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Inside the CFPB

March 9, 2015

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Mortgage Industry Reps Lay Out CFPB Reforms Expected on Hill

There might be the usual hard line posturing on the part of both major political parties in the U.S. Congress on display when it comes to legislation related to the CFPB. But behind the scenes, top industry officials have no intention of letting up on the pressure they are trying to bring to bear on lawmakers to pass as many practical changes to bureau rulemakings as possible. “In the next two weeks, there will be several bills introduced dealing with less controversial but important elements of regulatory reform that we think will have bipartisan support,” said one mortgage industry executive in Washington, DC. Bills are expected to include provisions such as providing “qualified mortgage” status for many portfolio loans, with ... Read More

Expect No Quarter From CFPB On Enforcement of the TRID

A key take-away from last week’s hearing of the House Financial Services Committee was a clear indication that the CFPB plans to fully enforce its integrated disclosure rule when the Aug. 1, 2015, effective date kicks in. The rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act was finalized in November 2013. During the hearing this past Tuesday, Reps. Randy Neugebauer, R-TX, and Brad Sherman, D-CA, both pressed CFPB Director Richard Cordray on whether he would be open to a 60-day enforcement delay or a “restrained enforcement” period when the TILA/RESPA integrated disclosure rule – the TRID – goes live. Cordray did not come right out and say he would refuse to accept or implement one, but ... Read More

HMDA Rule Out This Summer, With Extended Implementation Period

CFPB Director Richard Cordray told members of Congress last week that the bureau’s final rule on Home Mortgage Disclosure Act reporting would likely come out sometime this summer, perhaps in July. He also indicated there would be a significant amount of time for mortgage lenders to get in compliance with it. He did not, however, provide any more detail such as a specific timetable. During last week’s hearing of the House Financial Services Committee, Rep. Randy Hultgren, R- IL, said small financial institutions are concerned about the proposal. “CFPB’s efforts thus far to narrowly tailor proposed HMDA requirements have been insufficient,” he said. “Even though the Dodd-Frank Act mandates 17 new data fields, the CFPB has proposed an additional 20 ... Read More

Fannie/Freddie ‘Patch’ to ATR Rule Will be Extended if Needed

The CFPB’s ability-to-repay rule will likely be revised if Congress fails to enact legislation to reform the government-sponsored enterprises by the time the rule’s Fannie Mae/Freddie Mac “patch” expires in six years. Appearing before the House Financial Services Committee last week, CFPB Director Richard Cordray and committee chairman Jeb Hensarling, R-TX, went back and forth over the accuracy of a study the Federal Reserve did a few years ago about the potential impact the ATR rule could have on the market, specifically in terms of limiting borrower access to credit. Cordray said he disagreed with the findings of the report, asserting that the Fed’s study was based on provisions that were substantially different than what were ultimately adopted. Hensarling then ... Read More

Cordray Defends Controversial Online Rate Checker Tool

Many people in the mortgage industry remain bent out of shape over the CFPB’s controversial online rate-checker tool, and some of the pent up frustration was on display during a hearing last week of the House Financial Services Committee. Rep. Stephen Fincher, R-TN, asked CFPB Director Richard Cordray, “This mortgage rate checker is something that is really muddying the waters. Why did the bureau post an incomplete and imprecise rate checker to help consumers when it’s not accurate? Where are you getting that information, and why did you do it prematurely?” Cordray replied, “It actually is quite accurate and it’s up-to-date, daily information.” He then cited the bureau’s concern that prompted the development of the rate-checker. “What we found is ... Read More

CFPB Aims to Balance Access, Safety in Payday, Prepaid Lending

One of the common elements in the CFPB’s growing regulatory interest over prepaid cards and payday lending is the challenge the bureau faces in balancing strong consumer protections from excessive fees or high interest rates, on the one hand, and maintaining consumer access to such products, on the other.During a hearing last week before the House Financial Services Committee, CFPB Director Richard Cordray felt political pressure to strike the perfect balance in both lending sectors. Ranking Member Maxine Waters, D-CA, came out strongly in favor of cracking down on lenders that service the payday market, otherwise referred to as small-dollar lending. “Do you think there is any way we can bring payday lending under control anytime soon?” she asked ... Read More

