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Consumer Financial Protection Bureau Requests Comment on Extending Regulation E to Cover GPR Cards

Jun 04 2012

By: David L. Beam, Steven M. Kaplan, Kathryn M. Baugher

Last week, the Consumer Financial Protection Bureau released an Advance Notice of Proposed Rulemaking (ANPR) on the subject of general purpose reloadable (GPR) cards. In the ANPR, the Bureau announced that it plans to issue a proposal to extend Regulation E to cover GPR cards. The ANPR poses a series of questions and gives the public an opportunity to submit comments. Comments must be received by July 23, 2012.

CFPB Proposes Method for Extending Supervisory Power to “Risky” Nonbanks

Jun 01 2012

By: Eric Mitzenmacher

The Dodd-Frank Act empowers the CFPB to supervise three classes of nonbank covered persons: (1) participants in certain enumerated consumer financial markets including consumer mortgages, private education loans, and payday loans; (2) larger participants in other consumer financial markets, as further defined by CFPB rulemaking; and (3) other nonbanks engaging in “conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services.”

CFPB Proposes Strict Controls on Discount Points, Origination Fees, and Broker Compensation

May 16 2012

By: Kris D. Kully

The Consumer Financial Protection Bureau (CFPB) is considering putting strict limits on a creditor’s ability to price its mortgage loans, and on a consumer’s ability to choose among pricing options.

By way of implementing the far-reaching provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is proposing to require that when a creditor pays a mortgage loan originator’s compensation (which includes most mortgage loan transactions), any up-front amounts the consumer pays for the loan must be in the form of bona fide discount points that reduce the interest rate or a flat origination fee that does not vary with the loan amount.

Global Servicing Settlement Requires Single Points of Contact (“SPOCs”)

By: Kristie D. Kully

The servicing standards imposed on the five largest mortgage loan servicers by the recent global settlement agreement with state and federal regulators, described here, continue to pile on the “SPOC” requirements. “SPOC” stands for a single point of contact – a knowledgeable and accessible person a troubled borrower may contact to receive information and assistance in the loss mitigation, loan modification, and foreclosure process. SPOCs may do little to resolve the foreclosure documentation irregularities that sparked state and federal regulators to initiate their investigation. However, they have been touted as key to the efforts for national servicing standards, and are an inevitable adjunct to the global settlement agreement.

Customary and Reasonable Appraisal Rates Rule Faces State Opposition

Dec 15 2011

By: Nanci L. Weissgold and Kerri M. Smith

It is old news that the Dodd-Frank Act sets standards for pricing appraisals and subjects appraisal management companies, known as AMCs, to federal and state oversight. The news for 2012 is that lenders may need to contend with alternate state law requirements addressing the payment of fee appraisers, some of which may be inconsistent with federal law.

AMCs – the business entities that administer networks of independent appraisers to procure real estate appraisal assignments on behalf of lenders – are now subject to supervision by state governments through their appraisal boards. Under the Dodd-Frank Act, the federal banking agencies must jointly by rule establish minimum requirements to be applied by a state, including state registration and supervision of AMCs, and that appraisals be conducted in compliance with Section 129E of TILA. While states have three years from the date the federal agencies finalize their rules establishing minimum requirements, AMC registration laws now exist in 28 states.

FHA Insured Mortgages Require an Appraisal by a State Certified Appraiser

Dec 12 2011

By: Nanci L. Weissgold

Effective December 23, 2011, HUD has finally amended its rules to coincide with its existing practice of allowing only state certified appraisers to conduct appraisals of properties securing an FHA insured mortgage. This means that state licensed appraisers or those with only the certification of a “nationally recognized professional organization” are now permitted on the FHA Appraiser Roster.

CFPB Now Accepting Mortgage Complaints from Consumers

Dec 07 2011

By: Kathryn M. Baugher

On December 1, 2011, the Consumer Financial Protection Bureau began accepting mortgage complaints from consumers through the agency’s home page. This development follows the Bureau’s October announcement that it would be expanding the coverage of its consumer complaint portal to include products such as mortgages and student loans. Consumers have been able to submit credit card complaints through the Bureau’s web site since last July. Read More

The CFPB’s Office of Servicemember Affairs Looks at the Lending Practices of For-Profit Colleges and Their Impact on Military Members

Dec 07 2011

By: Rebecca Lobenherz

When servicemembers are discussed in relation to the consumer credit industry, the discussion usually centers on the protections to military homeowners and credit card holders under the Servicemembers Civil Relief Act (“SCRA”). While SCRA remains a concern of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), recently the Office of Servicemember Affairs has been taking aim at a more unlikely target: student loans. The CFPB is looking into the recruiting practices of for-profit colleges to determine if for-profit colleges are exploiting servicemembers in order to evade a federal financial aid rule.
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HUD’s Proposed Fair Lending Rule: Deadline for Comments

Dec 05 2011

By: Melissa S. Malpass

On November 16, 2011 the United States Department of Housing and Urban Development (“HUD”) released a proposed rule to establish that proof of intentional discrimination is not necessary to establish a violation of the Fair Housing Act, and that a violation may be established under a disparate impact approach. HUD’s proposal makes clear the intention of the agency to apply this new approach to lenders. In describing policies “that may have a disparate impact,” the proposal references: “mortgage pricing policies that give lenders or brokers discretion to impose additional charges or higher interest rates unrelated to a borrower’s creditworthiness” and “credit scoring overrides provided by a purchaser of loans.” Read More

CFPB and Other Federal Banking Agencies Issue Joint Supervisory Statement Clarifying $10 Billion Asset Determination: Regulatory Uncertainty Remains

Dec 05 2011

By: Andrew Caplan* and Stephanie C. Robinson
*Mr. Caplan is not yet admitted to practice; admission to the NY Bar pending.

The Dodd-Frank Act gives the CFPB exclusive supervisory authority and primary enforcement authority of federal consumer financial protection laws over depository institutions with total assets greater than $10 billion and their affiliates (“Large Institutions”). Under Dodd-Frank, the federal banking agencies maintain supervisory and enforcement authority over other institutions with respect to federal consumer financial protection laws. On November 17, 2011, the federal banking agencies and the CFPB issued a joint supervisory statement delineating how and when these Agencies will determine the total assets of an insured depository institution or an insured credit union for purposes of their supervisory and enforcement responsibilities. This is because sections 1025 and 1026 Dodd-Frank, which establish the basic threshold regarding who will regulate whom, do not specify how and when an institution’s assets are assessed for purposes of determining “Large Institution” status. That task was left to the Agencies themselves to determine.

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