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Inside the CFPB

May 6, 2013

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CFPB Subpoenas Auto Lenders; Dealers, Finance Firms Scramble

The CFPB has ratcheted up its scrutiny of the domestic auto finance industry, subpoenaing a number of U.S. auto lenders over the sale of extended warranties and other financial products, according to a report in the May 3 edition of the Wall Street Journal. Bureau officials said they would not comment on or confirm any potential subpoenas or requests for information. The CFPB interacts with the car-buying public and auto lenders in a variety of different ways. These can include educating consumers, examining and possibly... Read More

Bureau Releases Small Entity Compliance Guide on ECOA Rule

Late last week, the CFPB published a small entity compliance guide on its final rule implementing an amendment to the Equal Credit Opportunity Act that has to do with furnishing copies of appraisals and other written valuations to applicants for first-lien loans secured by a dwelling. The final rule, known as the ECOA Valuations Rule, was issued in January and becomes effective Jan. 18, 2014.The guide summarizes the new rule, but it is not a substitute for the rule, the document states. As the guide points out, the ECOA... Read More

CFPB Issues New Small Entity Compliance Guide on HOEPA Rule

The CFPB also issued a small entity compliance guide on its high-cost mortgage rule, otherwise known as the 2013 HOEPA Rule, which implements the Dodd-Frank Act changes to the Home Ownership and Equity Protection Act. The 2013 HOEPA Rule, published this past January, also implements two additional Dodd-Frank counseling requirements that may apply to lenders regardless of whether or not they make high-cost mortgages. Specifically, these provisions require or encourage consumers to obtain homeownership counseling for... Read More

Bureau Puts Out Small Entity Compliance Guide on HPML Rule

The last of three compliance guides the CFPB published last week for small entities covers the agency’s final rule, promulgated in January with the other banking regulatory agencies, regarding appraisals for higher-priced (i.e., subprime) mortgage loans (HPMLs). The new guide reminds that under the HPML Appraisal Rule, mortgage loans are HPMLs if they are secured by a consumer’s principal dwelling and have interest rates above certain thresholds. Also, when lenders originate a higher-priced first-lien or subordinate-lien loan covered by the... Read More

Did Hensarling Force Obama’s Hand in Canning Appeal?

The Obama administration has formally requested the Supreme Court of the United States to resolve the constitutionality of the recess appointments the president made to the National Labor Relations Board, which were called into question in the Noel Canning v. NLRB decision earlier this year. Industry attorneys widely see the eventual outcome of the Canning ruling to have direct implications for the tenure of Richard Cordray as the director of the CFPB, even though the oversight of the bureau itself is unlikely to suffer... Read More

Cordray Defends Bureau’s Data Collection Efforts Before Congress

CFPB Director Richard Cordray unapologetically defended his agency’s big move into the data collection sphere against complaints from skeptical Republicans during a hearing recently before the Senate Banking, Housing and Urban Affairs Committee. Sen. Mike Crapo, R-ID, ranking member of the committee, got this ball rolling by citing a recent press account that the CFPB has allocated more than $20 million for collecting and tracking customer credit card and spending habits for more than 10 million Americans. “The size of this data... Read More

Much Uncertainty Remains for Lenders on CFPB Fair Lending Front

With the CFPB still such a relative babe in the woods as far as being a federal financial regulator, the mortgage lending industry has plenty of uncertainty to contend with when it comes to expectations about the bureau examining for fair lending compliance. “While the CFPB may be the new regulator in town, its supervisory staff comes, in large part, from those who participated in fair lending examinations for the OCC or the FRB or the FDIC or OTS or the FTC,” said Dr. Marsha Courchane, vice president and practice leader of... Read More

Groups Urge CFPB to Expand ‘Rural,’ ‘Underserved’ in New Rule

Representatives of banks and credit unions urged the CFPB to amend its proposed rule on mandatory escrow accounts for higher-priced mortgage loans, including expanding the definitions of ‘rural’ and ‘underserved’ areas, which are the criteria for locales where banks are exempt from the escrow rule, as well as rules related to balloon payments and qualified mortgages. Under the January 2013 rule, small creditors that meet certain loan and asset limits and that operate predominately in rural or underserved areas will be exempt from... Read More