TRID Will Demand Much From Lenders on Multiple Levels

This is the first in a series on industry efforts to prepare for compliance with the CFPB’s integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act.According to Scott Stucky, chief strategy officer at DocuTech, mortgage lenders need to engage TRID preparation on multiple levels. “They’ve obviously got to be ready from a technology perspective, so working with their origination system and document solution provider, they should be in the testing phase at this point in time,” he told Inside the CFPB recently. “Even if it’s rudimentary testing, even if it’s just very basic and they can’t get everything completely together, they should be doing some basic evaluation,” he added. “That’s because, in ... Read More

LO Comp Rule Still a Source Of Confusion, Uncertainty

More than two years after the CFPB first released its loan originator compensation rule, plenty of unanswered questions and ambiguity remain for lenders struggling to maximize their compliance. Meanwhile, the implementation date of CFPB’s integrated disclosure rule looms at the beginning of August, threatening to compound the complexity of the situation. During a recent webinar sponsored by Inside Mortgage Finance, an affiliated newsletter, lender representatives were anxious to resolve a host of concerns and uncertainties. One webinar participant had some questions about borrower-paid compensation to the loan broker. “To what extent can the applicant and the broker negotiate the compensation, and at what point is that compensation set, such that the broker can no longer concede any of it back ... Read More

Biggest Sources of Debt Collection Complaints Improve QoQ, YoY

Three out of the top four targets of consumer complaints to the CFPB about their debt collection practices saw their numbers go down both quarter over quarter and year over year, according to a new analysis by Inside the CFPB. Encore Capital Group, the largest of the top four, in terms of number of consumer gripes, saw its tallies drop 31.1 percent from the third quarter of 2014 to the fourth, and 28.0 percent from year-ago levels, the latest numbers from the CFPB’s consumer complaint database show. Second-ranked Portfolio Recovery Associates was the only one of the four largest firms hit by criticisms to bounce down in one period (9.4 percent QoQ) yet rise in another (30.7 percent YoY)... [with exclusive data chart]... Read More

CFPB Proposes Suspending TILA Requirement for CC Issuers

Issuers of open-end credit cards would get a one-year break from the Truth in Lending Act/Regulation Z requirement to forward their credit card agreements to the CFPB on a quarterly basis for posting in a public database on the agency’s website, under a proposed rule the bureau issued recently. The proposal would temporarily suspend card issuers’ obligations to submit agreements to the bureau for a period of one year (i.e., four quarterly submissions), in order to reduce burden while the bureau works to develop a more streamlined and automated electronic submission system. Other requirements, including card issuers’ obligations to post currently offered agreements on their own websites, would be unchanged under the proposal. “The bureau recognizes that its proposed temporary ... Read More

CFPB Can Enhance Its Diversity And Inclusion Efforts, OIG Says

The CFPB can do a better job when it comes to diversity and inclusion, according to a new report issued by the bureau’s Office of Inspector General. The CFPB has taken steps to foster a diverse and inclusive workforce since it began operations in July 2011, the OIG began. But it identified four areas of the bureau’s diversity and inclusion efforts that can be enhanced. “First, diversity and inclusion training is not mandatory for CFPB employees, supervisors and senior managers,” the office said. Second, data quality issues exist in the CFPB’s tracking spreadsheets for Equal Employment Opportunity complaints and negotiated grievances, the report said, and certain data related to performance management are not analyzed for trends that could indicate potential ... Read More

Worth Noting/Betcha Didn’t Know/Dates to Watch

Walter Reports a $44 Million Loss, Cites a Pending Settlement with the CFPB. Walter Investment Management Corp., which owns the nation’s eighth-largest residential servicer, reported a $44 million loss for the fourth quarter, citing – among other things – a pending settlement with the CFPB and the Federal Trade Commission. “We have agreed to a proposed stipulated order with the FTC and CFPB, which is subject to approval by the FTC, CFPB and the court, and expect the settlement approval process may take a month or two,” the company noted in its fourth quarter 2014 earnings release. “We believe the proposed settlement is in the best interest of our business and all stakeholders.” This past October, Walter disclosed in a regulatory filing ... Read More

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