Bureau of Consumer Financial Protection (CFPB) – Page 6

What’s Driving the CFPB’s Latest Administrative Enforcement Action?

Dec 10 2015

The Consumer Financial Protection Bureau’s (CFPB) latest enforcement action suggests that the CFPB may seek to use its administrative enforcement authority to pursue claims of unfair or deceptive conduct that would otherwise be time-barred and that pre-date the agency’s formation. The CFPB Director’s ultimate decision on these issues—and any court decisions that may result from any appeal—are likely to have widespread implications for the agency’s enforcement powers.

On November 18, the CFPB filed a Notice of Charges (essentially an administrative complaint) against Integrity Advance, LLC and its CEO and president, James R. Carnes. The Notice of Charges, which was made public last week, alleges that from May 15, 2008 through December 2012, Integrity Advance and Carnes engaged in unfair and deceptive conduct, and that Integrity Advance also committed violations of the Truth in Lending Act (TILA) and the Electronic Funds Transfer Act (EFTA) in the origination of online payday loans.

CFPB Expands Its Targeting of For-Profit Schools and Pushes Jurisdictional Limits

Dec 04 2015

After suing two of the nation’s largest for-profit school chains, ITT and Corinthian, the Consumer Financial Protection Bureau (CFPB) is continuing its push to police the for-profit school industry. Bridgepoint Education, Inc. recently disclosed that on August 10, 2015, Bridgepoint and Ashford University received Civil Investigative Demands (CIDs) from the CFPB related to the CFPB’s investigation to determine “whether for-profit post-secondary-education companies” have engaged in unlawful acts or practices related to the advertising, marketing or origination of private student loans. And on October 29, 2015, the CFPB filed a lawsuit to compel the Accrediting Council for Independent Colleges and Schools (ACICS) to comply with a CID that the CFPB had issued to it on August 25, 2015. That CID concerns an investigation into possible legal violations “in connection with accrediting for-profit colleges.” These two actions suggest the CFPB will continue to pursue the for-profit industry, including associated entities such as ACICS that provide accreditation to such schools, apparently without concern over possibly exceeding its jurisdictional limits. This alert reviews the CFPB’s cases against for-profit schools to date and discusses the implications of the CIDs issued to Bridgepoint and ACICS.

Is the CFPB Coming After Marketplace Lenders?

Nov 24 2015

The CFPB recently released its fall 2015 Rulemaking Agenda, which suggests that the CFPB may be looking to exert its supervisory authority over certain marketplace lenders. If that is in fact the case, it would represent the agency’s first foray into this rapidly-developing credit marketplace.

The Rulemaking Agenda is released twice a year — in the spring and fall — and is where the CFPB identifies its rulemaking priorities for the short and long term. The fall Agenda contains a list of the various substantive rulemakings already underway at the CFPB — involving arbitration provisions, payday lending, prepaid accounts, overdrafts, debt collection, mortgage servicing, and the statutorily-required rule on women-owned, minority-owned, and small businesses data collection. These have all been publicly discussed by the CFPB before, and so they are no surprise. Read More

CFPB Revises Supervisory Appeals Process

Nov 12 2015

The CFPB recently revised its policy on Appeals of Supervisory Matters. Supervisory appeals are an avenue for supervised entities to obtain a second opinion from CFPB headquarters about examiners’ findings. However, the Bureau’s policy excludes the most significant matters — specifically, all aspects of enforcement — from this process.

In 1994, Congress required the federal prudential regulators to establish “an independent intra-agency appellate process” that is “available to review material supervisory determinations,” with “appropriate safeguards … for protecting the appellant from retaliation by agency examiners.”

Although the Bureau is not expressly subject to this congressional mandate, it established a similar appeals process in 2012. The Bureau’s policy allows entities to appeal less-than-satisfactory compliance ratings (a 3, 4, or 5) and adverse findings in a supervisory letter or examination report, but not the supervisory letter or examination report itself.

None of the regulators allow a supervised entity to use the appeals process to contest the decision to pursue an enforcement action. But in the case of the OCC, “[w]hile banks may not appeal a decision by [examiners] to pursue a formal enforcement-related action, banks may appeal conclusions in” an exam report that underlies a potential enforcement action.

D.C. District Court Decision Supports Principle of Allowing Companies to Challenge CFPB Information Requests without Fear of Public Disclosure of Investigation

Nov 05 2015

By: Ted Kornobis, Stephanie C. Robinson

Companies in receipt of a civil investigative demand (CID) from the Consumer Financial Protection Bureau (CFPB) are required to take a number of quick and important actions and make decisions that can have significant impact on the course and tenor of what will likely be a months- or years-long investigation. This can be a frustrating and high-pressure process, particularly given the limited practical options available under the CFPB’s rules for a CID recipient to effectively seek relief from what oftentimes can be broad and onerous requests. In particular, because of the CFPB’s policy to publicly identify any person or entity that files a petition to modify or set aside a CID, recipients of a CID generally forgo that route and instead are left to rely upon the reasonableness of the staff attorney and supervisor assigned to the matter. A recent decision in the U.S. District Court for the District of Columbia, however, may provide some measure of relief for CID recipients.