Credit Union Group Supports Changes to QM Points and Fees

The National Association of Federal Credit Unions is calling upon the leadership of the House Financial Services Committee to support legislation that would revise the definition of ‘points and fees’ used to determine what is a qualified mortgage under the CFPB’s ability-to-repay rule. H.R. 1077, the “Consumer Mortgage Choice Act,” was introduced by Rep. Bill Huizenga, R-MI, in March. The legislation would make it easier for consumers to qualify for QM loans at a lower rate by changing the definition of points and fees as it applies... Read More

Reg Relief Bill for Small Banks Would Amend CFPB Rulemakings

The CFPB rulemaking is facing another legislative challenge from Capitol Hill, this time from H.R. 1750, the Community Lending Enhancement and Regulatory Relief Act. Introduced late last month by Rep. Blaine Luetkemeyer, R-MO, H.R. 1750 would enable community banks to raise capital more easily and exempt institutions with less than $10 billion in assets from federal mortgage escrow requirements. It also would exempt institutions with less than $10 billion in assets from qualified mortgage requirements if the institution keeps a... Read More

Bureau Issues Final Rule, Proposed Revisions on its Civil Penalty Fund

In late April, the CFPB issued a final rule governing the administration of its Civil Penalty Fund, along with proposed revisions to that rule. Among the highlights of the final rule is that a victim is eligible for payment from the fund if a final order in a bureau enforcement action imposed a civil penalty for the violation or violations that harmed the victim. That means that payments from the fund would only be made to compensate victims for the harms they suffered from a violation for which penalties were... Read More

Mortgage Bankers Continue to Press Bureau on ATR/QM Changes

Late last month, members and staff of the Mortgage Bankers Association met with key personnel from the CFPB to highlight ongoing concerns with aspects of the bureau’s ability-to-repay, qualified mortgage rulemaking. Some of the issues the organization raised with the regulators were not dealt with by the bureau’s recent proposed clarifications, including questions about loan originator compensation. Currently, LO compensation to individual originator employees is factored into the calculation of the QM’s three... Read More

CFPB Rulemakings Top the List Of Lender Compliance Concerns

The top compliance concerns for lenders stem from CFPB mandates such as the combined Truth in Lending and Good Faith Estimate disclosure form, as well as other bureau-related rulemakings, according to the seventh annual compliance survey from Laguna Hills, CA-based QuestSoft, a provider of automated compliance software and services to the mortgage, banking and credit union industries. The combined TILA/GFE rules ranked as the highest concern among lenders, with 58.8 percent citing it as a high concern, followed by as-yet-undefined... Read More

Lawmakers Take on CFPB’s High-Cost Mortgage Thresholds

Rep. Gary Miller, R-CA, and two other members of the House recently introduced the Preserving Access to Manufactured Housing Act, legislation they said will ensure that new regulations released earlier this year by the CFPB to address high-cost mortgage loans do not further hinder the availability of mortgage credit for manufactured homes. Miller said the concern is, without their legislation, financing options for manufactured housing would be greatly limited, leaving thousands of manufactured home customers... Read More

Worth Noting

Nevada Bill Would Conflict With CFPB Servicing Rules. Last week, the Mortgage Bankers Association wrote members of the Nevada Assembly Judiciary Committee to warn that state Senate Bill 321, which would enact state-specific mortgage servicing rules, would conflict with the CFPB’s comprehensive, national servicing rules that were finalized in January. S.B. 321 would, among other things, authorize a defendant in a judicial foreclosure action to elect mediation... Read More

Looking Ahead

May/to be announced: The House Financial Services Committee has reportedly called upon two, as of yet unnamed CFPB officials to testify at a hearing to be announced later this month on the agency’s ability-to-repay, ‘qualified mortgage’ rule that was promulgated in January. Additional details were not available as Inside the CFPB went to press. May 8: The bureau plans to host a field hearing at Miami Dade College in Florida “on student loan borrowers,” and expects to feature remarks from Director Richard Cordray... Read More

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