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Inside the CFPB

April 8, 2013

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Lenders Next Expected Targets As CFPB Goes After Captive Re

CFPB’s crosshairs, the bureau revealed week as it announced enforcement actions against four private mortgage insurers over the industry’s use of captive reinsurance arrangements, and fining the companies relatively small amounts. These units have been in runoff mode for several years, as captive re withered after the market collapse. “[I]n every kickback situation, there is somebody paying and somebody receiving. It takes two to tango,” said CFPB Director of Enforcement Kent Marcus. “Today, we’re dealing with those paying... Read More

CFPB’s Vastly Expanded Complaint Database Raises Legal Questions

The CFPB went “live” with a significantly expanded consumer complaint database late last month, featuring a wealth of new data on problems consumers have with credit cards, mortgages, student loans, bank accounts, services and other consumer loans. The CFPB characterizes it as “the nation’s largest public database of federal consumer financial complaints, opening up to consumers information on more than 90,000 individual complaints on financial products and services.” CFPB Director Richard Cordray said, “By sharing these... Read More

Bureau Now Accepting Complaints About Money Transfer Transactions

The CFPB is now accepting consumer complaints about money transfer transactions, otherwise known as remittances, the bureau announced last week. The agency specifically wants to hear from consumers who have an issue such as money was not available when promised; a wrong amount charged or received (transfer amounts, fees, exchange rates, taxes, etc.); or incorrect/missing disclosures or information. The CFPB also wants to hear about other transaction issues (unauthorized transaction, cancellation, refund, etc.); other service issues... Read More

CSBS Urges More Flexibility in Defining ‘Rural’ Markets for QM

The Conference of State Bank Supervisors is calling upon the Consumer Financial Protection Bureau to adopt a petition process to define “rural” counties as the bureau prepares to implement balloon “qualified mortgage” and escrow requirements for rural creditors. The Dodd-Frank Wall Street Reform and Consumer Protection Act confers QM benefits on certain balloon loans if they are made in rural or underserved areas. In implementing the standard, the CFPB decided to use the USDA Economic Research Service’s Urban Influence Codes as... Read More

Nonbank Student Loan Servicers Going Under CFPB’s Microscope

The CFPB is proposing to amend the regulation defining larger participants of certain consumer financial product and service markets by adding a new section to define larger participants of a market for student loan servicing, according to a proposed rule issued late last month for public comment. As per its authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bureau’s proposal rule would identify a market for student loan servicing and define “larger participants” of this market that... Read More

Consumer Reps Call for Flexible Payment, Refi Options for Students

Consumers Union was among the many voices calling for the CFPB to make major changes to the ways students pay back their increasing level of educational loan debt. “The time is now to make two changes that would bring substantial relief to private student loan borrowers,” CU said, the first of which is that lenders should offer income-based repayment plans to borrowers. Higher education is a unique investment; the returns can take years to realize, especially when the job market is weak for new graduates,” CU noted... Read More

Banks Win One From the Bureau On ATM Placard Requirement

The CFPB late last month finalized a rule implementing the automated teller machine placard legislation that was signed into law last December. The legislation protects banks from frivolous lawsuits by repealing what they see as the outdated, duplicative requirement that a placard must be attached to an ATM stating that a fee may be charged. The final rule, effective immediately, amends Regulation E (on electronic fund transfers), which implements the Electronic Fund Transfer Act, and the official interpretation to the regulation... Read More

CFPB Spent $300 Million in FY12; $134 Million on Employee Comp.

The CFPB spent $299.76 million “in obligations” in fiscal year 2012, according to the bureau’s third semi-annual report to Congress, submitted late last month. Approximately $134 million of that was spent on employee compensation and benefits for the 970 employees on board at the bureau as of Sept. 30, 2012. As of Dec. 31, 2012, the CFPB had requested transfers from the Federal Reserve totaling $136.2 million to fund CFPB operations and activities for the first quarter of FY2013. These funds are held in an account for the bureau at... Read More

Contracting Processes Could Use Better Internal Controls, OIG Finds

The CFPB’s contract solicitation and selection processes are generally in compliance with federal regulation, but the bureau could do more to shore up internal controls, according to the results of an evaluation by the Federal Reserve Board Office of Inspector General.“We found that the CFPB’s processes and practices were compliant with particular Federal Acquisition Regulation requirements, such as performing acquisition planning and market research, providing opportunities for companies to compete for CFPB contracts, and... Read More

Auto Dealers Take Issue With CFPB Guidance on Auto Lending

Two major auto dealer trade groups have some serious objections to the guidance the CFPB put out last month on auto lending, particularly taking issue with whether the CFPB’s position on dealer rate participation is going to make much difference in helping car buyers. The National Automobile Dealers Association and the National Association of Minority Automobile Dealers said the guidance issued by the bureau attempts to force auto finance sources into changing the way they compensate dealers without any indication that... Read More

Worth Noting

The CFPB is going to release its first substantive guides to the mortgage rulemakings it issued earlier this year, according to the text of an email that the bureau sent to industry groups last week but otherwise did not announced publicly. The National Association of Independent Housing Professionals is shopping around on Capitol Hill some new appraisal rules that would include the establishment of a hotline with the CFPB. The National Association of Federal Credit Unions made a fresh appeal to Senate leadership for relief from... Read More

Around Town/Looking Ahead/Also On Our Radar

New Treasury Secretary Jack Lew chaired the regularly scheduled meeting of the Financial Stability Oversight Council, of which the CFPB is a member, in a closed session at Treasury last week. The CFPB, which is using the disparate-impact standard as the basis of its actions, is assigning a fair lending staffer to every supervision exam; conducting fair lending investigations; and striking alliances with the Department of Justice, as well as the Department of Housing and Urban Development and other regulators, we’ve been told... Read More

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