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On June 11, House Financial Services Committee Chairwoman Maxine Waters and 64 other Democratic House members sent a letter to the CFPB urging rescission of its May proposal to permanently raise the coverage thresholds for collecting and reporting HMDA data and to retire its HMDA Explorer tool. (Covered by InfoBytes here.) In the letter, members argue that recent data “showed widespread discrimination in bank lending” and that redlining continues to be a pervasive problem. They note that HMDA data is an important tool for public officials to understand access to credit in their communities, and that the Bureau’s proposal would exempt “about half of lending institutions from reporting data about closed-end mortgages … [and] sacrifice information that can make a difference in the lives of creditworthy, lower-income consumers.” The members also ask for information regarding the new Federal Financial Institutions Examination Council (FFIEC) query tool that is to be used as a replacement for the HMDA Explorer tool and Public Data Platform API that the Bureau plans to retire, as previously covered by InfoBytes here.
On May 22, the Office of Information and Regulatory Affairs released the CFPB’s spring 2019 rulemaking agenda. According to a Bureau blog post, the information presented represents regulatory matters it “reasonably anticipates having under consideration during the period of May 1, 2019, to April 30, 2020.” The rulemaking activities include implementing statutory directives mandated in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), continuing certain other rulemakings previously outlined in the Bureau’s fall 2018 agenda (covered by InfoBytes here), as well as considering future projects and requests for information.
Key rulemaking initiatives include:
- Property Assessed Clean Energy Loans (PACE): On March 4, the Bureau published an advanced notice of proposed rulemaking (ANPR) and request for comments in response to Section 307 of the Act, which amended TILA to mandate the CFPB propose regulations related to PACE financing. The regulations must carry out the purposes of TILA’s ability-to-repay requirements, and apply TILA’s general civil liability provisions for violations. (InfoBytes coverage here.)
- Remittance Transfers: On April 25, the Bureau issued a request for information (RFI) on two aspects of the Remittance Rule that require financial companies handling international money transfers, or remittance transfers, to disclose to individuals transferring money the exact exchange rate, fees, and the amount expected to be delivered. The RFI seeks information related to the expiration of the temporary exception and whether to propose changing the number of remittance transfers a provider must make to be governed by the rule. (InfoBytes coverage here.)
- HMDA/Regulation C: On May 2, the Bureau issued a notice of proposed rulemaking (NPRM) to raise permanently coverage thresholds for collecting and reporting data about closed-end mortgage loans and open-end lines of credit under the HMDA rules. Specifically, the NPRM would raise permanently the reporting threshold for closed-end mortgage loans from 25 loans in each of the two preceding calendar years to either 50 or 100 closed-end loans in each of the preceding two calendar years. (InfoBytes coverage here.)
- Debt Collection Rule: On May 7, the Bureau issued a NPRM to amend Regulation F, which implements the FDCPA, covering debt collection communications and consumer disclosures and addressing related practices by debt collectors. The Bureau reports that the NPRM “builds on research and pre-rulemaking activities regarding the debt collection market, which remains a top source of complaints.” (InfoBytes coverage here.)
- Payday Rule/Delay of Compliance Date: On February 6, the Bureau released two NPRMs related to certain payday lending requirements under the CFPB’s 2017 final rule covering “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (the Rule). The first proposal would rescind portions of the Rule related to ability-to-repay underwriting standards for payday loans and related products scheduled to take effect later this year, while the second proposal would delay the compliance date for those same provisions for fifteen months. The Bureau anticipates it will issue a final rule concerning the compliance date this summer and a final determination on reconsideration thereafter. (InfoBytes coverage here.)
Long term priorities include rulemaking addressing (i) consumer reporting; (ii) amendments to FIRREA concerning automated valuation models; (iii) disclosure of records and information; (iv) consumer access to financial records; (v) Regulation E modernization; (vi) rules to implement the Act, concerning various mortgage requirements, student lending, and consumer reporting; and (vii) clarity for the definition of abusive acts and practices.
