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- Senate Vote on Cordray Nomination Expected Next Week: Anyone Holding Their Breath?
- Get Out the Popcorn (and an Energy Drink): The CFPB Releases Videos On New Mortgage Rules
- CFPB Proposes Delay in Implementing Rule Against Financing of Certain Credit Insurance on Mortgage Loans
- Just-Issued Final Remittance Rule Suggests CFPB is Listening… Sort Of
- FHFA Limits Fannie and Freddie to “Qualified Loans”: Another Strike Against Non-Qualified Loans and the Consumers Who Rely on Them
- CFPB Publishes Small Entity Compliance Guides for New HOEPA, ECOA, and TILA Rules- Institutions of All Sizes Should Take Notice
- CFPB Probes Auto Lenders Over Extended Warranty And Other Ancillary Products
- CFPB Hosting Student Loan Hearing: New Rules On The Way???
- Legislation Seeks to Limit CFPB’s Authority Over Community Banks, Credit Unions and Small Servicers
- CFPB Eases Limits On Credit Card Fees to Avoid Court Battle: Afraid of the Fight or Evidence that It Is Listening Industry Stakeholders?
- Richard E. GottliebMember312-627-2196
- Arthur B. AxelsonSenior Counsel202-906-8607
- J. Kevin SnyderMember213-457-1810
- Heather C. HutchingsSenior Counsel202-906-8616
- Stephen M. MahieuAssociate312-627-2170
- Brett J. NatarelliAssociate312-627-8318
- Michael B. RainesAssociate312-627-4605
- Daniel J. ZollnerMember312-627-2193
Senate Majority Leader Harry Reid (D-NV) has promised a vote on Richard Cordray’s nomination next week. Based on the chest pounding, it seems like a foregone conclusion that the Republicans will block this nomination unless the Democrats agree to change the CFPB’s structure and weaken its power. Cordray’s nomination was approved by the Senate Banking Committee along party lines (12-10). In February, 43 Senators, a group large enough to block Cordray’s nomination, sent President Obama a letter stating that they will continue to oppose confirmation of any nominee to lead the U.S. Consumer Financial Protection Bureau until “key changes are made to ensure accountability and transparency at the bureau.” When asked whether he would use the “nuclear option” and change the Senate rules to override the 60 votes necessary to stop a filibuster, Reid explained that he is “not going to do anything now, precipitously. But I’m looking at this very closely…. We’re going to fill that job. Cordray is there now. He’s going to get a vote.”
Stay tuned to the CFPB-Lawblog as we track the progress of Director Cordray’s nomination.
The CFPB has just released a series of video presentations on the new mortgage rules issued by CFPB earlier this year. In his opening remarks, Director Cordray explains that these videos are part of “a broader effort on [the CFPB’s] part to help you comply with the Dodd-Frank Act’s mortgage reforms and [the CFPB] rules.” These videos, cover:
- Ability-to-Repay and Qualified Mortgage Rule
- 2013 HOEPA Rule
- ECOA Valuations and TILA Higher-Priced Mortgage Loans Appraisal Rules
- Loan Originator Compensation Rule
- Mortgage Servicing Rules
- TILA Escrow Rule
The CFPB issued these videos “to provide an overview of the rules in a plain language format that makes the content more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff.” Those of you hoping for action sequences involving Director Cordray will be disappointed. The videos are a series PowerPoint presentations by members of the CFPB staff. Each of the videos warns that these are just “staff guidance and not any official interpretation of the Bureau or legal advice.” This guidance is important because the videos are just overviews of the requirements and do not cover all aspects of the rules or the obligations that financial institutions face under these rules.
Read More ›
CFPB Proposes Delay in Implementing Rule Against Financing of Certain Credit Insurance on Mortgage Loans
As our readers will recall, the CFPB proposed back in January 2013 to limit the ability of mortgage lenders to finance credit insurance premiums. These prohibitions were to go into effect on June 1, 2013, several months before the required implementation date of most regulations issued at that time. On May 8, 2013, however, the CFPB switched course, proposing to delay implementation of the rule while the CFPB decides whether to make the rule applicable to transactions other than those in which a lump-sum premium is added to the loan amount at closing. Back in January, the CFPB issued a number of final rules concerning mortgage lending, in accordance with requirements of the Dodd-Frank Act, including Loan Originator Compensation Requirements under the Truth in Lending Act (Regulation Z) (the "LO Compensation Rule"). The LO Compensation Rule deals not only with compensation, but also with loan originator qualifications and registration, as well as compliance procedures for banks, prohibitions on mandatory arbitration, and (relevant here), prohibitions on the financing of single-premium credit insurance. Read More ›
In January, the CFPB announced that it was delaying implementation of its controversial Remittance Rule governing foreign money transfers to revisit certain concerns raised by financial institutions. It appears that the CFPB was listening--sort of. The final Remittance Rule just released by the CFPB contains revisions lifting some of the compliance burdens on smaller community banks and credit unions, but leaving others in place that could jeopardize the ability of these small banks to offer remittance services. Read More ›
FHFA Limits Fannie and Freddie to “Qualified Loans”: Another Strike Against Non-Qualified Loans and the Consumers Who Rely on Them
In January, the CFPB issued its final Qualified Mortgage Rule (QMR) creating a safe harbor for lenders from liability for loans that meet its criteria for a “qualified mortgage.” The Federal Housing Finance Authority (FHFA) has endorsed this Rule by barring Fannie Mae and Freddie Mac from purchasing non-qualified mortgages. This means that, beginning in January 2014 when the QRM takes effect, Fannie and Freddie will no longer be permitted to purchase: (i) loans with terms over 30 years, (ii) interest-only loans; (iii) negative amortization or ballooning principal loans; or (iv) loans with points and fees exceeding the thresholds set by the CFPB. The one exception the FHFA made is for loans that meet Fannie’s and Freddie’s underwriting and delivery standards. According to the FHFA, the “[a]doption of these new limitations by Fannie Mae and Freddie Mac is in keeping with FHFA’s goal of gradually contracting their market footprint and protecting borrowers and taxpayers.” These limitations also add to the growing number of disincentives for lenders to offer non-qualifying loans, which could constrict access to credit for those who may need it the most.
