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Inside the CFPB

December 10, 2012

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CFPB, Justice Department Collaborating on Fair Lending

Fair lending enforcement moved to a new level last week when the CFPB and the Department of Justice signed an agreement to strengthen the coordination of their efforts in this regard as well as to avoid duplication. The good news for the industry is any effort to reduce government duplication could similarly reduce lenders’ compliance burden. Under the memorandum of understanding the agencies signed, the CFPB and Justice will meet regularly on investigations and establish strict confidentiality for shared information... Read More

Appeals Court Justices Cast Doubt On Obama Recess Appointments

Last week, the U.S. Court of Appeals for the D.C. Circuit cast some doubt on the validity of President Barack Obama’s controversial recess appointments to the National Labor Relations Board – and by extension, that of Richard Cordray as director of the CFPB. Noel Canning v. National Labor Relations Board involves a challenge to the president’s recess appointments to the NLRB in early January – during a period when the Senate was holding pro forma sessions every three days specifically to deny him the opportunity to make... Read More

CFPB Files to Dismiss Challenge To Director's Appointment

The CFPB recently joined in the filing of a motion to dismiss a case that includes a legal challenge to President Barack Obama’s controversial recess appointment of Richard Cordray as the bureau’s director.The eventual outcome of State National Bank of Big Spring, Texas, et al. v. Geithner, et al., could be significant in that it might affect not only Cordray’s appointment but an entire new level of regulatory oversight at the bureau that was inaugurated by, and in fact dependent upon, the appointment of a director at the bureau. Most notable among them would be nonbank mortgage lending... Read More

Perceived Delay in QM Rule a Sign The Bureau is Trying to Get it Right

As anxious as mortgage lenders are about the apparent delay in the CFPB’s issuance of an ability-to-repay/qualified-mortgage final rule, industry attorneys, trade group experts and consumer advocates unanimously believe that bureau is taking so much time so it can put out the best, most balanced rule as possible. Carrie Hunt, general counsel and vice president of regulatory affairs for the National Association of Federal Credit Unions, said she isn’t as concerned about when the rule comes as she is about the quality of it... Read More

CFPB, City of Chicago, in a First, Reach Info-Sharing Agreement

Chicago will be the first city to directly report financial activity and fraud to the CFPB, under an information-sharing agreement announced last week by CFPB Director Richard Cordray and Chicago Mayor Rahm Emanuel to help protect the city's consumers from scams related to payday lending, small-dollar loans, student loans, reverse mortgages and home repairs. "We want to learn from and expand on the ways you protect consumers, and to share these approaches nationwide," Cordray said in a press conference... Read More

Compliance Pro Discusses CFPB And Fair Lending Risk Exceptions

Exceptions are part of any business, and when it comes to fair lending risk exceptions, "certainly the CFPB acknowledges that," said compliance expert Tammy Butler with Optimal Blue. However, officials at the bureau are concerned with when lenders give exceptions, for what reasons and whether or not they are given fairly. "To do that, you have to have policy and monitoring," she said. Butler then provided the following checklist to help lenders build their exception policy and procedures... Read More

Bureau Outlines Fair Lending Efforts, Intentions for Future

The CFPB provided Congress with the agency’s first fair lending report, highlighting its first-year accomplishments, and affirming a commitment to the lending industry to be clear about its expectations going forward. “We are still in the process of building our fair lending program and expect the CFPB’s contribution to the work of ensuring compliance with fair lending laws and promoting access to credit will grow as our program progresses,” the report stated. “We are also developing risk-based approaches to... Read More

Consumers Contact Ombudsman Mostly About Complaint Process

It shouldn’t be much of a surprise that 80 percent of the contact the CFPB’s Ombudsman Office received during its first year of operation was from consumers. However, the office’s first fiscal year report suggests that, for all its traditional and nontraditional outreach to consumers, such as the bureau’s social media efforts, much work remains to be done to give consumers a clear understanding of how to navigate the agency’s consumer complaint process. According to the ombudsman’s report... Read More

