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Inside the CFPB

June 3, 2013

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Industry Reps Split on Bureau’s ATR Changes for Small Lenders

The CFPB likely removed a noticeable amount of political pressure – but not all – from its back by responding to some industry concerns with its earlier ability-to-repay final rule. Last week, the bureau finalized amendments to the ATR rule that expand the legal protections for small lenders to make loans beyond the original rule’s main requirements, and it provided such creditors with a longer period of time in which to adjust to the rule’s restrictions on balloon mortgages. Under last week’s final rule, the CFPB... Read More

Bureau Ends Some Double Counting of L.O. Compensation

Among the changes that the CFPB made to its ability-to-repay rule last week are revisions to how loan originator compensation is counted in the qualified mortgage points-and-fees calculation. Under the Dodd-Frank Act, points and fees on a qualified mortgage may not exceed 3 percent of the loan balance. Further, points and fees that exceed 5 percent will trigger the protections for high-cost mortgages under the Home Ownership and Equity Protection Act. Dodd-Frank also mandates that loan originator compensation be counted toward... Read More

CFPB Delays Ban on Financing Credit Insurance Premium

The CFPB, as requested by the mortgage lending industry, has delayed implementing its ban on the financing of credit insurance premiums until Jan. 10, 2014, the effective date for most of the mortgage‐related rules it issued in January. The rule had originally been scheduled to kick in June 1. That effective date was originally proposed because the bureau believed the ban did not present a significant implementation burden for affected institutions. … Read More

Bureau Takes On ‘Abusive Acts or Practices’ With Debt Relief Firm

The CFPB filed a complaint in the U.S. District Court for the Southern District of Florida last week against American Debt Settlement Solutions, Inc., alleging that the debt-relief company was abusive and deceptive in misleading consumers across the country and charging illegal fees for its services. “Today we are taking action to halt a debt-relief company we believe has been preying on financially vulnerable consumers,” said CFPB Director Richard Cordray. “Consumers struggling to pay off a debt are among the... Read More

CFPB Complaint Database Expanded, Searchable by State

The expansion of the CFPB’s consumer complaint database moved to another level last week, with the inclusion of state-by-state searchable information, as well as complaints about money transfers and credit reporting. The updates, among other things, add a new field to every complaint – the state it came from. While five-digit ZIP Code information – provided by the consumer – has always been included in the complaint information, adding the state helps people more easily localize data, according to the bureau. The state... Read More

OIG Auditing Bureau’s Use of Enforcement Attorneys

The Federal Reserve Board Office of Inspector General is putting the CFPB’s controversial use of enforcement attorneys in its examination process under the microscope, according to the OIG’s semiannual report to Congress. “We initiated an evaluation of the CFPB’s integration of enforcement attorneys into its examinations of banking and nonbanking institutions’ compliance with applicable consumer protection laws and regulations,” the OIG said. Its objectives for this evaluation are to assess the potential risks associated... Read More

U.S. Files in Mt. Holly; CFPB View On Disparate Impact in Balance

The U.S. Solicitor General has asked the Supreme Court of the United States not to grant the petition for certiorari pending in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., a case that raises the question of whether disparate impact claims can be brought under the Fair Housing Act. Mt. Holly involves a challenge to a redevelopment plan in the Mount Holly Township of New Jersey over questions as to whether it was having a disparate impact on minorities. Last summer, the township formally asked the SCOTUS... Read More

CFPB, CSBS Set Up Joint Supervision, Enforcement Plan

The CFPB and the Conference of State Bank Supervisors recently entered into a coordination framework that will help synchronize the supervision of non-depository financial services providers and covered depository institutions with more than $10 billion in assets. This framework provides processes for the coordination of exam schedules; the development of comprehensive supervisory plans for particular institutions; the coordination of information requests; streamlining of information sharing; and the provision of... Read More

Senate Republicans Urge SCOTUS To Review Canning (and Cordray)

All 45 Republicans in the U.S. Senate have filed a brief asking the U.S. Supreme Court to grant certiorari in NLRB v. Noel Canning, the case in which President Obama’s recess appointments to the National Labor Relations Board were declared unconstitutional. “The president’s decision to circumvent the American people by installing his appointees at a powerful federal agency while the Senate was continuing to hold sessions, and without obtaining the advice and consent of the Senate, is an unprecedented power grab,” Senate... Read More

Effort Underway to Break Gridlock In Senate on Cordray Nomination

Sen. Rob Portman, R-OH, is reportedly working behind the scenes to try to thaw the ice jam among his GOP colleagues in the Senate that continues to thwart movement on a vote of President Obama's second nomination of Richard Cordray as director of the CFPB. The Capitol Hill publication Roll Call, citing a senior GOP aide, said that Portman has been meeting with Cordray recently, as well as bringing together members of both parties to try to find some common ground on changes to the bureau that would address Republican complaints... Read More

Congressional Dems Pushing Back At CFPB on Auto Lending Issues

Scrutiny of and accountability from the CFPB is not just for Republicans on Capitol Hill these days. Thirteen Democrats on the House Financial Services Committee – including several African American lawmakers – have asked the CFPB to provide them information related to the agency’s scrutiny of indirect auto loans. “As representatives of both consumers and small businesses (auto dealers), we want to continue our work with you to ensure that lending practices in the auto, mortgage and credit card... Read More

CFPB Clarifies Use of Uniform State Test under the SAFE Act

The CFPB recently issued some policy guidance on how states may use the Uniform State Test developed by the Nationwide Mortgage Licensing System and Registry as part of a qualified written test under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Section 1505(d) of the SAFE Act requires that state-licensed mortgage loan originators pass a “qualified written test.” Under the SAFE Act, this qualified written test must be developed by the NMLSR. A qualified written test must adequately measure the applicant’s... Read More

Mortgage Groups Suggest Changes To Appendix Q to Maximize QM

The Mortgage Bankers Association and the Housing Policy Council jointly wrote the CFPB recently with a variety of additional changes to improve lenders’ certainty when they use the ability-to-repay rule’s Appendix Q to define the debt-to-income ratio for qualified mortgages under the general definition. The groups emphasized reducing what they saw as an over-reliance on subjective qualifications that could require lenders to use manual underwriting processes when they would prefer to use automatic underwriting... Read More

Looking Ahead/Movers and Shakers/Worth Noting

CFPB, FTC Host Roundtable This Week on Data Integrity in Debt Collection. The CFPB and the Federal Trade Commission are slated to host a roundtable on June 6, 2013, to examine the flow of consumer data throughout the debt collection process. The regulators plan to bring together consumer advocates, credit issuers, collection industry members, state and federal regulators, and academics to exchange information on a range of issues. Topics on the discussion agenda include the amount of documentation and other information... Read More

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