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Inside the CFPB

May 4, 2015

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CFPB, MD AG Bring Enforcement Action Against Title Co., Execs

In another display of multijurisdictional cooperation, the CFPB and the Maryland Attorney General last week brought an enforcement action against a Maryland-based title company and its executives, alleging they participated in a mortgage kickback scheme, trading cash and marketing services in exchange for referrals. The complaint names Genuine Title, LLC, as well as Jay Zukerberg, Brandon Glickstein, Gary Klopp, Adam Mandelberg, William Peterson, and Angela Pobletts, along with a number of limited-liability companies controlled by certain defendants. The CFPB and Maryland allege that Zukerberg and Glickstein developed and operated schemes to give loan officers marketing services and cash payments in exchange for referrals of title work. The kickback schemes violated the Real Estate Settlement Procedures Act, which prohibits giving a ... Read More

Regions Bank Faces $7.5M Fine, Industry Faces More Scrutiny

Last week, in the first such enforcement action of its kind – and as a warning shot across the bow of all financial institutions under its jurisdiction – the CFPB slapped Regions Bank with $7.5 million in fines for charging overdraft fees to consumers who had not opted-in for such coverage. “The 2010 opt-in rule made clear that consumer protection in this area is critical. That Regions Bank violated the law raises definite concerns worthy of note by all depository institutions,” said Cara Petersen, the CFPB’s deputy enforcement director. “Their customers should rest assured that the consumer bureau is here to protect them when it comes to the hard-earned money they keep in their checking accounts.” The depository institution, based in Birmingham ... Read More

Green Tree in $63M Settlement With the CFPB, FTC Over Tactics

Green Tree Servicing entered into a $48 million legal settlement with the CFPB and Federal Trade Commission last week after being accused of botching loan modifications on servicing transfers and harassing and threatening overdue borrowers. In addition to coughing up the $48 million, the nonbank will pay an additional $15 million penalty for what the CFPB called its “illegal” actions. The settlement, ironically, came just a few days after Green Tree – a subsidiary of the publicly traded Walter Investment – was given top grades by Fannie Mae for customer service and foreclosure prevention activities. To make amends, not only must the company compensate borrowers, but it will face “rigorous servicing transfer” requirements from regulators. In a statement on the settlement, the ... Read More

Fears Over TRID’s Impact Intensifying as Clock Ticks

The mortgage industry has just under 100 days until the do-or-die deadline of August 1 kicks in for compliance with the CFPB’s integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act, otherwise known as the TRID. And as the new lending environment approaches, industry anxieties are getting stronger and more specific in nature. “The primary concerns that I am hearing are about the inability to reset the fee tolerances when the closing date is significantly delayed, which many fear will require lenders to start over and scuttle closings, and the lack of guidance for wholesale lenders who work with brokers,” said Benjamin Olson, counsel in the Washington, DC, office of the BuckleySandler law ... Read More

CFPB Brings $3.1M Action Against Military Allotment Processor

The CFPB has compelled Fort Knox National Co. and its subsidiary, Military Assistance Co. (MAC), to pony up $3.1 million in relief to harmed service members to resolve allegations that the military allotment processor did not clearly disclose various recurring fees, which could total $100 or more. The military allotment system enables U.S. military personnel to deduct payments directly from their paychecks. The allotment system was created to help deployed members of the U.S. military send money home to their families and pay their creditors at a time when automatic bank payments and electronic transfers were not yet common bank services. Creditors, such as auto lenders, installment lenders and retail merchants, have in recent years been known to direct servicemembers ... Read More

CFPB Says Property Tax Loans Should Get Federal Protections

The CFPB told the U.S. Court of Appeals for the Fifth Circuit that property tax loans should get consumer protections under the federal Truth in Lending Act. The CFPB made its case in an amicus brief with the court in Billings v. Propel Financial Services, LLC. The legal question presented in this case is whether a private lender extends “consumer credit” under the Truth in Lending Act by providing loans to consumers for the purpose of paying off residential property-tax delinquencies.The bureau asserted its legal interest in the case on the grounds that it is the federal agency charged with interpreting and promulgating rules under TILA, and because it has authority to enforce compliance with the requirements of TILA.... Read More

