Consumer Financial Protection Bureau Law Blog

Get Out the Popcorn (and an Energy Drink): The CFPB Releases Videos On New Mortgage Rules

 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.

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 ›

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.”   

CFPB Issues New National Mortgage Servicing Rules

Today, the Consumer Financial Protection Bureau (CFPB) issued the expected mortgage servicing final rules. At over 1,000 pages, the final rules will amend the Truth in Lending Act (Regulation Z) and the Real Estate Settlement Procedures Act (Regulation X). Consistent with the Bureau’s proposal, the rules cover nine major topics and implement the mortgage servicing  provisions of Title XIV of  the Dodd-Frank Act. The rules, which will take effect on January 10, 2014, directly implement Congressionally-mandated servicing reforms but also include a host of required loss mitigation rules and processes. The CFPB promulgated these latter rules by way of its general rulemaking authority under RESPA provided in the Dodd-Frank Act, not pursuant to specific Dodd-Frank statutory provisions. In prepared remarks for today’s field hearing in Atlanta,  CFPB Director Cordray emphasized that these new rules are not only mandatory for mortgage servicers (with limited exceptions for smaller servicers), but “are backed by the full supervisory and enforcement authority that Congress has conferred upon [the CFPB].”  Read More ›

CFPB’s First Joint Enforcement Action with the States: Another Tool in the CFPB’s Arsenal

In the first joint enforcement action between the Bureau of Consumer Financial Protection (CFPB) and state regulators, a Florida payday lender has agreed to enter into a consent order requiring $105,000 in restitution and other payments. The consent order (Order), entered in the U.S. District Court for the Southern District of Florida, is directed against Payday Loan Debt Solution, Inc. (PLDS) for alleged violations of numerous state consumer protection laws, the federal Telemarketing Sales Rule (16 C.F.R. § 310), and various provisions of the Dodd-Frank Act (12 U.S.C. §§ 5481, 5531, 5536, 5564 and 5581). Read More ›

CFPB PROPOSES NEW, SWEEPING RULES TO REGULATE MORTGAGE SERVICING

On August 9, the CFPB released two sets of proposed rules that will substantially impact the mortgage servicing industry. The proposed rules, which were issued under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA), cover nine major topic areas and impose new, stringent requirements on the servicing industry. The proposed TILA rules are available here, and the proposed RESPA rules are available here. In an indirect jab at current mortgage servicing practices, CFPB Director Rich Cordray claims that the new rules “offer consumers basic protections and put the ‘service’ back into mortgage servicing.” Bob Davis, executive vice president of the American Bankers Association, warns that, when considering these rules, servicing should not “get tangled up in so much red tape that high-quality, responsive servicing is no longer viable.” Others caution that these regulations will impose significant costs on mortgage servicers. Indeed, some suggest that some large banks have already begun shifting their mortgage servicing to dedicated mortgage servicers in anticipation of these regulations.   Read More ›

Court Grants Preliminary Injunction That Prevents CFPB From Enforcing TILA Rules on Credit Card Fees

A federal district court in First Premier Bank v. U.S. Consumer Financial Protection Bureau (D.S.D.) granted a preliminary injunction to First Premier Bank (“Premier”) to block the CFPB’s enforcement of an amendment to Regulation Z, which would narrow the scope of fees credit card companies can impose on the type of cards typically offered to subprime borrowers. The injunction, based in part on the finding that the Federal Reserve Board (“FRB”) had exceeded its authority, prevents the CFPB from enforcing the amendment until a final decision is made in the case. Read More ›

Senate Committee Approves Cordray to Head Consumer Financial Protection Bureau

The Senate Banking Committee voted 12-10 to approve Richard Cordray’s nomination to be the first director of the CFPB. Cordray is a former Ohio attorney general who currently leads the Bureau’s enforcement division. The committee voted along party lines, with no Republican committee member voting to approve the nomination. Cordray’s nomination now proceeds to the full Senate for a vote. Read More ›

Date Calls for Greater Transparency in Checking Account Fees

On the heels of Bank of America’s announcement that it will impose a monthly fee on debit card users, the Consumer Financial Protection Bureau (“CFPB”) has signaled that it will work toward increasing transparency regarding checking account fees and might require more simplified checking account disclosures. Raj Date, special advisor to the Secretary of the Treasury on the CFPB, recently issued a statement noting that “checking accounts often come with a wide variety of unexpected costs that can quickly add up for consumers.” Read More ›

CFPB Drafting Qualified Mortgage Regulations in Hopes of Expanding Mortgage Loan Originations

The CFPB is currently drafting regulations that define the requirements of a Qualified Mortgage (“QM”) and the benefits to lenders whose loans fall within the QM parameters. Recognizing that “[t]here can be little or no access to credit unless suppliers of capital are willing to finance home mortgages,” Patricia McCoy, the CFPB’s assistant director for mortgage markets, is appreciative of the hundreds of extremely thoughtful comment letters received that will inform this “critical and difficult rulemaking.” Read More ›