Bureau Reviewing its Use of Enforcement Attorneys in Exams

The CFPB could be reconsidering its practice of having enforcement attorneys participate in the supervisory examination process, according to the fiscal year 2012 report from the bureau’s Ombudsman Office. When the CFPB was first being set up, it considered the experiences of other agencies and decided to make supervision and enforcement an integrated process within one division at the bureau, and to involve enforcement attorneys at the beginning, middle and end of the supervision examination, according to the report... Read More

CFPB Reminds Credit Reporting Agencies of FCRA Compliance

The CFPB recently issued a bulletin reminding nationwide specialty consumer reporting agencies of their obligation under the Fair Credit Reporting Act to provide a streamlined process for consumers to request a free annual credit report. The bulletin indicates that in order to be in compliance with the FCRA, which the CFPB oversees, nationwide specialty consumer reporting agencies must provide a toll-free number that is published in every telephone directory in which a number for the company appears, and which is clearly and... Read More

Heeding Industry Concerns, Bureau to Revise Remittance Rule

In a concession to concerns expressed by industry representatives, the CFPB recently announced it plans to issue a proposal sometime this month to make certain limited changes to its rule on international money transfers, as well as to extend the rule’s effective date until 90 days after the proposal is finalized.“Some regulated entities identified issues that pose practical challenges in implementing the new law,” the bureau said in announcing its intention to propose a narrow set of changes to the remittance rule. “The proposed changes would improve implementation of the new law while keeping the important new protections for consumers intended by the Dodd‐Frank Act,” the CFPB said. Read More

Congress’ Updated Committee Lineup Features Elizabeth Warren

Opponents of Elizabeth Warren as head of the CFPB will not only have to deal with the Massachusetts Democrat as a new member of the U.S. Senate during the 113th Congress, but also as a newly minted member of the Senate Banking, Housing and Urban Affairs Committee, which has legislative jurisdiction over the CFPB’s regulatory turf, numerous sources said. Warren reportedly received the strong support of Sen. Tim Johnson, D-SD, who is returning as chairman of the powerful committee, along with that of committee member Jack... Read More

Behavioral Economics Produced Stronger Consumer Agency in CFPB

The anti‐predatory lending rules of the Dodd‐Frank Wall Street Reform and Consumer Protection Act – especially those related to mortgages and credit cards – are based on the theory of ‘behavioral economics.’ That in turn has produced a stronger kind of federal regulator, in the form of the CFPB, and in stronger consumer protection laws, according to a new legal abstract. “These new legislative and regulatory developments mark a shift from the ‘rational consumer’ theory that underlay the great disclosure statutes of the late 1960’s and early 1970’s, such as the Truth in Lending Act, and toward the rising influence of ‘behavioral economics’ as a guiding force in consumer protection,” explained Dee Pridgen, professor of law and social responsibility at the University of Wyoming College of Law. ... Read More

More Evidence That Consumers Don’t Use TILA Forms to Shop

In a development that might catch the attention of officials at the CFPB who are working on improving consumer disclosures under the Real Estate Settlement and Procedures Act and the Truth In Lending Act, more evidence has emerged that consumers aren’t very big on using TILA forms to comparison shop for mortgages.A new study from Fannie Mae found that nearly half of lower‐income respondents and more than a third of higher‐income respondents get quotes from only one mortgage lender. The survey also confirms findings in other reports that “a substantial portion of all consumers do not understand key mortgage elements.” Read More

Worth Noting

CFPB's Top Lawyer Lends a Hand. CFPB General Counsel Meredith Fuchs was reportedly named an adviser to the American Law Institute's project to create a "Restatement of the Law Third, Consumer Contracts," which had its first meeting on Nov. 30. Gail Hillebrand, the bureaufs associate director for consumer education and engagement, is said to have attended the meeting as a guest. The ALI's project could have major consequences for providers of consumer financial services and other companies that contract... Read More

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