iCFPB Extends Diversity Standards Proposal Comment Period
On October 25, 2013, the CFPB, in conjunction with several other financial regulators, issued a joint proposed interagency policy statement that would establish joint standards for assessing the diversity policies and practices of entities regulated by the agencies. Comments were originally due on December 24, 2013, but on December 23rd the agencies extended the comment period to February 7, 2014.
CFPB Issues 2014 Regulatory Exemption Thresholds
On December 30th, the CFPB issued final rules adjusting the thresholds of the asset-size exemptions for collecting Home Mortgage Disclosure Act (HMDA) data and establishing escrow accounts for certain mortgage loans under the Truth in Lending Act (TILA). HMDA exempts depository institutions with assets below an annually adjusted threshold from HMDA data collection requirements. The final rule increased the threshold of $42 million to $43 million for 2014. TILA exempts certain “small creditors” that operate predominantly in rural or underserved counties from the requirement that escrow accounts be established for certain higher-priced mortgage loans. The final rule increases the associated asset threshold to $2.028 billion for 2014.
CFPB Adds List of Rural and Underserved Counties for 2011
The CFPB recently added a list of rural and underserved counties for calendar year 2011 to the lists already posted on its website.1 On September 13, 2013, the CFPB issued a final rule expanding the exemption for certain “small creditors” from the escrow requirement for certain first-lien higher-priced mortgage loans under the Truth in Lending Act. The rule expanded the exemption so that small creditors that operated predominantly in rural or underserved counties in any of the previous three calendar years (as opposed to just the previous calendar year) could qualify. The change takes effect on January 1, 2014, meaning that small creditors will qualify for the exemption in 2014 if they operated predominantly in rural or underserved counties in calendar years 2011, 2012 or 2013.
CFPB and DOJ Sue National Bank for Discriminatory Mortgage Pricing
On December 23rd, the CFPB and Department of Justice (DOJ) filed a joint complaint against a national bank for alleged fair lending violations.2 The complaint alleges that during the period 2002 to 2008 the bank violated the Equal Credit Opportunity Act (ECOA), which prohibits creditors from discriminating against loan applicants on the basis of certain characteristics such as race and national origin. The agencies allege that the bank violated ECOA by charging African-American and Hispanic borrowers higher mortgage rates than similarly creditworthy white borrowers. The DOJ also alleges that the bank violated the Fair Housing Act, which similarly prohibits discrimination in residential mortgage lending. At the same time, the agencies also filed a proposed order to settle the suit, which would require the bank to pay $35 million in restitution to harmed borrowers.3
CFPB Enters Consent Order With Credit Card Issuer Over Add-On Products
On December 23rd, the CFPB ordered a major credit card company to refund an estimated $59.5 million to more than 335,000 consumers for allegedly illegal credit card practices.4 The allegedly illegal practices, covering the period from 2000 to 2012, included unfair billing tactics and deceptive marketing with respect to credit card “add-on products” like payment protection and credit monitoring. The CFPB is also requiring the company to pay an additional $9.6 million in civil money penalties. This is the fourth action that the CFPB has taken with respect to credit card add-on products.
Specifically, the CFPB alleges that the company’s subsidiaries and their vendors and telemarketers engaged in misleading and deceptive tactics to sell credit card add-on products. Among other actions, the company allegedly misled consumers about the benefits of the payment protection products being offered, the length of coverage of the payment protection products, and the fees associated with the payment protection products.
The CFPB also alleges that the company engaged in unfair billing practices related to an identity theft protection product the company offered. The company allegedly charged consumers for services they did not receive, unfairly charged consumers for interest and fees, and failed to inform consumers about their right to obtain a free credit report.
CFPB Initiates Know Before You Owe Program for Mortgage Closing Process
On January 3rd, the CFPB published an information collection request in the Federal Register as a part of its “Know Before You Owe” initiative. The CFPB is seeking information regarding borrower experiences during the mortgage closing process and how problems experienced during the process could be addressed by market innovations and technology. The CFPB’s goal is to “encourage the development of a more streamlined, efficient, and educational closing process as the mortgage industry increases its usage of technology, electronic signatures, and paperless processes.” Comments are due February 7, 2014.
CFPB to Hold Mortgage Servicing Rule Training Event
On January 10th, the CFPB will host an event in Phoenix entitled “Protecting Homeowners: New Tools for Empowering Consumers and Advocates.” The event will provide training for housing counselors, legal aid attorneys, and other advocates on the new mortgage servicing rule, which will become effective that same day. The event can be watched live at 11 a.m. MST (1 p.m. EST) via the CFPB’s website.
1 See the list here.
2 See the complaint here.
3 See the consent order here.
