nkolen – Page 18 – Consumer Financial Services Watch

CFPB Provides Guidance on Effective Compliance Management Systems

Nov 07 2012

By: Jonathan D. Jaffe , Amanda D. Gossai

Last week, the Consumer Financial Protection Bureau (the “CFPB”) released its first Supervisory Highlights report, featuring issues that CFPB examiners discovered in the supervision period between July 21, 2011 and September 30, 2012. One issue upon which the CFPB focused was effective compliance management systems (“CMS”). This is not surprising given the CFPB’s focus since its inception on CMSs. Read More

Consumer Advisory Board holds its inaugural meeting

Oct 24 2012

By: Michael A. Cumming

The Consumer Advisory Board (“CAB”) held its inaugural meeting on September 27th in St. Louis. Composed of bank and credit union executives, consumer advocates and community development officials (click here to view the biographies), the CAB is required by the Dodd-Frank Act, which mandates that the CAB “provide information on emerging practices in the consumer financial products or services industry” to the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”). The CAB replaces the Consumer Advisory Council, which for 35 years advised the Federal Reserve Board on consumer financial services matters.

Regulators Highlight Hot Topics in Fair Lending: Are You Ready?

Oct 19 2012

By: Elena Grigera Babinecz

This week the Non-Discrimination Working Group of the Financial Fraud Enforcement Task Force sponsored a webinar highlighting emerging fair lending issues and hot topics that financial institutions should be aware of as regulatory agencies continue to focus their attention on discrimination in the housing and finance markets. Whether you’re in the business of making residential mortgage, commercial, student, auto, or payday loans, or you offer credit cards, it is important to understand the regulators’ areas of interest and to ensure that your compliance program is designed to monitor and address any potential concerns in these areas. Read More

CFPB’s Proposed Rule on Receiving a Copy of Your Appraisal and Valuation

Oct 10 2012

By: Nanci L. Weissgold, Kerri M. Smith

Although Congress mandated the sunset of the Home Valuation Code of Conduct (HVCC) in the Dodd-Frank Act, Congress effectively codified many of its requirements, including the obligation to furnish a copy of an appraisal to borrowers. To implement this statutory change to ECOA, the CFPB proposes to amend Regulation B to make the furnishing of “any and all written appraisals and valuations” developed in connection with the application for a first-lien loan mandatory, rather than at the consumer’s request. Comments to the ECOA proposed rule are due on October 15, 2012.

Is It Illegal Under Federal Law to Opt Out Of Jurisdictions Exercising Eminent Domain?

Sep 11 2012

By: Laurence E. Platt

Is a refusal to make or buy residential mortgage loans from jurisdictions that seize loans through eminent domain a federal crime or a reasoned response to excessive government intervention? That’s the question that people are asking today in light of the comments of Lt. Governor of California Gavin Newsom. Yesterday, he asked the U.S. Department of Justice to investigate and prosecute those in the industry who advocate staying away from jurisdictions exercising eminent domain. Did he expect the industry instead to send thank you notes? Read More

Servicemembers’ Civil Relief Act Protections Extended

Aug 27 2012

By: David I. Monteiro

On August 6, 2012, President Obama signed into law another extension to the protections from nonjudicial foreclosure afforded to members of the military under the federal Servicemembers’ Civil Relief Act (Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012, or the “Act”). Prior to the Act, the SCRA prohibited nonjudicial foreclosures on mortgage loans to active-duty members of the military, both during military service and for nine months after termination of active service. The Act extends these protections from nine months to one year following the end of military service. This extension takes effect on February 2, 2013. Read More

Bureau Considers Enforceability of State Unclaimed Property Laws for Gift Cards

Aug 24 2012

By: David L. Beam

The gift card provisions of the Electronic Funds Transfer Act (“EFTA”) and Regulation E (which implements the EFTA) do not allow funds on most gift cards to expire sooner than five years after issuance (or, if the card is reloadable, five years after the last load). But the unclaimed property laws in some states require gift card issuers to turn over the funds on dormant gift cards sooner than five years after the last activity. The state unclaimed property laws generally relieve the issuer of the obligation to honor a card after it has turned the funds over to the state. Instead, the owner of the card must apply to the state treasurer to recover the funds. (If the card issuer decides to honor the card anyway—and many do for customer service reasons—then the issuer may apply to the state for reimbursement.)

CFPB Legislates Loss Mitigation Through Proposed Servicing Regulations

Aug 13 2012

By: Laurence E. Platt

For those who wondered how the Consumer Financial Protection Bureau (the “Bureau”) would seek to convert portions of the global foreclosure settlement into federal law, last Friday’s proposed servicing rules provide an answer. The Dodd-Frank Act (“DFA”) amended the Real Estate Settlement Procedures Act (“RESPA”) in several ways to address discrete loan servicing issues, such as escrow accounts, flood insurance, and qualified written requests. What it did not do, however, is address loss mitigation or foreclosure. Many thought that the Bureau would use its general authority to issue regulations prohibiting unfair, deceptive or abusive acts and practices to craft loss mitigation requirements, but that authority would not afford consumers with a federal private right of action. Read More

The Consumer Financial Protection Bureau: A First Year Retrospective by K&L Gates

Jul 24 2012

By: Laurence E. Platt, Steven M. Kaplan, Stephanie C. Robinson, Kristie D. Kully, David L. Beam, Melanie Hibbs Brody, Jonathan D. Jaffe, Nanci L. Weissgold, Holly Spencer Bunting, Kerri M. Smith, David A. Tallman, Eric Mitzenmacher, David G. McDonough, Jr., Rebecca Lobenherz, John L. Longstreth, Krista Cooley, Paul F. Hancock, David I. Monteiro, Michael J. Missal, Shanda N. Hastings, Noam A. Kutler, Matt T. Morley, Stephen J. Crimmins, Amanda B. Kostner, Karen Kazmerzak, Bruce J. Heiman, Daniel F. C. Crowley, Akilah Green

As the Consumer Financial Protection Bureau celebrates its first birthday, financial service providers mark the occasion with solemnity. It has been quite a turbulent year with the Bureau, which has made the most of its new statutory authority to issue several final and proposed regulations, initiate its supervisory oversight of the previously unsupervised, and assume the supervisory function of the federal banking agencies for large banks. It has also laid the groundwork for what is expected to be an active enforcement environment.

This retrospective of the Bureau’s first year of operations describes the Bureau’s most consequential actions since its launch on July 21, 2011. Its wide-ranging activities over the past year reflect a mandate that spans numerous industries within the consumer financial services sphere, including some industries that previously went unregulated. Among the topics covered in our retrospective are rulemaking in the mortgage market and other markets such as prepaid cards, supervision and examination of banks and nonbanks, enforcement of federal consumer financial laws, and the debate over the agency’s legitimacy.

To download the retrospective, click here.

Circuit Court Declares Bank’s Wire Transfer Security to Be Commercially Unreasonable Under UCC Article 4A

Jul 18 2012

By: Holly K. Towle

In 2010 we reported on the “Wave of Online Banking Fraud Targeting Businesses” that use online banking relationships to make electronic fund transfers by wire or ACH. The fraudsters use malware such as key-loggers to steal access credentials and then start draining the business’ account. In the U.S., the transfers are governed by Article 4A of the Uniform Commercial Code (“UCC”). Consumer accounts are not impacted by Article 4A: they are eligible for the consumer protections afforded by the federal Electronic Funds Transfer Act and Regulation E, which limit a consumer’s exposure to fraudulent transfers to a maximum of $50 as long as the consumer promptly reports the fraudulent activity. Read More

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