November 12th 2013
Consumer Financial Protection Bureau Director Richard Cordray acknowledged concerns Tuesday about how the agency is regulating indirect auto lenders, vowing to be more transparent about its oversight.
The agency has been under fire since a March bulletin, which was not subject to public comment, that said the agency would hold auto lenders responsible for any discrimination made by partner dealers, whether it was intentional or not. Cordray said the agency was holding a field hearing Thursday on the issue designed to engage directly with auto lenders.
Additional Information: November 12th 2013
Cordray Vows "Openness" with Auto Lenders
September 13th 2013
The Consumer Financial Protection Bureau late last week finalized amendments and clarifications to its January mortgage rules.
CFPB Director Richard Cordray said the amendments will help industry comply and to better protect consumers, answering questions that have been identified during the implementation process.
“Our mortgage rules were designed to eliminate irresponsible practices and foster a thriving, more sustainable marketplace,” Cordray said. “Today’s rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers.”
**Note** - No changes were made to force placed insurance.
July 8th 2013
The CFPB released the first version of the 2013 Dodd-Frank Mortgage Rules Readiness Guide. The guide is made for use by financial institutions of all sizes to evaluate their preparedness to be compliant and to maintain compliance with the upcoming mortgage rule changes. According to the CFPB, the guide serves three purposes:
- Assists regulated entities in achieving compliance with the mortgage rules.
- Highlights key issue areas that may be closely examined during a review.
- Focuses the industry and examiners on key elements of a compliance management system that may warrant review, modification, or other enhancement.
June 21st 2013
Republican lawmakers are calling on the Consumer Financial Protection Bureau to explain its rationale behind new fair lending guidelines for auto lenders.
The House Republicans, including 27 members of the Financial Services Committee, sent a letter dated Thursday to the bureau expressing concern about the intent and methodology of the guidelines. In March, the CFPB told indirect auto lenders to improve oversight of dealers they work with, warning them of reported interest rate disparities in car loans given to minority borrowers.
May 16th 2013
The CFPB issued a final rule clarifying and making technical amendments to the 2013 Escrows Final Rule issued by the Bureau this past January. This is the first final rule in connection with the CFPB's planned issuances to clarify and provide additional guidance about the mortgage rules issued in January. It is based on a proposed rule issued in April.
This final rule has two primary purposes:
Maintaining Consumer Protections
The 2013 Escrows Final Rule amends an existing rule that provides protections regarding assessments of consumers’ ability to repay and prepayment penalties on certain “higher-priced” mortgage loans. The Dodd-Frank Act and certain of the other new mortgage rules issued in January expand and strengthen the requirements concerning ability to repay and prepayment penalties. However, the 2013 Escrows Final Rule as adopted in January can be read to cut off the old protections before the new expanded protections take effect. This would create a six-month period when those consumer protections would not apply. This final rule establishes a temporary provision to ensure existing protections remain in place for higher-priced mortgage loans until the expanded provisions take effect in January 2014.
“Rural” and “Underserved” Definitions
The CFPB is also clarifying how to determine whether or not a county is considered “rural” or “underserved” for purposes of applying an exemption in the 2013 Escrows Final Rule and special provisions adopted in three other Dodd-Frank Act mortgage rules issued in January. The CFPB also provides illustrations of how to do the determinations to facilitate compliance. The determinations are made based on currently applicable Urban Influence Codes or UICs, which are established by the USDA’s Economic Research Service (for “rural”), or based on HMDA data (for “underserved”). The CFPB used the changes to compile the final 2013 rural or underserved counties list (which applies with respect to the exemption in the 2013 Escrows Final Rule posted on their website to mortgages closed from June 1, 2013 through December 31, 2013.)
During the rulemaking process for these clarifications, the Bureau received many comments suggesting major changes to the rural and underserved definitions and related provisions. These comments were outside the scope of the narrow technical changes the rule was proposing. However, the Bureau plans to finalize very soon the proposed rule the Bureau issued concurrently with the Ability to Repay/QM Rule in January, and it will address questions of further flexibility for small institutions.
April 4th 2013
The Consumer Financial Protection Bureau (CFPB) announced four enforcement actions to end what the Bureau believes to be improper kickbacks paid by mortgage insurers to mortgage lenders in exchange for business. The CFPB filed complaints and proposed consent orders against four national mortgage insurance companies in order to stop these practices, which have been prevalent for more than 10 years. The proposed orders require the four mortgage insurers to pay more than $15 million in penalties to the CFPB.
“Illegal kickbacks distort markets and can inflate the financial burden of homeownership for consumers,” said CFPB Director Richard Cordray. “We believe these mortgage insurance companies funneled millions of dollars to mortgage lenders for well over a decade. The orders announced today put an end to these types of arrangements and require these insurers to pay more than $15 million in penalties for violating the law.”
The CFPB alleges that four mortgage insurance companies violated federal consumer financial law by engaging in widespread kickback arrangements with lenders across the country. The CFPB believes the mortgage insurers named in today’s enforcement actions provided kickbacks to mortgage lenders by purchasing captive reinsurance that was essentially worthless but was designed to make a profit for the lenders.
The four companies named in today’s actions are Genworth Mortgage Insurance Corporation, United Guaranty Corporation, Radian Guaranty Inc., and Mortgage Guaranty Insurance Corporation. In exchange for kickbacks, these mortgage insurers received lucrative business referrals from lenders. These types of kickbacks were a common practice in the years leading up to the financial crisis. These four companies were key players during that time.
March 21st 2013
At the CBA Live conference last week in Phoenix, CFPB Assistant Director for Fair Lending & Equal Opportunity Patrice Ficklin announced that the CFPB will be using ECOA to regulate dealer mark-up.
January 17th 2013
Consumer finance agency finalizes rules to protect mortgage borrowers from runarounds, fees - The government’s consumer lending watchdog finalized new rules Thursday aimed at protecting homeowners from shoddy service and unexpected fees charged by companies that collect their monthly mortgage payments.
Mortgage servicing companies will be required to provide clear monthly billing statements, warn borrowers before interest rate hikes and actively help them avoid foreclosure, the Consumer Financial Protection Bureau said. The rules also require companies to credit people’s payments promptly, swiftly correct errors and keep better internal records.
August 10th 2012
CFPB released TILA and RESPA Mortgage Servicing Proposals that were put out for public comment. The complete proposals highlighted for force-placed insurance are listed below.
The TILA Proposal did not address force-placed insurance in detail, however, the RESPA proposal detailed the requirements. We have included the borrower notification form letters that CFPB is proposing. These letters are listed below.
1. Fees - related to service actually performed
a. Bureau finds commissions "problematic"
b. Bona-fide & reasonable
a. Flood Insurance
a. Homeowner policy renewal for delinquent borrowers
i. Must be renewed by servicer
ii. Not subject to force-placed ins
a. 45 day cycle - 3 letters
b. Good faith estimate
c. Grace periods