On May 2, the CFPB issued a Notice of Proposed Rulemaking (NPRM), which would permanently raise coverage thresholds for collecting and reporting data about closed-end mortgage loans and open-end lines of credit under the HMDA rules. Specifically, the proposal would permanently raise the reporting threshold for closed-end mortgage loans from 25 loans in each of the two preceding calendar years to either 50 or 100 closed-end loans in each of the preceding two calendar years. As previously covered by InfoBytes, the CFPB temporarily increased the threshold for open-end lines of credit from 100 loans to 500 loans for calendar years 2018 and 2019. The current proposal would extend that temporary threshold to January 1, 2022, and then permanently lower the threshold to 200 open-end lines of credit after that date. Lastly, the proposal incorporates, with minor adjustments, the interpretive and procedural rule issued in August 2018 (2018 Rule), which implemented and clarified the HMDA amendments included in Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (previously covered by InfoBytes here). The proposal includes additional interpretive information related to the partial exemptions in the 2018 Rule, including how the partial exemption rules apply after a merger or acquisition. The Bureau is proposing that these changes take effect January 1, 2020. Comments on the NPRM must be received within 30 days of publication in the Federal Register.
The Bureau also issued an Advance Notice of Proposed Rulemaking (ANPR) seeking information on the costs and benefits of reporting certain data points under HMDA. Additionally, the ANPR also seeks information about the requirement that institutions report certain commercial-purpose loans made to a non-natural person and secured by a multifamily dwelling. Comments on the ANPR must be received within 60 days of publication in the Federal Register.
On April 29, nine Democratic Senators, led by Sherrod Brown (D-Ohio), wrote to the CFPB expressing “deep concern” regarding the Bureau’s plan to retire its tools for public exploration of HMDA data—HMDA Explorer Tool and the Public Data Platform API. In the letter, the Senators argue that retiring the tools with no plan for adequate replacements “threatens to undermine the statutory purposes of HMDA and does not live up the commitments to transparency and accountability” that Director Kraninger promised to uphold during her nomination hearing. The Senators cite to the Bureau’s decision to move the Office of Fair Lending and Equal Opportunity from the Supervision and Enforcement section to the Office of the Director and argue that “[r]reductions in available data and its accessibility, combined with weakened [fair lending] enforcement, is a disservice to the consumers the CFPB was created to protect.” The letter urges the CFPB to reverse course and requests that the Bureau provide a “detailed briefing” on the decision by May 10.
In the notice regarding the tools’ retirement, the Bureau states that the FFIEC “will publish a query tool for the 2018 data in the coming months.”
CFPB and Federal Reserve update HMDA examination procedures; CFPB updates ECOA baseline review procedures
On April 1, the CFPB and the Federal Reserve Board (Federal Reserve) issued revisions to the HMDA examination procedures covering data collected since January 1, 2018, under the HMDA amendments issued by the Bureau in October 2015 and August 2017, as well as section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (implemented and clarified by the 2018 HMDA Rule, which was covered by InfoBytes in August 2018 here.) According to the Federal Reserve’s CA 19-5, the HMDA examination updates include, (i) Narrative, Examination Objectives, and Examination Procedure sections that were developed by the Task Force on Consumer Compliance of the FFIEC; (ii) Review of Compliance Management System, Examination Conclusions and Wrap-Up, and Examination Checklist sections that were developed in consultation with the FDIC and the OCC; and (iii) sampling, verification, and resubmission procedures. With regard to HMDA data collected prior to January 1, 2018, institutions will continue to be examined according to the interagency HMDA examination procedures “transmitted with CA 09-10 and the HMDA sampling and resubmission procedures transmitted with CA 04-4.”
Additionally, in April, the CFPB also released updated ECOA baseline review procedures. The procedures consist of five modules: (i) Fair Lending Supervisory History; (ii) Fair Lending Compliance Management System (CMS); (iii) Fair Lending Risks Related to Origination; (iv) Fair Lending Risks Related to Servicing; and (v) Fair Lending Risks Related to Models. According to the Bureau, all exams will cover the Fair Lending CMS module and additional modules will be assigned depending on the scope of examination.
On March 29, the CFPB announced that the HMDA Modified Loan Application Registers (LARs) data is available for 2018. Specifically, the Modified LARs contain loan level information for 2018 on HMDA filers, covering approximately 5,400 financial institutions. This is the first release in which the additional data required by the 2015 HMDA rule is available. Later this year, additional information will be published, including a complete loan level dataset.
