In another example of joint agency enforcement and jurisdictional cooperation, the CFPB and the New York Department of Financial Services filed a lawsuit in federal court last week against Pension Funding LLC and Pension Income LLC, and three of the companies’ managers over allegations they deceived consumers about the costs and risks of their pension advance loans. From 2011 until about December 2014, Pension Funding and Pension Income, two California-based companies, offered consumers lump-sum cash advances for agreeing to redirect all or part of their pension payments over a period of eight years, according to CFPB and the NYDFS. More specifically, the joint complaint alleges that the companies and individual defendants Steven Covey, Edwin Lichtig and Rex Hofelter represented to ...

The CFPB last week ordered Springstone Financial LLC of Westborough, MA – now known as Lending Club Patient Solutions – to provide $700,000 in relief to roughly 3,200 victims of allegedly deceptive credit enrollment tactics. The bureau said the business practices at issue took place mostly before the company’s acquisition by LendingClub Corp., a $140 million transaction that took place back in April 2014 with financing provided from funds and accounts handled by T. Rowe Price Group Inc., Wellington Management Company LLP, BlackRock Inc. and Sands Capital, according to Bloomberg News. According to the CFPB, a number of consumers who signed up for Springstone’s deferred-interest loan product at dental offices to finance dental work were led to believe that the product was ...

The CFPB has denied a recent petition from Selling Source, LLC, a lead-generation company in Las Vegas, and Tim Madsen, a company employee and recipient of a civil investigative demand from the bureau, to modify or set aside the action. “Petitioners raise a number of objections to the CID, none of which warrants setting aside or modifying the CID,” said the bureau. First, the petitioners contend that the CID’s notification of purpose is too vague and thus fails to comply with legal and regulatory requirements, according to the CFPB’s decision. The bureau said the related statute and regulation do not require a detailed narrative and that it may draw the boundaries of its investigation quite generally. Second, the petitioners contend ...

World Acceptance Corp., a publicly traded small-loan consumer finance company based in Greenville, SC, recently revealed that CFPB enforcement staff is considering whether to recommend the agency bring legal action against the company. The company received a civil investigative demand from the bureau back in March, the stated purpose of which is to determine whether the company has been or is “engaging in unlawful acts or practices in connection with the marketing, offering, or extension of credit.” World Acceptance Corp. responded, within the deadlines specified in the CID, to “broad requests for the production of documents, answers to interrogatories and written reports related to loans made by the company and numerous other aspects of the company’s business,” the firm said ...

The National Association of Women in Real Estate Businesses is among the industry groups that generally support the final interagency statement on diversity policies and practices issued by the CFPB, the federal banking regulators and the Securities and Exchange Commission. However, in its comment letter to the agencies, one of the issues the group addressed was ways to enhance the quality, utility and clarity of the information to be collected under the final statement. “Detail is important; when releasing information, agencies and their regulated entities must carefully detail the ways they are promoting diversity and the success and shortcomings of each of their efforts,” the NAWREB said. “The difficulty will always be ensuring that the minority and women inclusion is ...

The CFPB’s arbitration report to Congress “contains substantial methodological flaws and does not support a ban on arbitration clauses in consumer credit contracts,” law professors at the University of Virginia and George Mason University concluded in a recent study. “To the contrary, the data presented in the report show that consumers on balance are better off if they have the arbitration process available to them for dispute resolution,” they added. “Rather than relying on flawed methodology and inaccurate data, the CFPB should focus on the actual benefits arbitration provides to consumers.” Jason Scott Johnston, a law professor at UVA, and Todd Zywicki, a law professor at GMU, reviewed the bureau report for the Mercatus Center and determined that CFPB’s findings ...

Securitization industry participants raised concerns after an appeals court last week refused to hear an appeal of an earlier ruling that reversed the long-held federal preemption that nonbanks have relied on to keep securitized loans exempt from state usury laws. The U.S. Court of Appeals for the Second Circuit denied the appeal of Madden v. Midland Funding last week. No explanation was provided with the denial. The appeal was supported by the Structured Finance Industry Group and the Securities Industry and Financial Markets Association, among others. SFIG said...

Two more long-running legacy MBS lawsuits were resolved last week after defendants Goldman Sachs and Deutsche Bank separately agreed to settle with plaintiffs. The NECA-IBEW Health & Welfare Fund, a union pension fund in Decatur, IL, is seeking preliminary court approval of a $272 million settlement with Goldman Sachs on behalf of entities that purchased MBS issued by defendant GS Mortgage Securities and which Goldman underwrote. If approved, the settlement would put...

Two FHA lenders in Texas have agreed to pay a total of $469,419 in civil money penalties to resolve government allegations they charged bogus fees to borrowers to inflate the purchase amount of newly built manufactured housing. Among 11 alleged violations of FHA rules, the Department of Housing and Urban Development’s Mortgagee Review Board accused American Home Free Mortgage of Prosper, TX, of artificially increasing mortgage costs by an average of $12,000 per loan through improper fees. The fees were paid allegedly to a company owned and operated by AHFM’s sales manager. In addition, HUD alleged there were multiple violations of quality and annual certification requirements. As part of the settlement agreement, without admitting to any fault or liability, AHFM agreed to pay a $169,419 fine and to the permanent withdrawal of its FHA approval. In June 2014, the MRB also heard a ...

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 ...