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Inside the CFPB

January 6, 2014

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Mortgage Industry’s Y2K Moment Arrives at Week End

Your father’s mortgage lending industry is about to be unofficially laid to rest at the end of the week. Four significant rules from the CFPB set to kick in on Friday, Jan. 10, seem poised to forever change the mortgage lending and servicing landscape. The rule that has gotten far and away the most negative publicity is the bureau’s new ability-to-repay/qualified mortgage rule, which creates two versions of a QM loan – a ‘safe harbor’ QM and a ‘rebuttable presumption’ QM – as well as a 3 percent points-and-fees cap. The rule also features... Read More

Consumer Complaints to CFPB Drop Again, With Big Exceptions

Consumer complaints submitted to the CFPB continued moving somewhat erratically on a quarterly basis, generally dropping in the aggregate by 15.0 percent during the fourth quarter, led by a 33.3 percent fall in mortgage gripes, according to a new analysis of bureau data by Inside the CFPB. Also, grievances with consumers’ credit card experiences fell 17.6 percent for the period, followed by credit reports, off 17.5 percent; consumer loans, down 13.1 percent; and bank accounts, which declined by 12.5 percent. (INCLUDES TWO CHARTS)... Read More

Bureau Orders Ocwen to Provide $2 Billion in Principal Reduction

The CFPB and authorities in 49 states and the District of Columbia filed a proposed court order requiring the country’s largest nonbank mortgage loan servicer, Ocwen Financial Corp., and its subsidiary, Ocwen Loan Servicing, to provide $2 billion in principal reduction to underwater borrowers. The bureau said the consent order “addresses Ocwen’s systemic misconduct at every stage of the mortgage servicing process.” Ocwen also is required to refund $125 million to the nearly 185,000 borrowers who have already been foreclosed upon, the CFPB... Read More

CFPB Orders Ally to Pay $98 Million Over Auto Lending Discrimination

The CFPB and the Department of Justice last month ordered Ally Financial and Ally Bank to pay a total of $98 million to resolve complaints about discriminatory auto loan pricing towards African-American, Hispanic and Asian/Pacific Islander borrowers. The settlement provides $80 million in compensation for victims of alleged past discrimination by Ally, one of the nation’s largest auto lenders, and requires the lender to pay $18 million to the CFPB’s civil penalty fund. Ally also must refund discriminatory overcharges... Read More

CFPB Compels AmEx to Pay $69 M To Settle Credit Card Allegations

Last month, the CFPB ordered American Express to refund an estimated $59.5 million to more than 335,000 consumers to resolve allegations of illegal credit card practices. The charges include unfair billing tactics and deceptive marketing related to credit card “add-on products” such as payment protection and credit monitoring. The credit card giant also will pay an additional $9.6 million in civil penalties to the CFPB. Further, the bureau has been coordinating this action with the Federal Deposit Insurance Corp. and the Office of the... Read More

CFPB, DoJ Want $35 M From PNC To Settle Mortgage Allegations

The CFPB and the Department of Justice are seeking $35 million in damages from PNC Bank to settle allegations that one of its acquisitions – National City Bank – discriminated against African Americans and Hispanic borrowers during the housing boom by charging them higher rates. The alleged activity took place between 2002 and 2008, the government said. PNC, though, did not buy National City until the fall of 2008, agreeing to pay roughly $5.8 billion for the bank. Based on their joint investigation, which began in 2011, the... Read More

CFPB Sends Enforcement Action Early Warning to ITT Educational

ITT Educational Services, Inc., a for-profit postsecondary education provider based in Carmel, IN, revealed it has received a CFPB “early warning” letter indicating that the bureau’s Enforcement Office is likely to recommend that the agency take legal action against the firm. At issue is whether the company engaged in any unlawful acts or practices relating to the advertising, marketing, or origination of private student loans. “On Dec. 23, 2013, the company received a letter from the CFPB, confirming that the CFPB has notified the... Read More

OIG Faults Bureau for Bringing Enforcement Attorneys to Exams

The Federal Reserve Board Office of Inspector General, as had been hinted at previously, issued a report last month critical of the CFPB’s practice of bringing enforcement attorneys to regular examinations. Numerous industry representatives privately said it was having a chilling effect on lenders during the exam process. The bureau recently decided it would cease the practice, and some industry insiders suspected the OIG’s then-pending report had a good bit to do with that decision. The OIG had already finished with the... Read More

CFPB Calls for Public Disclosure Of Collegiate Marketing Deals

The CFPB called on financial institutions last month to publicly disclose agreements they have with colleges and universities to market debit, prepaid, and other products to students – even as the agency noted a continued decline in college credit card agreements.Currently, institutions only make the desired disclosures about college credit cards. The bureau is particularly apprehensive about what it characterizes as the lack of transparency regarding the marketing partnerships between colleges and lenders. “Students and... Read More

CFPB Staffing Up 2200% Over Two Years as Young Agency Ramps Up

The CFPB continues to grow as a young federal agency, going from 58 employees at the beginning of fiscal year 2011 to 1,335 employees at the end of fiscal year 2013, an increase of 2,201 percent, according to the agency’s financial report for FY 2013. “At the end of fiscal year 2013, the CFPB was still below the full employment levels and funding it estimates for its steady state in future years,” the report stated. The lion’s share of CFPB staff – 45 percent – is dedicated to supervision, enforcement and fair lending, while 29... Read More

GAO Signs Off on CFPB Financials, Notwithstanding Two Deficiencies

In a recent report, the Government Accountability Office found that the CFPB financial statements as of and for the fiscal years ended Sept. 30, 2013, and 2012, were presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles. Also, the CFPB maintained, in all material respects, effective internal control over financial reporting as of Sept. 30, 2013, “although internal control deficiencies related to recording year-end accounts payable and accounting for property and equipment... Read More

Bureau Seeking Comments About Mortgage Closing ‘Pain Points’

The CFPB is seeking consumer comments on the mortgage closing process, specifically asking consumers to identify the key “pain points” associated with mortgage closing and how those pain points might by addressed by market innovations and technology. Specifically, the agency said it wanted comments on how to increase the use of technology and promote inventions that encourage a more streamlined mortgage closing process while also improving consumer knowledge. The agency said it is seeking information from market... Read More

Worth Noting/Looking Ahead

Realtors to Make Another Appeal to CFPB Leadership. The National Association of Realtors plans to host CFPB Director Richard Cordray and other housing policy experts Tuesday, Jan. 7, to discuss the effects the bureau’s game-changing mortgage rules will have on lenders, consumers and the overall housing market. Chief among the focal points of discussion will be the bureau’s new ability-to-repay/qualified mortgage rule, which establishes strong consumer protections that aim to ensure qualified homebuyers have access to... Read More

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