CFPB Publishes Small Entity Compliance Guides for New HOEPA, ECOA, and TILA Rules- Institutions of All Sizes Should Take Notice
As readers of this blog know, in January 2013, the CFPB adopted rules governing the Home Ownership and Equity Protection Act (HOEPA), valuations under the Equal Credit Opportunity Act (ECOA), and appraisals of Higher-Priced Mortgage Loans (HPML) under the Truth In Lending Act (TILA). While these rules do not take effect until January 2014, the CFPB is wasting no time warning financial institutions of their obligations under these rules. On May 2, 2013, the CFPB published three compliance guides for each of these rules targeted at small entities with limited legal and compliance staff. The guides can be found here: Guide for the 2013 HOEPA Rule; Guide for the ECOA Valuations Rule; and Guide for the TILA HPML Appraisal Rule. While billed as “Small Entity Compliance Guides,” mortgage lenders and servicers of all sizes could benefit from reviewing these materials to understand better the CFPB’s recent rules. Read More ›
The CFPB has subpoenaed a number of auto lenders concerning the sale of financial products such as extended warranties, according to a report in the May 2, 2013 edition of the Wall Street Journal. Consumer advocates have long criticized what they perceive to be excessive use of high-cost ancillary products to boost profits for car dealers. Although there is nothing illegal about any of these products, and many provide significant benefits to consumers, we nonetheless expect the CFPB to use its UDAAP powers to deem certain of these practices “abusive,” and to use fair lending-based methodologies to argue that these sales have a disparate impact on certain protected classes. When combined with the CFPB’s March 2013 guidance on indirect auto lending, which we discuss here, the CFPB is demonstrating that auto lending will be an area of significant enforcement activities in the months to come.
Stay tuned to the CFPB-Lawblog's continuing coverage of the CFPB's activities involving auto financing.
On May 8, 2013, the CFPB is hosting a field hearing at Miami Dade College in Florida "on student loan borrowers." The CFPB holds field meetings on a regular basis without much fanfare, but what makes this hearing different is that the "event will feature remarks from [Director Cordray]." Cordrary's attendance at a "field hearing" is traditionally coupled with a "major announcement" from the CFPB , e.g. the release of data/information from the CFPB's compliant database, issuance of recommended procedures, or the publication of new rules. Student loans have been a special focus of attention for the CFPB, and it would suprise us in the least if Director Cordray used this forum to make a "major announcement" regarding student loans. Stay tuned to the CFPB-Lawblog, as we follow this developing story.
Rep. Blaine Luetkemeyer (R-Mo.) has introduced legislation would limit the CFPB’s authority over and provide regulatory relief to community banks, credit unions, small servicers. Luetkemeyer’s legislation, H.R. 1750The Community Lending Enhancement and Regulatory Relief Act, would exempt institutions with less than $10 billion in assets from federal requirements on mortgage escrows and “qualified mortgage” standards (the latter only applies to loans keep on an institution's books for least three years),which which should benefit community banks and credit unions. The legislation would also increase the “small servicer” exemption in mortgage servicing rules from 5,000 mortgages to 20,000 mortgages annually. The Missouri Credit Union Association President/CEO Don Cohenour remarked that there “are several provisions in this bill that are valuable to credit unions and their members.” Stay tuned to the CFPB-lawblog as we follow this legislation.
CFPB Eases Limits On Credit Card Fees to Avoid Court Battle: Afraid of the Fight or Evidence that It Is Listening Industry Stakeholders?
The 2011 suit by First Premier Bank challenging certain credit card fee rules issued by the Federal Reserve under TILA and the Credit Card Act has been dismissed upon agreement by First Premier and the CFPB. In its complaint, First Premier argued that the rules, which attempted to regulate fees paid prior to the opening of a credit card account, exceeded the Federal Reserve’s statutory authority to regulate fees paid “in the first year during which the account is opened.” 15 U.S.C. § 1637(n); 5 U.S.C. § 706(2)(A) & (C). In July 2011, the CFPB assumed the rule making authority under TILA from the Federal Reserve and became the plaintiff in the matter. The Court enjoined the rules from taking effect and, inFebruary 2012, the CFPB advised the court that it was preparing to amended the rules so that they did not apply to fees paid prior to an “account opening.” In the amendment, which became effective on March 28, 2013, the CFPB acknowledges that the change was “necessary to resolve the uncertainty created by the South Dakota litigation.”