Category: Bureau of Consumer Financial Protection (CFPB)

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The Post-Election FinTech World: Are Happy Days (for Bankers) Here Again?
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Webinar: CFPB Final Rule on Prepaid Accounts: The Rules and Their Short and Long Term Impacts
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“Not A Close Call”: The D.C. Circuit Restores The Safe Harbor To Section 8 of RESPA
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Who Bears the Risk? Federal Court Holds That a Purchaser of Unsecured Consumer Loans Is the “True Lender,” Voiding Enforceability of the Loans
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Change Order: The CFPB Previews Its Proposed FDCPA Regulations
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LIGHT READING FOR THE DOG DAYS OF SUMMER: CFPB FINALIZES AMENDMENTS TO MORTGAGE SERVICING REGULATIONS
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CFPB Issues Notice of Proposed Rulemaking to Clarify “Know Before You Owe”; Some Welcome Guidance on TRID but Cure and Liability Issues Not Addressed
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Bridging the Great Divide: Collaboration Considerations for Banks and Marketplace Lenders
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It’s Time For An Upgrade — Outdated Technology Puts Mortgages Servicers At Risk For Increased CFPB Scrutiny and Potential Servicing Violations
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U.S. District Court (Again) Rules that Parties Can Challenge a CFPB Information Request Without Revealing Their Identities

Webinar: CFPB Final Rule on Prepaid Accounts: The Rules and Their Short and Long Term Impacts

Please join us for a webinar on the Consumer Financial Protection Bureau’s (“CFPB”) final rule (the “Rule”) on prepaid accounts.

The webinar will:
• Review the Final Rule in detail.
• Note industry responses to the Rule.
• Make projections regarding its short and long term impacts.

Panelists:
Linda C. Odom, Partner, K&L Gates
Judith E. Rinearson, Partner, K&L Gates
Jennifer L. Crowder, Counsel, K&L Gates
Eric A. Love, Law Clerk, K&L Gates
Ernest L. Simons, Associate, K&L Gates
Tyler Kirk, Associate, K&L Gates

To register, click here. Log-in instructions will be sent via email the day before the webinar. You must register to receive the log-in instructions.

“Not A Close Call”: The D.C. Circuit Restores The Safe Harbor To Section 8 of RESPA

By Irene C. Freidel

Noting that “[t]he basic statutory question in this case is not a close call,” the D.C. Circuit has held that a bona fide payment by one settlement service provider to another does not violate Section 8(a) of the Real Estate Settlement Procedures Act (RESPA) if the payment is reasonably related to the market value of the goods, services, or facilities provided. See PHH Corp. v. Consumer Financial Protection Bureau (D.C. Cir. Oct. 11, 2016). The court’s conclusion was mandated by the unambiguous text of Section 8(c) of RESPA, along with the U.S. Department of Housing and Urban Development’s (HUD’s) long-standing interpretations of the same statutory provision.

To read the full alert, click here.

Who Bears the Risk? Federal Court Holds That a Purchaser of Unsecured Consumer Loans Is the “True Lender,” Voiding Enforceability of the Loans

By Irene C. Freidel and David D. Christensen

A California federal court has held that the purchaser of small-dollar consumer loans is the “true lender” and thus subject to state usury laws, even though a separate tribal entity funded and closed the loans in its own name. See Consumer Financial Protection Bureau v. CashCall, Inc*. The court’s holding, which adopts the arguments of the Consumer Financial Protection Bureau (“CFPB”) and renders the loans serviced by CashCall unenforceable, challenges the business model that many marketplace lending platforms use to offer alternative, unsecured loans to consumers. Generally speaking, partnerships between marketplace platforms and tribal entities, state-chartered (and federally insured) banks, or national banks are intended to protect the platforms from the substantial licensing and compliance burden of state lending and licensing laws, and also to permit loans that might otherwise exceed the borrower’s home state usury limit. The recent CashCall decision, however, is another reminder that state and federal regulators, as well as plaintiffs’ attorneys, may be able to pierce these partnerships where a court finds that the financial institution funding and closing the loan does not bear substantial risk on those loans.

