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Inside the CFPB

September 9, 2013

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As QRM Proposal is Issued, Cordray Is Wary of Alignment With QM

Federal regulators issued a revised credit risk retention/qualified residential mortgage proposed rule late last month, one that tilts heavily in the direction of the qualified mortgage provisions established in the CFPB’s ability-to-repay rule – and that close proximity concerns the bureau’s director, Richard Cordray. “The proposal released Aug. 28 we see as another key step in obtaining further certainty for the mortgage market going forward,” said Cordray, who as one of the four members of the Federal Deposit... Read More

Bureau Considering Webinars As Industry Pleads for Relief

With multiple mortgage rulemaking implementation dates just a few months away, and the industry clamoring for a formal delay or an informal enforcement holiday from the CFPB, the bureau is considering hosting a few webinars to provide guidance for at least some of the rulemakings, most notably the new mortgage servicing rules, one industry source confided. The Department of Housing and Urban Development did something similar with its 2010 Real Estate Settlement Procedures Act final rule, the source continued. That... Read More

Bank Vendors Not Ready for Prime Time, CFPB Compliance-Wise

A recent survey by the American Bankers Association of its membership found that, as of the end of June, 60 percent of bank vendors have not told banks when they will be ready to comply with the CFPB’s new mortgage rules. For institutions that will receive vendor products over time (as opposed to all at once), 56 percent stated that their vendor had not provided information on when it will deliver the first installment of the project; 17 percent anticipate receiving the first installment in September or October; and 8 percent anticipate... Read More

Operating as ‘Mini-Correspondent’ Might Avoid Points, Fee Problems

Some folks in the mortgage broker community have been suggesting that operating as a mini-correspondent will help brokers avoid points-and-fees complications with the qualified mortgage definition under the CFPB’s ability-to-repay final rule. As it stands now under the CFPB’s rule, lender- paid compensation will have to be counted in the 3 percent compensation limitation for qualified mortgages. “The broker segment continues to mull over the final ‘final’ rule from the CFPB regarding compensation,” said mortgage broker Rob Chrisman in... Read More

Cordray Ratifies Bureau Actions Taken Under Recess Authority

It looks like the last little bit of legal ground upon which someone could launch a challenge to a rule or other action from the CFPB has been chewed up for good. Late last month, CFPB Director Richard Cordray formally ratified his prior actions as director before being confirmed by the Senate in July. “I believe that the actions I took during the period I was serving as a recess appointee were legally authorized and entirely proper,” Cordray wrote in a brief “Notice of Ratification” in the Aug. 30 Federal Register. “To avoid any... Read More

Mt. Holly Disparate Impact Case Proceeds as Briefs are Filed

Late last month, the Township of Mount Holly, NJ, as petitioner, filed its opening merits brief with the Supreme Court of the United States in a closely watched disparate impact case, despite continuing settlement discussions. The crux of the case, Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc. et al., No. 11-1507, is whether disparate impact claims are cognizable under the Fair Housing Act. The township argues that they are not. In its brief with the SCOTUS, the township asserted that under the ordinary meaning of... Read More

CFPB Urges Court to Affirm Fair Debt Collection Class Action

The CFPB recently urged the Seventh Circuit Court of Appeals to uphold a lower court’s refusal to dismiss a class-action lawsuit alleging that a debt collector’s letter offering a settlement of the plaintiff’s credit card debt was in violation of the Fair Debt Collection Practices Act because it failed to disclose that the debt was time‐barred. In Delgado v. Capital Management Services, LP, et al., the debt collector allegedly sent the plaintiff a dunning letter with a limited-time offer to settle a debt upon which the statute... Read More

Bureau’s Servicing Rules Could Interfere With State Law

Mortgage lenders and servicers are increasingly worried about a number of aspects of the CFPB’s mortgage servicing rules that were issued earlier this year, including some that could interfere with various state laws. The fear is that will cause unnecessary litigation, conflicting judicial decisions and prolonged uncertainty for the industry. One of the bureau’s new regulations will require mortgage servicers to provide an opportunity to seek loss mitigation before foreclosure initiation is permitted, with a private right of... Read More

Lowering GSE Loan Limits Could Affect QM Status, Crimp Access

The Mortgage Bankers Association recently warned the CFPB that a move by the Federal Housing Finance Agency to lower loan limits for the government-sponsored enterprises could negatively affect qualified mortgage status and borrower access to credit. “Given that we are in the early, fragile stages of a housing recovery, we urge the bureau to consider additional refinements to the QM requirements to mitigate the combined impact of the rule and the FHFA’s action on loan limits,” the MBA said. The trade group noted that the QM rule... Read More

ABA Wants CFPB to Submit Data Collection to Public Comment

The American Bankers Association recently urged the CFPB to withdraw a generic clearance under the Paperwork Reduction Act for “information collections” – intake forms, questionnaires and other documents – related to its consumer complaint system, arguing that the request covers “substantial policy issues” that should be subject to public review and comment. Specifically, the CFPB is seeking generic clearances for information collections that will permit it to pilot new consumer complaint and inquiry intake forms; to gather... Read More

Bureau is Significantly Under Budget Thru 3Q FY 2013

As of June 30, 2013, the end of the third quarter of fiscal year 2013, the CFPB had received $323.2 million in transfers from the Federal Reserve, far below the $598 million the bureau is entitled to in funding under the Dodd-Frank Act, according to the CFPB’s latest financial update. Of the $308 million it spent, approximately $140.2 million was allocated to employee compensation and benefits for the 1,226 employees on board by the end of the quarter. Other than payroll expenses, the largest obligations for the quarter were... Read More

Looking Ahead/Worth Noting /CFPB Alumni Update

Thursday, Sept. 12: Now that Richard Cordray is “street legal” as the confirmed director of the CFPB, House Financial Services Committee Chairman Jeb Hensarling, R-TX, has decided to invite him before the panel to testify on the bureau’s third semi-annual report to Congress, which was released back in late March and covers the period from July 1, 2012, to Dec. 31, 2012. “The director of the CFPB is required by law to appear before the committee on a semi-annual basis to deliver a report on the CFPB,” says a hearing notice on the... Read More

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