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Inside the CFPB

November 4, 2013

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Integrated Consumer Disclosure Rule Anticipated in Early December

The CFPB’s integrated mortgage disclosure rule under the Real Estate Settlement Procedures Act and the Truth in Lending Act might not be out until early December, an informed source told Inside the CFPB. For months, the expectation had been that an October release was in the offing, but it still has yet to come out, and bureau personnel say they don’t have a release date. “We were in a meeting at the beginning of October, and before that, there were some pretty heavy rumors that it was going to come out at the end of October,” said... Read More

Industry Reps to Meet Cordray This Week to Further Discuss QM Issues

The National Association of Mortgage Brokers, the Mortgage Bankers Association and the National Association of Realtors are scheduled to meet with CFPB Director Richard Cordray and his staff this week to discuss various issues related to the bureau’s ability-to-repay rule and its qualified mortgage standard. More specifically, during their Tuesday, Nov. 5, 2013, meeting, the industry representatives plan to raise the impact of the points-and-fees cap, what they assert are the biases against mortgage brokers, and the ability for consumers to... Read More

Offering Only QMs Should Not Elevate Fair-Lending Risk, Feds Say

Mortgage lenders got a huge compliance and liability break, courtesy of the CFPB and the other federal financial regulators. A mortgage lender’s strategic decision to provide only qualified mortgages, in and of itself, will not raise its fair lending risk, the CFPB and four other regulators declared in new guidance issued last month. The agencies said they have received numerous inquiries from mortgage lenders about whether they would be liable under the disparate-impact doctrine of the Equal Credit Opportunity Act and its implementing... Read More

CFPB Servicing Rules Obviate Need For More Law, Congress Told

Congress has no need to enact additional legislation to impose tough loss-mitigation standards on servicers and owners of securitized residential mortgage loans for the benefit of consumers. The CFPB’s mortgage servicing regulation thoroughly covers all related issues in this regard, according to a leading industry attorney. Larry Platt, a consumer finance lawyer at the global law firm K&L Gates, LLP, appeared late last month in a personal capacity before the Senate Banking, Housing and Urban Affairs Committee to discuss the Housing... Read More

CFPB Data Breaches Compromised Consumer Info, Congress Told

The CFPB privately acknowledged to members of Congress recently that the bureau has had at least three data breaches thus far involving personally identifiable information from individuals who submitted complaints through the CFPB’s consumer response system. The admission was included among pages and pages of answers the bureau sent in response to numerous questions officials had received from lawmakers on Capitol Hill. Rep. Keith Rothfus, R-PA, brought the breaches to the public’s attention last week during a hearing on CFPB reform... Read More

Senators Question CFPB Over Indirect Auto Lending Guidance

A bipartisan group of 22 members of the U.S. Senate wrote CFPB Director Richard Cordray late last month to raise concerns about the bureau’s guidance affecting the indirect auto financing market and auto dealers’ ability to negotiate retail margins with consumers. Back in March, CFPB Bulletin 2013-02 instructed bank and nonbank indirect auto lenders about complying with federal fair-lending requirements when it comes to auto dealers “marking up” the lender’s risk-based buy rate and receiving compensation based on the... Read More

Bureau Alleges RESPA Kickback Scheme in Suit Against KY Firm

The CFPB has filed a lawsuit in federal district court against a Kentucky law firm, Borders & Borders, PLC and its principals, for illegally paying kickbacks for real estate settlement referrals through a network of shell companies. The CFPB alleges that Borders & Borders and principals Harry Borders, John Borders, Jr., and J. David Borders violated the Real Estate Settlement Procedures Act by operating a network of affiliated companies to pay kickbacks for referrals of mortgage settlement business. RESPA prohibits giving... Read More