On March 25, the CFPB announced that the Federal Financial Institutions Examinations Council (FFIEC) issued the 2019 edition of the “Guide to HMDA Reporting: Getting It Right!,” which reflects the amendments made to HMDA by the May 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act and the August 2018 interpretive and procedural rule issued by the CFPB. (Covered by InfoBytes here.) The guide includes (i) a summary of responsibilities and requirements; (ii) directions for assembling the necessary tools; and (iii) instructions for reporting HMDA data.
On March 7, the OCC released Bulletin 2019-12, which identifies the key HMDA data fields for full and partial reporters. Specifically, the Bulletin highlights the 37 key data fields for banks required to report all of the data set forth in the CFPB’s October 2015 and August 2017 HMDA amendments, as well as, the 21 key data fields required for banks that qualify for the partial HMDA exemption pursuant to the May 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act. According to the Bulletin, OCC examiners will focus on the identified key data fields during transaction testing pursuant to HMDA for data collected on or after January 1, 2018. The Bulletin rescinds OCC Bulletin 2017-41, “Home Mortgage Disclosure Act: Interagency Key Fields.”
As previously covered by InfoBytes, in December 2018, the Federal Reserve Board, the FDIC, and the OCC issued joint guidance regarding the same key data fields that Federal Reserve examiners would use to evaluate the accuracy of HMDA data collected since January 1, 2018.
On February 12, the CFPB issued its semi-annual report to Congress covering the Bureau’s work from April 1, 2018, through September 30, 2018. The report, which is required by the Dodd-Frank Act, addresses issues including problems faced by consumers with regard to consumer financial products or services; significant rules and orders adopted by the Bureau; and various supervisory and enforcement actions taken by the Bureau when acting Director Mick Mulvaney was still in office. The report is the first to be released under Kathy Kraninger, who was confirmed as Director in December 2018. In her opening letter, Kraninger emphasized that during her tenure the Bureau will “vigorously and even-handedly enforce the law,” and will make sure the financial marketplace “is innovating in ways that enhance consumer choice.” Among other things, the report focuses on credit invisibility and mortgage shopping as two significant problems faced by consumers, noting that credit invisibility among adults tends to be concentrated in rural and highly urban areas and, based on recent studies, more than 75 percent of borrowers report applying for a mortgage with only one lender.
The report also includes an analysis of the efforts of the Bureau to fulfill its fair lending mission. The report highlights the most frequently cited violations of Regulation B (ECOA) and Regulation C (HMDA) in fair lending exams during the reporting period and emphasizes that during the reporting period the Bureau did not initiate or complete any fair lending public enforcement actions or refer any matters to the DOJ with regard to discrimination.
On January 31, the CFPB published a new reference chart titled “Reportable HMDA Data: A Regulatory and Reporting Overview Reference Chart for Data Collected in 2019.” The chart is designed to be used as a reference tool for required data points to be collected, recorded, and reported under Regulation C, as amended by HMDA rules issued October 15, 2015, and August 24, 2017, as well as section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (implemented and clarified by the 2018 HMDA Rule, which was previously covered by InfoBytes here.) The Bureau noted that this chart does not provide HMDA loan/application register data fields or enumerations, and further emphasized that the chart “does not itself establish any binding obligations” and is not intended to be viewed as a “substitute for the regulation or its official commentary.”
- Buckley Webcast: Hot topics in debt collection — An analysis of recent federal FDCPA litigation
- Jonice Gray Tucker to discuss "How to succeed in law school" at the SEO Law DC Panel Discussions
- Amanda R. Lawrence to discuss "Navigating the challenges of the latest data protection regulations and proven protocols for breach prevention and response" at the ACI National Forum on Consumer Finance Class Actions and Government Enforcement
- Sasha Leonhardt and John B. Williams to discuss "Privacy" at the National Association of Federally-Insured Credit Unions Summer Regulatory Compliance School
- Warren W. Traiger to discuss "CRA modernization" at the National Association of Industrial Bankers and the Utah Association of Financial Services Annual Convention
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
- Henry Asbill to discuss "Ethical guidance in conducting internal investigations – The intersection of Yates an Upjohn" at the American Bar Association Southeastern White Collar Crime Institute
- Brandy A. Hood to discuss "RESPA Section 8/referrals: How do you stay compliant?" at the New England Mortgage Bankers Conference
- Daniel P. Stipano to discuss "Lessons learned from recent enforcement actions and CMPs" at the ACAMS AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Assessing the CDD final rule: A year of transitions" at the ACAMS AML & Financial Crime Conference