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Inside the CFPB

December 2, 2013

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CFPB Mortgage Disclosure Rule Not as ‘Transformational’ as ATR

The CFPB has gone ahead and issued the last big piece to the mortgage finance puzzle it was mandated to manufacture by the Dodd-Frank Act, the integrated mortgage-disclosure rule under the Real Estate Settlement Procedures Act and the Truth in Lending Act and related forms. The good news for the mortgage finance industry – apart from the 20-month implementation period – is that the new rule and forms, part of the bureau’s “know before you owe” initiative, are not nearly as “transformational” towards the fundamental nature of the... Read More

ATR/QM Rule Will Further Limit Access to Mortgages, S&P Says

The scope of the ability-to-repay/qualified mortgage final rule released earlier this year by the CFPB will make it more difficult for borrowers to obtain loans and tighten already-strict underwriting standards, according to analysts at Standard & Poor’s Ratings Services. “We anticipate that the rule will prevent many of the types of loosely underwritten mortgages that caused systemic risk during the 2006 and 2007 origination period, but may do so at the expense of limiting credit access – sometimes to qualified borrowers,” they... Read More

Industry Supports Bankruptcy Clarification to Servicer Rule

A handful of leading industry trade groups told the CFPB they generally support the agency’s recent interim final rule that clarifies the proper compliance with mortgage servicing requirements when a consumer is in bankruptcy or sends a cease communication request under the Fair Debt Collection Practices Act. The interim final rule, issued Oct. 23, 2013, amends some of the mortgage servicing-related provisions in Regulation X (the Real Estate Settlement Procedures Act) and Regulation Z (the Truth In Lending... Read More

Smaller Banks Face Largest Proportional Regulatory Burden

Banks with less than $1 billion in assets had the highest compliance-related costs as a percentage of operating expenses, according to a recent study the CFPB conducted measuring the financial impact of deposit regulations on seven banks, ranging in asset size from under $1 billion to over $100 billion. First, in its examination of costs by business function, the bureau found that compliance costs appear to be concentrated in operations, information technology, human resources (as it relates to employee training), compliance and... Read More

Bureau Updates Exam Procedures To Match Revised Mortgage Rules

Late last week, the CFPB released updates to its exam procedures in connection with the new mortgage regulations issued in January 2013 and amended through Oct. 15, 2013. The updates offer financial institutions and other industry participants valuable guidance on how the bureau will conduct examinations for compliance with the Truth in Lending Act and the Real Estate Settlement Procedures Act, the agency said. The bureau updated the supervision manual to reflect the renumbering of the consumer financial protection regulations for... Read More

HFSC GOP Passes Handful of CFPB Reform Bills Out of Committee

Towards the end of November, the Republican-controlled House Financial Services Committee passed six pieces of legislation in an attempt to bring more oversight, accountability and transparency to the CFPB, all of which largely passed on a party-line vote, give or take a vote or two. One of the most important of the batch for lenders is H.R. 3193, the Consumer Financial Protection Safety and Soundness Act of 2013, introduced by Rep. Sean Duffy, R-WI. The legislation would require the CFPB to consider the safety and... Read More

Bureau Nails Payday Lender With $19 Million Enforcement Action

Last month, the CFPB took its first enforcement action against a payday lender by ordering Cash America International Inc. to refund up to $14 million to consumers for robo-signing court documents in debt collection lawsuits and for illegally overcharging service members and their families. The publicly traded financial services company headquartered in Ft. Worth, TX, also was compelled to pay a $5 million fine for the violations and for destroying records in advance of the bureau’s examination. In terms of specific... Read More

CFPB Denies Advance Deposit Appeal; OCC, FDIC Issue Guidance

The CFPB and the payday lending industry continue to lock horns over the bureau’s controversial white paper on payday and deposit advance loans, most recently with the bureau rejecting “in its entirety” an appeal from the Community Financial Services Association, national payday lending trade group, which is seeking a retraction of the white paper. Back in April, the bureau put out the white paper, which was based on a study it did of 15 million storefront payday loans and 100,000 accounts eligible for deposit advances. Among its findings... Read More

Some Payday Lenders May Lose Their Access to ACH Network

Certain online payday lenders and other businesses deemed to present risks to consumers could find themselves banned from the Automatic Clearing House network, thanks to increased scrutiny from the CFPB and other authorities. Speaking before the Clearing House Annual Conference late last month, CFPB Director Richard Cordray invoked the bureau’s mandate to subject nonbank entities to the same level of regulatory scrutiny as banking institutions. “We now have the ability to examine participants in both the bank and nonbank segments of... Read More

Lawmakers Keep Pressure on CFPB Over Auto Fair Lending Guidance

Members of the House Financial Service Committee are continuing to give the CFPB a hard time over its recent auto fair-lending guidance, which quickly got the industry up in arms. Most recently, in a Nov. 15 letter to CFPB Director Richard Cordray, Rep. Blaine Luetkemeyer, R-MO, challenged the CFPB for failing to study how a shift to flat-fee compensation for dealers could influence the cost of credit to borrowers, especially low‐ and moderate‐income borrowers. “It is imperative that the bureau take the opportunity to conduct an... Read More

Student Borrower Enrollment in Repayment Plans on CFPB Radar

Rohit Chopra, CFPB assistant director and student-loan ombudsman, hinted recently that borrower enrollment in repayment programs by servicers might be a likely focus of bureau examinations and investigations once the agency’s student-loan servicer “larger participant” rule is finalized. In comments before the Federal Reserve Bank of St. Louis, Chopra noted some similarities between problems in the mortgage market and the student-loan market – including breakdowns in the servicing sector. “The CFPB has... Read More

Worth Noting/Looking Ahead

Bureau Faults Financial Services Providers Over Educational Expenditures. A new study from the CFPB claims that the financial services industry spends 25 times as much money annually on marketing financial products and services to consumers each year than on financial education – $17 billion versus $670 million, respectively. According to the bureau’s modeling methodology, that shakes out to about $54 on marketing versus $2 on financial education per person per year. Richard Hunt, president and CEO of the Consumer Bankers... Read More

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