EBay Faces CFPB Investigation Over its ‘Bill Me Later’ Program

The long arm of the law being enforced by the new consumer sheriff in town is extending to EBay Inc., which is facing an investigation by the CFPB over a loan program that resembles a structure used by high-interest lenders to bypass state regulations before the practice was eradicated by regulators. The program at issue, known as Bill Me Later, is a service provided by EBay’s PayPal unit that derives funding from Comenity Capital Bank, based in Salt Lake City, UT, to make loans that are subsequently purchased and managed by EBay... Read More

Consumer Complaints About Mortgages Noticeably Drop in 3Q13

The complaints that consumers filed with the CFPB about their mortgages fell for the second straight quarter during the third quarter of 2013, and with a bigger drop – 16.8 percent – than was seen in 2Q13, when the fall off was at 9.2 percent, according to a new analysis of consumer complaint data by Inside the CFPB. Leading the way again were gripes about loan modifications, which fell 25.5 percent in the third quarter, versus a drop of 10.3 percent in 2Q13. Complaints related to applications and other aspects of the...{includes 1 chart] Read More

Landmark Ruling on Disparate Impact Averted in Mt. Holly Case

The parties in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., currently pending before the Supreme Court of the United States, have reached a tentative settlement, the Wall Street Journal reported late last week, citing people involved in the dispute. The prime question before the SCOTUS in Mount Holly is whether disparate-impact claims are cognizable under the Fair Housing Act. Mount Holly challenges the legal position of the Department of Housing and Urban Development that disparate impact can be used to... Read More

Cordray Emphasizes Strength Of QM Legal Protections

CFPB Director Richard Cordray tried to reassure the mortgage lending community that the CFPB’s ability-to-repay rule with its qualified mortgage standard will provide all the legal protections they are expecting. One issue “that some consultants and lawyers have raised is whether the law and our rule will deliver the assured and predictable legal protections even for QM loans,” Cordray said in an address recently before the annual convention of the Mortgage Bankers Association in Washington, DC. “We believe strongly that they will... Read More

Don’t Read Too Much into CFPB Shift on Enforcement Attorneys

The CFPB’s recent decision to no longer bring enforcement attorneys along for the ride in routine examinations may bring a sigh of relief to many in the industry, but it’s important to avoid reading too much into the move, according to a consultants’ analysis. For one thing, examiners will no longer be distracted by the need for additional legal review. “Assigning an enforcement attorney to support every exam was the CFPB’s most meaningful break from the practices of its prudential peers as it forged its own interdisciplinary approach to... Read More

Bureau Issues Updated ATR Small Entity Compliance Guide

The CFPB recently updated its Small Entity Compliance Guide to the ability‐to‐repay/qualified mortgage rule, which takes effect in January. The updated guide reflects clarifications and changes – formally known as the June 2013 ATR/QM concurrent final rule, the July 2013 final rule, and the October 2013 final rule – made to the rule since it was issued in January 2013. Among the most notable changes in the October 2013 final rule reflected in the updated guide is the exclusion of compensation that is paid by a retailer of... Read More

OIG Finds Room for CFPB To Improve Budget Requests

The Federal Reserve Office of Inspector General – the IG for the CFPB – completed an evaluation of the bureau’s fiscal year 2013 budget and concluded the CFPB could improve some of its budget-related practices.“Overall, our evaluation showed that the CFPB has a budget process in place to facilitate the achievement of its goals and performance objectives, including transparency to the public,” the OIG said. “However, we noted opportunities for the CFPB to enhance its practices related to preparing funding requests and posting budget... Read More

Worth Noting

D.C. Federal Court Deep-Sixes Morgan Drexen Lawsuit Against CFPB. The federal district court in Washington, DC, has denied without prejudice the lawsuit Morgan Drexen, a legal services firm, and attorney Kimberly Pisinski filed against the CFPB, which asserted that the bureau’s structure was unconstitutional because it violated the U.S. Constitution’s separation of powers. The court concurred with the bureau’s argument that the sought-for injunctive relief was not justified because Morgan Drexen could raise its constitutional... Read More

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