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Change Order: The CFPB Previews Its Proposed FDCPA Regulations

By Andrew C. Glass, Brian M. Forbes, Gregory N. Blase, and Roger L. Smerage

The Consumer Financial Protection Bureau (“CFPB”) recently took the next step toward promulgating regulations under the Fair Debt Collection Practices Act (“FDCPA”) by releasing its “Outline of Proposals under Consideration and Alternatives Considered” (the “Outline”). The Outline sheds light on the approach the CFPB may take in regulating the debt-collection industry. As detailed in this alert, the proposed approach would implement comprehensive and substantial changes.

To read the full alert, click here.

LIGHT READING FOR THE DOG DAYS OF SUMMER: CFPB FINALIZES AMENDMENTS TO MORTGAGE SERVICING REGULATIONS

By Brian M. Forbes, Andrew C. Glass, Gregory N. Blase, Robert W. Sparkes III and Matthew N. Lowe

On August 4, 2016, the Consumer Financial Protection Bureau (“CFPB”) issued its final rule setting forth amendments and clarifications to mortgage servicing regulations. These changes follow a prior round of revisions to mortgage servicing regulations that went into effect in January 2014. Since proposing the amendments to the regulations in November 2014, the CFPB received and reviewed hundreds of comments. At just over 900 pages in length, the final rule addresses numerous areas of mortgage servicing, including the following:

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CFPB Issues Notice of Proposed Rulemaking to Clarify “Know Before You Owe”; Some Welcome Guidance on TRID but Cure and Liability Issues Not Addressed

By Jennifer J. Nagle and Hollee M. Watson

On July 29, 2016, the Consumer Financial Protection Bureau (“CFPB”) issued a much anticipated Notice of Proposed Rulemaking (“NPRM”) on the TILA-RESPA Integrated Disclosure rule (“TRID” or “Know Before You Owe”), which went into effect on October 3, 2015, and has posed significant implementation challenges. The CFPB previously announced that it would issue proposed rulemaking in an April 28, 2016 letter to mortgage industry trade groups, in which it acknowledged the “many operational challenges” presented by TRID and noted that “there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity.”

CFPB Director Richard Cordray expects that the “proposed updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process.” See Consumer Financial Protection Bureau Proposes Updates to “Know Before You Owe” Mortgage Disclosure Rule. While the NPRM does contain some helpful guidance, there are also some notable omissions that may disappoint industry participants.

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Bridging the Great Divide: Collaboration Considerations for Banks and Marketplace Lenders

By Anthony R.G. Nolan, Edward Dartley, Sonia R. Gioseffi, Joseph A. Valenti, Christopher J. Scully and Christopher H. Bell

Marketplace lending has grown dramatically over the last several years, but it still remains a nascent industry. As it continues to expand its reach, players in the industry and the traditional banking/investment sector are discovering the mutual benefits of cooperation. While marketplace lending often has been heralded as a disruptor of traditional banking, industry participants are being presented with opportunities to collaborate with banking institutions as the industry matures.

To read the full alert, click here.

It’s Time For An Upgrade — Outdated Technology Puts Mortgages Servicers At Risk For Increased CFPB Scrutiny and Potential Servicing Violations

By Brian M. Forbes, Soyong Cho, and Hollee M. Watson

More than two years have passed since the Consumer Financial Protection Bureau (“CFPB”) implemented comprehensive amendments to the loan servicing provisions of Regulation X. Mortgage servicers have had to invest in technology and human capital to keep up with new regulatory requirements while saddled with expanded duties to respond to borrower inquires, disputes, and requests for information, in addition to new and extensive loss mitigation requirements. Outdated technology has put servicers at risk for increased enforcement and litigation issues. But, as the CFPB has noted, the problems are not “insurmountable.”

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U.S. District Court (Again) Rules that Parties Can Challenge a CFPB Information Request Without Revealing Their Identities

By: Ted Kornobis

Last week, a federal court issued an opinion supporting the ability of an entity to file a court challenge to Consumer Financial Protection Bureau (“CFPB”) information requests without necessarily needing to “out” itself as a potential investigation target. Specifically, the court reaffirmed a prior ruling that recipients of a CFPB civil investigative demand (“CID”) who were potential targets of an enforcement action could challenge the CFPB’s attempt to take certain testimony by proceeding as “John Doe” plaintiffs in a federal injunctive action. The district court first allowed the plaintiffs to proceed pseudonymously late last year, and last week’s order denied the CFPB’s motion for reconsideration. A description of the case background and judge’s original decision may be found in our earlier post on this case.

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