Consumer Financial Services Watch

News and developments related to consumer financial services, litigation, and enforcement.

 

1
Risky Business: CFPB’s New Consumer Risk Assessment Process
2
CFPB Announces “Know Before You Owe” for Student Loans
3
The CFPB Mortgage Servicing Examination Procedures Fail to Harmonize – Isn’t it Ironic?
4
When Trying Title Becomes Trying: The Impact of Bevilacqua v. Rodriguez on Massachusetts Foreclosure Law
5
CFPB to Host Town Hall in Minneapolis on October 26
6
CSBS/AARMR Order Up State Loan Originator Compensation Examination Guidelines – But Go Easy On The Guidance!
7
CFPB Shares Company Portal Manual with Industry
8
CFPB Official Hints at Disclosure Requirements for Checking Accounts
9
California Governor Vetoes Burdensome Payroll Card Bill
10
Is the CFPB a Step Closer to Having a Leader?

Risky Business: CFPB’s New Consumer Risk Assessment Process

By: David L. Beam, Rebecca Lobenherz, Stephanie C. Robinson

Those who have been concerned about the expansive powers of the new Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) should ready themselves for the risk assessment reviews that the Bureau is about to initiate. The CFPB recently released the first edition of its Supervision and Examination Manual (“Examination Manual”), which provides an overview of the Bureau’s supervision planning process and details the Bureau’s examination procedures. A key component of the Examination Manual is the CFPB’s Consumer Risk Assessment process, which evaluates supervised entities based on the amount of risk their activities pose to consumers, identifies sources of risk, and assesses the quality of risk controls put in place by the supervised entities.

To view the complete alert online, click here.

CFPB Announces “Know Before You Owe” for Student Loans

By: Kathryn Baugher

The CFPB is expanding its “Know Before You Owe” initiative to cover student loans. Since “Know Before You Owe” began last May, the CFPB has asked the public for input on a variety of draft mortgage disclosure forms. Now the CFPB is working with the Department of Education to gather feedback on a sample financial aid offer form. The Department of Education, as required by the Higher Education Opportunity Act, plans to publish a model form that schools can use to communicate financial aid offers to students. Read More

The CFPB Mortgage Servicing Examination Procedures Fail to Harmonize – Isn’t it Ironic?

By: Jonathan D. Jaffe, Steven M. Kaplan, David I. Monteiro, David A. Tallman

The Bureau of Consumer Financial Protection (the “Bureau” or the “CFPB”) was designed to provide a single, integrated federal approach to consumer financial protection. But with the October 13, 2011, release of its new Mortgage Servicing Examination Procedures (the “Procedures”), the CFPB appears to leave it up to scores of individual examiners to decide in their subjective judgment whether a company’s loan servicing practices raise “unfair, deceptive, or abusive acts or practices” (“UDAAP”) concerns. A federal government that is supposed to sing in one voice has not yet harmonized its employees.

To view the complete alert online, click here.

When Trying Title Becomes Trying: The Impact of Bevilacqua v. Rodriguez on Massachusetts Foreclosure Law

By: R. Bruce Allensworth, Andrew C. Glass, Roger L. Smerage

The Massachusetts Supreme Judicial Court (“SJC”) has ruled that Massachusetts property owners may lack standing to establish title to their property where there is a void foreclosure sale in the chain of title. The Massachusetts “try title” statute permits a holder of “record title” in possession of property to file a petition to force adverse claimants to defend their purported interest in the property. In Bevilacqua v. Rodriguez, the SJC held that a third-party purchaser of foreclosed property did not hold record title where no assignment of mortgage to the foreclosing entity had occurred at the time of foreclosure. Absent such an assignment, the foreclosure sale was invalid, and the foreclosing entity had nothing to convey to the third-party purchaser. Taking nothing from the foreclosing entity, the third-party purchaser lacked standing to maintain a try title action against the original mortgagor. Nonetheless, the scope of the ruling is likely limited to Massachusetts and jurisdictions where a mortgagee or its assigns must initiate foreclosure and where the party bringing the foreclosure action did not obtain an assignment of the mortgage until after the commencement of the foreclosure process. Moreover, because the Bevilacqua decision simply applies the law as already articulated by the SJC in its January 2011 U.S. Bank, N.A. v. Ibanez  opinion, its impact on current and ongoing foreclosure practices appears limited. Massachusetts foreclosure attorneys are likely to have already altered their assignment practices in light of Ibanez.