CFPB Publishes Major Changes to HDMA

Oct 15 2015

By: Melanie Brody, Christopher Shelton

Today, the Consumer Financial Protection Bureau issued a final rule that makes significant amendments to its Home Mortgage Disclosure Act (“HMDA”) regulations. The final rule is available here.

At 797 double-spaced pages, the final rule is almost half the length of the TILA-RESPA Integrated Disclosure rule, which came into effect earlier this month. Institutions will have to devote significant attention to digesting and implementing all the new HMDA requirements. The new requirements come into effect in three phases, starting in January 2018, January 2019, and January 2020.

K&L Gates will be circulating a client alert shortly, followed by a webinar, to help institutions navigate this complex final rule.

The CFPB on MSAs: Consider Yourself Warned

Oct 09 2015

By: Holly Spencer Bunting, Phillip L. Schulman

Settlement service providers have been begging the Consumer Financial Protection Bureau (“CFPB”) for regulatory guidance regarding marketing services agreements (“MSAs”) under Section 8 of the Real Estate Settlement Procedures Act (“RESPA”). Yesterday, they got it − sort of. After months of the industry deciphering enforcement actions in an attempt to gauge whether the CFPB believes MSAs between settlement service providers are legal under RESPA, the CFPB issued Compliance Bulletin 2015-05 (“Bulletin”) regarding “RESPA Compliance and Marketing Services Agreements.” But, the Bulletin neither answers the legality question nor provides clear guidelines on what can and cannot be done in an MSA. Rather, the Bulletin, as stated by the CFPB, “describe[s] the substantial risks posed by entering into [MSAs].” It is safe to say this is not the kind of guidance the industry was looking for.

CFPB and DOJ Continue to Pursue Indirect Auto and Redlining Claims

Oct 08 2015

By: Melanie Brody, Christa Bieker

The Department of Justice (“DOJ” or the “Department”) and the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) are increasingly pursuing lenders suspected of discriminatory lending practices. Last week, the DOJ and the CFPB announced two settlements with lenders resolving alleged violations of the Equal Credit Opportunity Act (“ECOA”) and the Fair Housing Act. These announcements come only days after the DOJ and the CFPB announced a consent order with Hudson City Savings Bank resolving allegations of racial redlining.

On September 28, the CFPB and the DOJ announced a consent order with Cincinnati-based Fifth Third Bank (“Fifth Third”) resolving allegations that Fifth Third’s indirect auto-lending pricing policies discriminated against African American and Hispanic borrowers. Although the CFPB does not have oversight over car dealers, the Bureau is able to investigate the auto loans that lenders like Fifth Third make through dealers. Coordinated investigations into Fifth Third’s indirect auto-lending business led the Bureau and the Department to conclude that African American and Hispanic borrowers paid approximately 35 or 36 basis points more, respectively, in dealer markups than similarly situated non-Hispanic white borrowers, which resulted in African American and Hispanic borrowers paying an average of $200 more for their car loans.

The CFPB Gives Student Loan Servicers Bad Grades in New Report (Card)

Oct 06 2015

By: Steve Kaplan, Elyse Schoenfeld*, and Tori Shinohara
*Ms. Schoenfeld is not admitted in D.C. She is supervised by Melanie Brody, a member of the D.C. Bar.

On September 29, 2015, the CFPB issued a 151-page report that details perceived problems with student loan servicing practices and provides insight into the CFPB’s agenda for changes to the student loan industry. The report signifies increased efforts by the CFPB to address issues in student loan servicing and suggests that servicers will be subject to increased scrutiny in the future.

The report details comments the CFPB received in response to its May 2015 public inquiry seeking input on and recommendations for improving student loan servicing practices. The CFPB received more than 30,000 public comments from individual consumers, state attorneys general and banking regulators, trade associations, and other organizations. The report highlights comments on a host of problems borrowers are facing, including lost paperwork and payment processing errors, difficulties in correcting servicing errors, and issues accessing affordable repayment options or alternatives to avoid default. Commenters also responded to queries regarding the similarity of the problems facing the student loan servicing industry to issues in the mortgage market after the financial crisis, and suggested that the reforms made to mortgage practices could inform future changes to student loan servicing.

Key Takeaways From the CFPB’s and DOJ’s Redlining Settlement With Hudson City Savings Bank

Sep 25 2015

By: Melanie Brody, Anjali Garg

On Thursday, September 24, 2015, the CFPB and DOJ filed a complaint and proposed consent order against Hudson City Savings Bank (“Hudson City”) alleging violations of the Equal Credit Opportunity Act and Fair Housing Act. The complaint alleges that Hudson City discriminated against Black and Hispanic borrowers by redlining majority-Black-and-Hispanic neighborhoods (defined in the consent order as a census tract in which more than 50 percent of the residents are identified in the 2010 U.S. Census as either “Black or African American” or “Hispanic or Latino”) in its residential mortgage lending in New York, New Jersey, and Pennsylvania. The complaint alleges that Hudson City engaged in redlining through its (1) location of branches and loan officers, (2) exclusion of Black and Hispanic census tracts from its Community Reinvestment Act (“CRA”) assessment area, (3) use of brokers outside of majority Black and Hispanic neighborhoods, (4) marketing directed at neighborhoods with relatively few minority residents, and (5) exclusion of residents from majority-minority counties from discounted home improvement loans for borrowers with low to moderate incomes.

Catagory:Bureau of Consumer Financial Protection (CFPB)