President Obama Threatens to Veto Legislation to Limit CFPB Funding

President Barack Obama threatened Republicans in Congress that he would veto H.R. 1195 – not because of the substance of the original measure, but because of amendments that would reduce the cap on the total amount of funding that could be requested for the CFPB for fiscal years 2020 and 2025.As originally passed out of committee, H.R. 1195, the Bureau of Consumer Financial Protection Advisory Boards Act, would direct the CFPB to establish advisory councils for community banks, credit unions, and small businesses to advise and consult with the bureau. Since the bureau already convenes such panels on an ad hoc basis, the legislation seeks to formally codify and require it to do so. But the president and congressional Democrats ... Read More

CFPB Official Pledges to Help Firms Implement TRID After Aug. 1

David Silberman, associate director of research, markets and regulations at the CFPB, told members of Congress recently that the bureau will continue to work with the mortgage industry as it implements and adapts to the pending integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement and Procedures Act. “The bureau’s work supporting implementation of the integrated disclosure rule does not end with the effective date of the integrated disclosure rule,” Silberman told the House Financial Services Subcommittee on Financial Institutions and Consumer Credit recently. “We expect to continue working with industry, consumers, and other stakeholders to answer questions, provide guidance, and evaluate any issues industry and consumers experience as the integrated disclosure rule is implemented.” ... Read More

Complaints About Student Loans Continue Drifting Downwards

Borrower complaints about their student loans continued their apparently inexorable downward momentum, both quarter over quarter and year over year, according to a new analysis by Inside the CFPB of the latest complaint data from the CFPB. Industry wise, consumer gripes fell 11.3 percent QoQ and an even larger 15.7 percent YoY, the data show. Navient, the Sallie Mae spinoff, continues to dominate because of the sheer size of its footprint in the marketplace. Nonetheless, it showed impressive drops of 24.3 percent and 33.0 percent, respectively, for both time periods. Repayment problems continue to represent the lion’s share of the issues about which student-debt borrowers have issues. However, after peaking in the second quarter of 2012, and experiencing another big ... Read More

CHLA Calls For Disclosures Of MLO Qualifications

The Community Home Lenders Association recently sent a letter to CFPB Director Richard Cordray, asking the bureau to require consumer disclosures on each mortgage loan that indicate whether the mortgage loan originator working on that loan is licensed. Such disclosures also should show whether the MLO has passed the SAFE Act test, and has completed an independent background check and SAFE Act approved pre-licensing and continuing education courses. CHLA also recommended that consumers be told if their loan originator previously failed (and never passed) the SAFE Act test or has ever been denied a state license because they failed a background check. “The CFPB is carrying out its ‘Know Before You Owe’ initiative, to improve consumer understanding and mortgage disclosures” ... Read More

Briefs: Other Enforcement News/Interagency Briefs

CFPB, Justice Department Engaged in Fair-Lending Investigations. The Department of Justice’s Civil Rights Division was engaged in 10 joint fair- lending probes with the CFPB at the end of 2014 as the result of referrals from the bureau, according to a recently released report to Congress. In five of the probes, the parties were in the midst of pre-suit negotiations, the report indicated. “In addition, seven joint investigations with the CFPB, which were initiated before 2014, are ongoing,” the report continued.The division received a total 18 referrals in 2014: 15 from the CFPB and three from the Federal Deposit Insurance Corp. Of those 15 referrals from the bureau, seven had to do with issues of race/national origin, three with ... Read More

Briefs: All About the TRID/Upcoming This Month

FFIEC Issues Revised Interagency Examination Procedures for Compliance with the TRID. The Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council recently put out new interagency examination procedures for the Truth in Lending Act (TILA), as implemented by Regulation Z, and the Real Estate Settlement Procedures Act (RESPA), as implemented by Regulation X. These procedures reflect CFPB amendments to Regulations Z and X published in the Federal Register in December 2013 and February 2015. Most of the changes to the procedures relate to the integrated mortgage disclosure requirements under TILA and RESPA, commonly referred to as the “TRID” requirements. Office of the Comptroller of the Currency Bulletin 2015-27 makes available on the OCC website the revised interagency ... Read More

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