Consumer Financial Services Watch

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

 

1
CFPB Officially Launches Nonbank Supervision Program
2
CFPB’s Guidance to Supervised Banks Says Privilege Waiver Concerns Are No Reason for Withholding Information
3
Supreme Court Brief Filed on Behalf of Mortgage Lenders
4
CFPB Puts Inherited Consumer Financial Protection Regulations on the Table
5
CFPB Republishes RESPA Regulations
6
RESPA Investigations Initiated at HUD May Have Been Reassigned to the CFPB
7
HAMP Handbook Version 3.4 Arrives Just in Time for the Holidays
8
Customary and Reasonable Appraisal Rates Rule Faces State Opposition
9
FHA Insured Mortgages Require an Appraisal by a State Certified Appraiser
10
CFPB Now Accepting Mortgage Complaints from Consumers

CFPB Officially Launches Nonbank Supervision Program

By: Stephanie C. Robinson

Now that the CFPB has a director, it can officially begin to exercise the full authorities granted to it under the Dodd-Frank Act. The agency issued a press release on Thursday announcing the formal launch of its nonbank supervision program. Read More

CFPB’s Guidance to Supervised Banks Says Privilege Waiver Concerns Are No Reason for Withholding Information

By: Stephanie C. Robinson

As supervisor of large depository institutions, credit unions, and their affiliates, the CFPB expects such supervised institutions to share with it all documents that CFPB requests, even if the document is protected by the attorney-client privilege. Banks routinely share privileged documents with their banking regulators without concern about facing a claim of waiver because of two statutory provisions (one for banks and another for credit unions) that say submitting privileged information to a prudential regulator does not result in a waiver as to any other person or entity. But those statutory provisions have not been amended to encompass information provided to the CFPB. Read More

Supreme Court Brief Filed on Behalf of Mortgage Lenders

By: Paul F. Hancock, Andrew C. Glass, Melanie Hibbs Brody, Melissa S. Malpass, Gregory N. Blase   

On December 29, 2011, K&L Gates filed a brief as amici curiae before the United States Supreme Court in Magner v. Gallagher, a case in which the Court will consider whether the disparate impact theory of discrimination is cognizable under the Fair Housing Act or whether plaintiffs must instead prove intentional discrimination. The brief was filed on behalf of the Independent Community Bankers of America, the Consumer Mortgage Coalition, and the American Financial Services Association, and contends that proof of discriminatory intent is required to establish a violation of the Act.  A copy of the brief is available here.  The Court has scheduled oral argument in the matter for February 29, 2012.

CFPB Puts Inherited Consumer Financial Protection Regulations on the Table

By: David A. Tallman

Adding to its already full plate, the Bureau of Consumer Financial Protection (the “CFPB” or the “Bureau”) recently requested public comment on its review of the various consumer financial protection regulations it has inherited from other agencies. The request signals that the Bureau does not intend for its higher-profile mortgage finance initiatives to overshadow its mandate to update, modify (or even eliminate) outdated, unduly burdensome, or unnecessary existing regulations. It also suggests that the CFPB is contemplating that its initial review of the inherited regulations may extend beyond mere technical corrections to more significant substantive changes.

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CFPB Republishes RESPA Regulations

By: Holly Spencer Bunting

While the CFPB took over rulemaking and enforcement authority for RESPA on July 21, 2011, that transfer of authority will soon be reflected in RESPA regulations. On December 20, 2011, the CFPB published an interim final rule in the Federal Register to republish, effective December 30, 2011, HUD’s Regulation X, which implements RESPA. These republished regulations are substantively the same as the current RESPA regulations, but the CFPB makes certain non-substantive, technical, formatting, and stylistic changes to the regulations. The CFPB will accept public comments on the interim final rule until February 21, 2012. Read More

RESPA Investigations Initiated at HUD May Have Been Reassigned to the CFPB

By: Phillip L. Schulman

When HUD transferred RESPA enforcement authority to the CFPB, some RESPA investigations that had been initiated at HUD may have been assigned to the new agency. As a result, some companies may not be out of the woods just yet.

Approximately 10 former HUD RESPA Enforcement Division staffers and counsel transferred to the new CFPB on July 21st, including RESPA Enforcement Division Director Bart Shapiro. About five of those employees ended up being reassigned to the CFPB’s Enforcement Division. Last spring the HUD Unit was busy trying to resolve dozens of RESPA investigations before they turned out the RESPA enforcement lights at HUD. Read More

HAMP Handbook Version 3.4 Arrives Just in Time for the Holidays

By: Kerri M. Smith

Followers of Treasury’s HAMP program will need to update their shortcuts to the latest version of the HAMP Handbook, Version 3.4. Treasury issued the latest HAMP Handbook, the consolidated guidance related to HAMP for non-GSE mortgage loans, on December 15, 2011. Version 3.4 of the Handbook includes all of the prior Supplemental Directives, including those with effective dates after the publication of Version 3.3. In addition to these updates, Treasury announced that Version 3.4 includes certain clarifications addressing: (1) ARM loan eligibility; (2) Timing of response to initial packages; and (3) “Escalated Cases” and pending litigation. We explain these changes below. Read More

Customary and Reasonable Appraisal Rates Rule Faces State Opposition

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.

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FHA Insured Mortgages Require an Appraisal by a State Certified Appraiser

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.

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CFPB Now Accepting Mortgage Complaints from Consumers

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

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