To view the complete alert online, click here.

CFPB to Host Town Hall in Minneapolis on October 26

By: Rebecca Lobenherz

The CFPB, which has regularly reached out to consumers online through its blog posts and its consumer complaint portal, is also seeking consumer input the old-fashioned way – in person. On October 26, Raj Date, Special Advisor to the Secretary of the Treasury for the CFPB, who previously spoke with consumers in Philadelphia, will be headed to Minneapolis, Minnesota to discuss the Bureau’s upcoming initiatives directly with consumers. The Bureau has plans on holding more events aimed at consumers throughout the country in the upcoming months.

Read More

CSBS/AARMR Order Up State Loan Originator Compensation Examination Guidelines – But Go Easy On The Guidance!

By: Kris D. Kully

The CSBS/AARMR Multistate Mortgage Committee (MMC) released a set of examiner guidelines to assist state regulators in implementing the Federal Reserve Boards loan originator compensation restrictions. Unfortunately, those guidelines provide very little guidance for examiners in determining whether state-regulated mortgage lenders or brokers have complied with those restrictions, or for the lenders or brokers seeking to comply. Like the children’s game of Hot Potato, the Federal Reserve Board issued the rulemaking, and then handed it over to the Consumer Financial Protection Bureau, but so far has left interpretation and/or enforcement of the rule to other federal and state agencies. While there are many significant questions that remain in understanding and implementing the loan originator compensation restrictions, the new state CSBS/AARMR examination guidelines do not (and cannot really be expected to) provide those answers. This client alert highlights certain aspects of the guidelines and describes the limited take-aways provided for state-regulated mortgage lenders, brokers, and loan originators.

To view the complete alert online, click here.

CFPB Shares Company Portal Manual with Industry

By: Kathryn M. Baugher

In the months ahead, the CFPB will 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 a portal on the CFPB web site since July 21st. In addition to providing a consumer portal through which consumers can submit and check on the status of their complaints, the CFPB now provides a company portal through which companies can view and respond to consumer complaints. The CFPB recently met with industry representatives to show them how the new system works. Read More

CFPB Official Hints at Disclosure Requirements for Checking Accounts

By: David L. Beam

Raj Date recently issued a statement on the CFPB’s web site which suggests that the Bureau is considering a standardized disclosure form for checking account fees. The “problem,” Mr. Date said, “is that checking accounts often come with a wide variety of unexpected costs that can quickly add up for consumers.” One bank might call the fee one thing, while another bank calls it something else. And the circumstances under which banks charge the same fee might be different. Read More

California Governor Vetoes Burdensome Payroll Card Bill

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

The effort to impose demanding new requirements on payroll cards in California just lost some steam. On Sunday, October 9, California Governor Jerry Brown vetoed a bill that would have imposed an onerous set of requirements and restrictions on employers who want to pay employees by payroll card (and, by extension, the financial institutions that provide payroll card programs to employers). The provisions of the Bill were vastly more burdensome than the requirements imposed by federal law and many other state wage and hour laws. Fortunately, Governor Brown recognized that the Bill went too far.

To view the complete alert online, click here.

Is the CFPB a Step Closer to Having a Leader?

By: Stephanie C. Robinson

Richard Cordray’s nomination to become the director of the Consumer Financial Protection Bureau will be in the hands of the full Senate now that the Senate Banking Committee has approved his nomination along a 12-10 party-line vote. But will the CFPB ever have an official leader in place? Not at this rate.

It has been fourteen months since Congress passed the Dodd-Frank Act, and the new government agency still has no formal leader. Read More

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