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Inside the CFPB

June 17, 2013

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SCOTUS Accepts Mt. Holly case; Next Up: Noel Canning v. NLRB

The Supreme Court of the United States announced Monday, June 17, that it decided to grant the petition for certiorari in the disparate impact case of Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc. Specifically, Mt. Holly challenges the position of the Department of Housing and Urban Development that disparate impact can be used to establish liability under the Fair Housing Act, even if there is no discriminatory intent. The CFPB, HUD and the Department of Justice have all previously gone on record as... Read More

How Do You Thread the ATR Needle? Think “CADI,” Pro Says

Bruce Schultz, head of mortgage operations for SpiritBank, offered attendees at the American Bankers Association’s regulatory compliance conference a useful acronym to remember a good strategy for navigating the rocks and shoals of the CFPB’s ability-to-repay/qualified mortgage rulemaking: CADI: Coordinate, Analyze, Decide, Implement. “First up is coordination,” Schultz told participants in a break-out session at the conference, held last week in Chicago. “Various people that you’re going to need to have input... Read More

Complaint Management Can Be a Competitive Advantage for a Bank

With consumer complaints being taken to levels near seen before by a regulatory authority – the CFPB – many lenders are quite anxious about getting their hands on them, resolving them as quickly as possible, and then diminishing the frequency of their occurrence in the future. But there’s more to complaints than that, some top compliance representatives said during last week’s regulatory compliance conference sponsored by the American Bankers Association. If viewed the right way, they can be quite instructive and... Read More

Industry Pro Suggests Some Best Practices for HMDA Data Integrity

Sometimes, industry “best practices” are as much what not to do as they are what in fact to do. That reality that is taking on a new degree of seriousness with the CFPB as the new sheriff in town when it comes to the Home Mortgage Disclosure Act and all of the new attention being paid to HMDA data. Maria Marquez, a manager for enterprise risk services at Deloitte & Touche LLP, told a group discussion during the American Bankers Association’s regulatory compliance conference that large banks are facing heightened... Read More

10 Questions Lenders Should Ask Before the CFPB Comes Calling

Last week, at the American Bankers Association’s 2013 Regulatory Compliance Conference in Chicago, the folks at the BuckleySandler law firm circulated a checklist of the following 10 questions lenders should ask themselves before the examiner from the CFPB comes knocking on the door: 1. Do your board and management set an appropriate “tone at the top” concerning the importance of compliance?2. Do your board and management receive periodic reports on the state of your compliance program and compliance issues? 3. Do you have... Read More

Industry Wants More Guidance On Temporary QM for GSE Loans

The American Bankers Association asked the CFPB for more detailed guidance on the “temporary qualified mortgage” for government-sponsored enterprise and agency mortgage loans. Earlier this year, the bureau proposed some amendments to its mortgage rules under the Real Estate Settlement and Procedures Act and the Truth in Lending Act. Among them are some proposed revised commentaries regarding the standards that a creditor must meet when relying upon a written guide or the automated underwriting system of one of the GSEs, the... Read More

Bureau Issues Exam Procedures For January Mortgage Rules

The CFPB has published the first update to its exam procedures for the new mortgage regulations it issued in January 2013 having to do with appraisals, escrow accounts, and compensation and qualifications for loan originators. The exam procedures offer financial institutions and mortgage companies guidance on what the CFPB will be looking for as the rules become effective. “The CFPB recognizes that the easier we make it for financial institutions and mortgage companies to follow the new regulations, the better off consumers... Read More

CFPB Puts Out Two More Small Entity Compliance Guides

The CFPB recently put out two more small entity compliance guides, one for its loan originator rule and the other for its mortgage servicing rules that were finalized in January and kick in Jan. 10, 2014. The loan originator rule generally regulates how compensation is paid to a loan originator in most closed-end mortgage transactions. That includes prohibiting a loan originator’s compensation from being based on the terms of the transaction or a proxy for a transaction term. The LO rule also prohibits loan... Read More

Industry Calls on CFPB, HUD to Make a Consistent Safe Harbor

Eight lender industry trade groups have called upon the CFPB and the Department of Housing and Urban Development to provide written guidance that clearly spells out that complying with the bureau’s ability‐to repay/qualified mortgage rulemaking will not make lenders vulnerable to disparate impact liability under the Fair Housing Act or the Equal Credit Opportunity Act. In February of this year, HUD came out with its disparate impact rule under which liability for such claims can be established as per the Fair Housing Act. Back in... Read More

Raj Date’s New Finance Company Will Focus on Non-QM mortgages

Former top CFPB officials are banking on the widespread assumption that most mortgage lenders plan to avoid making mortgages that do not meet the “qualified mortgage” standard under the bureau’s ability-to-repay rule. Raj Date, the former deputy director at the CFPB, and three other high-placed bureau alums, Garry Reeder, former chief of staff; Chris Haspel, former senior advisor for mortgage servicing and securitization; and Mitchell Hochberg, former regulatory senior counsel, have created a new consumer finance company called Fenway... Read More

CFPB to Survey Credit Card Holders In Review of Arbitration Clauses

As part of its scrutiny of the use of mandatory pre‐dispute arbitration clauses in consumer financial contracts, the CFPB is proposing to conduct a nationwide telephone survey of 1,000 credit card holders. In Section 1028 of the Dodd‐Frank Wall Street Reform and Consumer Protection Act, Congress instructed the bureau to complete a study about arbitration. Section 1028 also authorizes the CFPB to “prohibit or impose conditions or limitations on the use of” such agreements based on the study results, the attorneys at the... Read More

Bureau Paper on Overdrafts Likely Hints at Rulemaking

The CFPB recently released initial data findings from its 15‐month (and counting) study of overdraft programs, including a few comments that suggest some rulemaking is in the offing. “Nothing in this report implies that banks and credit unions should be precluded from offering overdraft coverage,” the report stated. Moreover, the study noted progress in some areas in recent years in protecting consumers from harm. “Nonetheless, our findings with respect to the number of consumers who are incurring heavy overdraft fees or account... Read More

CFPB Eyes Improving Debt Collection for Consumers

Comments at the recent CFPB/Federal Trade Commission roundtable on debt collection reveal the bureau is concerned about making the process more consumer friendly, and that portends more oversight and regulation for the industry. “At the bureau, we recognize that debt collection is an essential part of the credit system,” said Steve Antonakes, the bureau’s acting deputy director. “Debt collectors remind borrowers that repaying debt is a serious obligation and that not repaying has consequences.” However, the bureau also... Read More

In Brief

Bureau Puts All Mortgage Rules in One Online Location. The CFPB launched its new Regulatory Implementation web page last week, a centralized online location that consolidates all of the bureau’s new 2013 mortgage rules and related implementation materials. “This is an effort to support rule implementation and ensure that industry is ready to comply with the new borrower protections,” the CFPB said. This is the central access point for the agency’s mortgage-related implementation materials, including mortgage rules at a glance... Read More

Looking Ahead

The House Financial Services Oversight and Investigations Subcommittee, chaired by Rep. Patrick McHenry, R-NC, plans a hearing on the afternoon of Tuesday, June 18, entitled, “CFPB Budget Review.” “The hearing will examine the past and planned obligations and expenditures of the CFPB for fiscal years 2011-14, the purpose and propriety of such obligations and expenditures, and whether the absence of CFPB accountability to Congress has an impact on such obligations and expenditures,” according to a subcommittee... Read More

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