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Posts published in “CFPB”

Consumer Financial Protection Bureau

Debt Collection Rulemaking on Hold Amid CFPB Rancor

The future of federal rules covering debt collection has been thrown into doubt amid the leadership change at the Consumer Financial Protection Bureau. In one of his first actions since taking the helm of the CFPB as acting director, Mick Mulvaney announced a halt on all Bureau rulemaking, reported Reuters. It has been more than four years since the CFPB announced plans to propose the first-ever rules regulating debt collectors subject to the federal Fair Debt Collection Practices Act. Last year it issued an outline of what those rules might look like. The Bureau had indicated earlier this year that…

CFPB Uses UDAAP in FDCPA-Like $28.5M Consent Order Against Depository Institution

The federal Consumer Financial Protection Bureau (CFPB) recently entered into a $28.5 million Consent Order with a depository institution for alleged violations of the “unfair, deceptive, or abusive” acts or practices provisions of 12 U.S.C. §§ 5531 and 5536 relating to the depository institution’s collection of its delinquent accounts. A copy of the Consent Order is available at:  Link to Consent Order. Among other things, the alleged “unfair, deceptive, or abusive” acts or practices included: ▪ Threatening legal action the depository institution did not intend to take. As you may recall, it is a violation of the federal Fair Debt…

CFPB Narrowly Escapes Shutdown in D.C. Circuit Court Ruling

The Consumer Financial Protection Bureau narrowly escaped a constitutional challenge today in a ruling handed down from the United States Court of Appeals for the District of Columbia Circuit. Although the court found the CFPB's structure is unconstitutional, the defect, according to the court’s opinion, did not warrant its dissolution.

CFPB Issues Supervisory Report Addressing ‘Unfair’ Coding Errors, Other Issues

The federal Consumer Financial Protection Bureau (CFPB) recently issued its “Supervisory Highlights – Issue 12, Summer 2016” report, focusing attention on automobile origination, debt collection, mortgage origination, small dollar lending, fair lending, and remedial actions, reflecting supervisory activity generally completed between January 2016 and April 2016. The CFPB reported deficiencies in Compliance Management Systems and other software-related systems in various industries.  The Bureau also emphasized the ECOA “special purpose credit programs” found at various lenders, noting that it “generally takes a favorable view of conscientious efforts that institutions may undertake to develop special purpose credit programs to promote extensions of…

CFPB Report Emphasizes Servicer Loss Mitigation Errors, Technology Systems, Training Deficiencies

The federal Consumer Financial Protection Bureau (CFPB) recently issued its “Supervisory Highlights – Mortgage Servicing – Special Edition” (Issue 11), addressing examination issues reportedly found as to loss mitigation acknowledgement notices, loss mitigation offers and related communications, loan modification denial notices, servicer policies and procedures, and servicing transfers. Of note, the Supervisory Highlights also addresses the CFPB’s approach to mortgage servicing examinations, including as to recent changes to the mortgage servicing chapter of the CFPB Supervision and Examination Manual. A copy of report is available at: Link to Report. The CFPB summarized its findings as follows: Outdated and deficient servicing…

CFPB’s Proposed Arbitration Rule Designed to Protect Consumer Financial Services Class Actions

The Consumer Financial Protection Bureau has released a proposal to prohibit creditors from using arbitration clauses to block class action litigation. The Bureau’s proposed ban is not surprising. However, it will only impact arbitration agreements concerning covered consumer financial products or services entered into after its effective date. Arbitration Clauses and Class Action Waivers Arbitration is an effective means for consumers to vindicate their claims in an informal setting. Through the informal setting of arbitration, consumers are not restricted by court rules of evidence and procedure that could otherwise limit or even prevent the assertion of particular claims or the use…

CFPB Reopens Comment Period on ‘Periodic Statements in Bankruptcy’ Mortgage Servicing Amendments

The Consumer Financial Protection Bureau (CFPB) recently reopened the comment period for its proposed amendments to the mortgage servicing related rules under RESPA and TILA that generally would require servicers to provide modified periodic statements to consumers who have filed for bankruptcy. The full announcement is available at:  Link to Announcement. As you may recall, in December 2014, the CFPB published for notice and comment a proposed rule that among other things would require mortgage servicers to provide certain modified periodic statements to consumers in bankruptcy (subject to specific exceptions), with different disclosures and notices required for different types of…

DC Fed. Court Holds CFPB Exceeded Its Statutory Authority in Issuing CID

The U.S. District Court for the District of Columbia recently denied a petition by the Consumer Financial Protection Bureau (CFPB) to enforce a Civil Investigative Demand (CID) issued to an accreditor of for-profit colleges, holding that the CFPB did not have statutory authority to issue the CID. A copy of the opinion in Consumer Financial Protection Bureau v. Accrediting Council for Independent Colleges and Schools is available at:  Link to Opinion. The CID issued by the CFPB required the respondent to designate a representative to give oral testimony regarding the respondent’s policies, procedures, and practices relating to the accreditation of seven schools.…

9th Cir. Rejects Challenge to CFPB Enforcement Authority

In a split decision, the U.S. Court of Appeals for the Ninth Circuit recently affirmed, in part, summary judgment in favor of the Consumer Financial Protection Bureau (CFPB) in an enforcement action against a law firm operating as a loan modification company. In so ruling, the Court rejected the attorney loan modification company’s argument that the CFPB was without authority to commence an enforcement action before its director was properly nominated and confirmed. A copy of the opinion in Consumer Fin. Prot. Bureau v. Gordon is available at:  Link to Opinion. The defendant, a licensed California attorney, operated a law…

CFPB Issues Final ‘No Action Letter’ Policy Without Substantial Change

The federal Consumer Financial Protection Bureau (CFPB) recently issued its final policy regarding “no action letters.” A copy of the final policy is available at: Link to Policy. The final policy establishes a process to apply for non-binding statements from the CFPB as to whether it has any “present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter” involving “innovative financial products or services that promise substantial consumer benefit where there is substantial uncertainty whether or how specific provisions of statutes implemented or regulations issued by the [CFPB] would be…

Parsing the CFPB’s EFTA Bulletin

The Consumer Financial Protection Bureau issued a bulletin on Nov. 23, 2015 “intended to remind entities of their obligations under the Electronic Fund Transfer Act (EFTA) and Regulation E.” A careful read is needed, as Bulletin 2015-06 can be easily misinterpreted. A copy is available at:  Link to Bulletin 2015-06. Electronic transfers become subject to the EFTA and Regulation E when they are made from a consumer’s “account.” Credit cards will typically not cause a transfer from a consumer’s account, but debit cards would cause a transfer from a consumer’s account. Much of the bulletin’s focus is directed at the…

Supervisory Highlights Reveals Wide-Spread Compliance by Debt Collectors

The Consumer Financial Protection Bureau’s latest edition of Supervisory Highlights was released last week. I expected some stinging comments directed at debt collectors and debt buyers, given the recent consent decrees. What I found was the opposite. The 45-page report devoted only three paragraphs to supervised ARM entities. And, what was reported only indicates the potential for regulatory violation and did not note any instance where a consumer was actually harmed. Communications with Consumers Here the Bureau looked at supervised entities’ compliance with section 1692c of the Fair Debt Collection Practices Act. The CFPB’s beef here was that ARM companies had…