any form of discrimination, and we expect our dealers to uphold this principle as well,” said the lender. “We firmly believe that our lending practices have been fair and transparent. “AHFC has a difference of opinion with the CFPB and the DOJ regarding the methodology used to make determinations about lending practices, but we nonetheless share a fundamental agreement in the importance of fair lending,” the company added.In cooperation with the CFPB and the DOJ, AHFC...

The CFPB and the Department of Justice resolved a $24 million enforcement action against American Honda Finance Corp. last week with a settlement that will put new measures in place to address discretionary auto loan pricing and compensation practices. The joint CFPB/DOJ investigation concluded that Honda’s policies resulted in minority borrowers paying higher dealer markups. “Honda violated the Equal Credit Opportunity Act by charging African-American, Hispanic, and Asian and Pacific Islander borrowers higher dealer markups for their auto loans than non-Hispanic white borrowers,” said the bureau. “These markups were without regard to the creditworthiness of the borrowers.” Honda’s policies also injured thousands of minority borrowers, according to the CFPB. “Honda’s discriminatory pricing and compensation structure meant thousands of minority borrowers ...

New issuance of non-mortgage ABS increased in most major product categories during the second quarter of 2015, although a slowdown in floorplan deals dampened the party slightly. The ABS market generated $54.15 billion in new issuance during the second quarter, a gain of 5.8 percent from the first three months of 2015. It was the strongest new issuance figure since the financial market meltdown, with the previous high ($54.22 billion) coming in the third quarter of 2007. ABS issuance has climbed...[Includes two data tables]

CFPB is Investigating Bankrate. Bankrate revealed recently that the CFPB has issued civil investigative demands to the company and certain employees in an effort to seek documents and answer questions relating to Bankrate’s quality control process for its online mortgage interest rate tables. The company has cooperated in responding to the CIDs, Bankrate said in a Form 10-K filing with the Securities and Exchange Commission. “The company received a communication from the CFPB inviting the company to respond to the CFPB’s identified issues in the form of a notice of opportunity to respond and advise during which the CFPB identified potential claims it might bring against the company,” the filing said. Bankrate said it has submitted a response that it ...