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Inside the CFPB

May 20, 2013

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Vote on Cordray Nomination Nigh, Obama Recess Appt. Nixed Again

Senate Majority Leader Harry Reid, D-NV, indicated last week he plans to push for a Senate confirmation vote sometime this week on President Obama’s nomination of Richard Cordray to continue at the helm of the CFPB. “I’m going to make sure he’s going to have a vote next week, and then we’ll see what happens after that,” Reid said last week, according to one press account. When pressed by reporters if he would use what’s often referred to as the “nuclear option” and force a change in the Senate rules to override the 60 votes needed... Read More

Sen. Crapo Presses Director for Answers on Huge Data Collection

U.S. Sen. Mike Crapo, R-ID, ranking member of the Senate Banking, Housing and Urban Affairs Committee, wrote CFPB Director Richard Cordray late last week, requesting prompt answers to legal concerns surrounding the massive data collection effort undertaken by the agency on consumer spending habits. News reports in recent weeks have indicated the agency has allocated more than $20 million for collecting and tracking customer credit card and spending habits for more than 10 million Americans. After the senator and the... Read More

CFPB Criminal Referral Prompts DOJ Action Against Debt Relief Firm

Based on a criminal referral from the CFPB, the Justice Department has filed a complaint in New York against Mission Settlement Agency, a debt relief agency that allegedly charged illegal fees to consumers for debt settlement services. The charges are the first generated by such a referral from the CFPB, which filed its own civil complaint against Mission and another company. Last week, federal officials unsealed an indictment charging Mission Settlement Agency, its owner Michael Levitis, and three of its employees – Denis Kurlyand... Read More

Bureau Slaps Consent Order on Homebuilder Over Kickbacks

Based on a referral from the Federal Deposit Insurance Corp., the CFPB has compelled a Texas homebuilder to surrender more than $100,000 he received in alleged kickbacks for referring mortgage origination business to entities the bureau asserts are sham mortgage companies. According to the CFPB, the homebuilder, Paul Taylor, received illegal referral fees through partnerships with Benchmark Bank and Willow Bend Mortgage Company. Taylor and Benchmark created and jointly owned Stratford Mortgage Services LC, which claimed to... Read More

Congress Looks to Intervene in Student Debt After CFPB Report

Federal action to help student loan borrowers deal with ever-increasing amounts of debt seems more likely to occur, after the CFPB issued a report highlighting how such debt burdens could be having a host of wide-ranging negative effects on the economy and society at large. Lawmakers in both the House and Senate issued statements and proposed bills to address the debts of student borrowers as the CFPB was issuing its report on student loan affordability. Sens. Elizabeth Warren, D-MA, Jack Reed, D-RI... Read More

ATR/QM Rule May Impair Access to Credit for Some, Fed Governor Said

Aspects of the CFPB’s ability-to-repay rule and ‘qualified mortgage’ standards may make credit access difficult for homebuyers with low credit scores, including many low-income and first-time homebuyers, Federal Reserve Board Governor Elizabeth Duke said recently. “First, the QM requirement that borrower payments on all debts and some recurring obligations must be 43 percent or less of borrower income may disproportionately affect less-advantaged borrowers,” Duke said. “Board staff tabulations based on the Survey of Consumer Finances... Read More

Appendix Q Compliance Key to Maintaining QM Legal Protections

Among the critical areas that mortgage lenders must pay close attention to in the CFPB’s ability-to-repay, qualified mortgage rule is what’s known as Appendix Q, which contains detailed underwriting guidance on how creditors must calculate the debt-to-income ratio in order to make a general QM loan subject to the 43 percent DTI limit. As adopted, Appendix Q generally requires items to be considered and verified for the two prior years, and requires well-documented projections for the following three years. However, on April 22... Read More

Reminder: Some CFPB Mortgage Requirements Kick in June 1, 2013

Most of the CFPB’s requirements stemming from its blizzard of mortgage rulemakings in January take effect sometime next year. But there are a few notable exceptions, including the Truth in Lending Act ban on mandatory arbitration provisions in certain mortgage loans, which kicks in June 1, 2013. “Lenders now using mortgage loan documentation containing such provisions should take steps to ensure that they (and references to them) are removed from documentation to be used for loans that will be subject to the ban,” said Alan... Read More

Trouble on the CFPB Homefront as Bureau Employees Vote to Unionize

It’s not exactly Mutiny on the Bounty, but 378 employees of the CFPB voted last week in favor of joining the National Treasury Employees Union, with 86 against, putting the NTEU in the position of representing more than 800 of the CFPB’s approximately 1,200 employees, according to Politico. “Why would employees at CFPB – an agency with liberal bona fides, generous compensation and top-notch benefits – want to form a union,” Politico asked. “The push to organize was driven in large part by news that many employees in... Read More

FTC Affirms to CFPB Commitment To Vigorous Enforcement

In its yearly letter to the CFPB, the Federal Trade Commission affirmed that it is “committed to continuing its vigorous enforcement” of regulations under the Equal Credit Opportunity Act, the Electronic Fund Transfer Acts, the Truth in Lending Act and the Consumer Leasing Act, and “in intends to do the same with other rules the CFPB issues.” The Dodd-Frank Wall Street Reform and Consumer Protection Act gave the FTC the authority to enforce any bureau rules that apply to entities within the FTC’s jurisdiction, which... Read More

CFPB Biggest Threat to Community Banks, AEI Researchers Say

The broad and still uncertain powers granted to the CFPB by the Dodd-Frank Wall Street Reform and Consumer Protection Act are the biggest threat to community banks, according to an American Enterprise Institute white paper authored by Tanya Marsh and Joseph Norman.“The CFPB has been granted broad powers to ‘regulate the offering and provision of consumer financial products or services,’” the authors said. “The limit to those powers, and how those powers may be implemented in regards to community banks, remain uncertain... Read More

NAFCU Has ‘Serious Concerns’ With Limiting GSE Buys to QMs

The National Association of Federal Credit Unions is apprehensive about the unintended consequences of the Federal Housing Finance Agency’s decision to limit Fannie Mae and Freddie Mac future mortgage purchases to ‘qualified mortgages’ as defined by the final rule issued earlier this year by the CFPB. Earlier this month, the FHFA directed the two government-sponsored enterprises to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or... Read More

Worth Noting/People In The News/What We’re Hearing/Looking Ahead

Legislation Would Revise QM Points-and-Fees Calculation Sens. Joe Manchin, D-WV, and Mike Johanns, R-NE, introduced legislation last week that would amend the way ‘points and fees’ are calculated to determine if a loan meets the ‘qualified mortgage’ definition under the CFPB’s ability-to-repay rule, issued earlier this year. Under the rule, a QM cannot have points and fees exceeding three percent of the loan amount. S. 949 is a companion to H.R. 1077, the Consumer Mortgage Choice Act, which has steadily picked up support since... Read More

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