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Inside the CFPB

October 7, 2013

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CFPB Still Open for Business as Shutdown Throws GOP a Curve

As the partial shutdown of the U.S. government enters its second week on Oct. 7, the CFPB remains fully staffed, funded and operational, so any financial services providers that assumed they might get a bit of a regulatory, compliance or enforcement reprieve would be well advised to press on full-steam ahead. All of the key federal financial regulators – the bureau, the Federal Reserve, the Federal Housing Finance Agency, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency – remain open as usual... Read More

Mortgage Industry Says it Needs Still More CFPB Guidance, Clarity

The CFPB recently revised its final servicing and mortgage origination regulations, and while its changes were welcome, a significant number of issues remain unresolved, an industry group told the bureau late last week. Further, without additional clarification and definition, the group said the mortgage industry will probably impose additional safeguards that will cause even more credit tightening beyond the already tight standards limiting many prospective borrowers. “The final regulations still do not provide... Read More

ATR Assignee Liability Will Keep Investors From Non-Agency MBS

The assignee liability inherent in the Dodd-Frank Act and the CFPB’s ability-to-repay rule will keep institutional investors away from the non-agency mortgage-backed securities market, resulting in less credit availability for mortgages that fall outside the ATR’s qualified mortgage standard, John Gidman, president of the Association of Institutional Investors, told the Senate Banking, Housing and Urban Affairs Committee last week. The Dodd-Frank Act and the CFPB’s subsequent regulations create a path for a defaulting... Read More

HUD’s QM Departs From CFPB On Division Between Legal Protection

Last week, the Department of Housing and Urban Development came out with its own version of a “qualified mortgage” rule for FHA-backed mortgages based largely on the QM standard incorporated in the CFPB’s ability-to-repay rule early this year. Following the CFPB’s QM definition, HUD’s proposed rule defines both a safe-harbor QM and a rebuttable-presumption QM. HUD’s QM definition also incorporates the points-and-fees limitation scale from the CFPB’s final rule. “The significant departure from the CFPB’s definition is the way in... Read More

Banks May Now Apply for a Trial Disclosure Waiver Under New Policy

Banks are required to provide consumers with certain information about their financial products. But under a new trial disclosure policy the CFPB finalized recently, banks may apply for a waiver to test potential disclosure improvements on a trial basis. Under the terms of the finalized policy, if the CFPB approves a specific trial, then, for the duration of an agreed testing period, the bureau will deem a testing company’s disclosure, to the extent that it is used in accordance with the terms and conditions approved by the agency, to... Read More

CFPB Issues Interim Final Rule On Temp Cease-and-Desist Orders

Late last month, the CFPB put out an interim final rule with a request for public comment on its new rules of practice for issuing temporary cease‐and‐desist orders. The bureau’s rule generally tracks along the trajectory of the Federal Deposit Insurance Corp.’s approach. That’s likely because Section 1053(c) of the Dodd‐Frank legislation, which authorizes the bureau to issue temporary C&D orders, resembles the comparable provision in the Federal Deposit Insurance Act. Those authorities authorize a temporary C&D as an... Read More

Bureau Brings Action Against Debt-Settlement Payment Processor

Last week, the CFPB brought an enforcement action against Meracord LLC, a leading debt-settlement payment processor, and CEO/owner Linda Remsberg for allegedly helping others to collect millions of dollars in illegal upfront fees from consumers. The CFPB accused Meracord and Remsberg of violating the Telemarketing Sales Rule by helping debt-settlement companies charge consumers upfront fees. The rule prohibits debt-settlement companies from charging consumers such fees before settling any of their debts. It also protects consumers from... Read More

Castle & Cooke Case, LO Comp Rule Posing Comp Challenges

Loan originators these days not only are looking over their shoulders, they’re also getting skittish about what lies ahead of them. Some of their backward-facing anxiety has to do with this summer’s CFPB suit against the nonbank lender, Castle & Cooke of Utah, and two of its top executives for allegedly paying bonuses to loan officers who steered consumers into mortgages with higher rates.During a recent special webinar sponsored by Inside Mortgage Finance, an affiliated newsletter, Jay Laifman, counsel with the Buckley... Read More

Credit Card Practices to Remain on CFPB’s Front Burner, Report Shows

The CFPB issued a report last week on how the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) has benefited consumers by effectively eliminating over-limit fees, sharply curtailing re-pricing practices, and reducing the average size of late fees. But the report also reveals the bureau’s intentions to scrutinize add-on products, rewards programs, and other “areas of concern.” Examples of the add-on products getting eyeballed by the bureau are those having to do with debt cancellation... Read More

New Limits on Campus Banking Products Likely, Pros Believe

The CFPB held a forum in Washington, DC, recently on campus banking that featured some clues about likely forthcoming regulatory requirements for lenders that provide such services. One initial finding provided at the event was that arrangements between financial institutions and institutions of higher education on many student banking products are not well understood. Another was that “affinity products” – those co-branded by a lender and an educational institution – do not always have more competitive features... Read More

OIG Finds CFPB Needs to Improve On Travel Cards, Purchase Cards

Overall, internal controls for the CFPB Government Travel Card program should be strengthened to ensure program integrity, according to a new report by the Federal Reserve Office of Inspector General, which audits the bureau. “While controls over the GTC issuance process were designed and operating effectively, we found that controls are not designed or operating effectively to prevent and detect fraudulent or unauthorized use of GTCs, and [to] provide reasonable assurance that cards are properly monitored and closed... Read More

CFPB Urged to Improve Transparency, Accountability

The Financial Regulatory Reform Initiative of the Bipartisan Policy Center, a Washington, DC, think tank, issued a report late last month with dozens of recommendations by which the CFPB could improve transparency and accountability. “Perhaps the most significant trend the task force discovered was that when the bureau operated in a transparent, open and iterative manner, repeatedly seeking input from all stakeholders throughout a process, the results were generally positive,” the report said. “However, when the bureau made... Read More

Worth Noting

Drop in GSE Loan Limit Will Harm Special Category QMs, Industry Says. In a letter late last week to the Federal Housing Finance Agency, the regulator of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, the Mortgage Bankers Association warned against any lowering of the conforming loan limit for the size of mortgages that Fannie and Freddie can purchase. “Any FHFA action to lower loan limits would ... undermine the special category of QMs created by the CFPB for loans that are eligible for Fannie Mae and Freddie Mac purchase,” the MBA... Read More

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