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On September 4, the CFPB released its summer 2020 Supervisory Highlights, which details its supervisory and enforcement actions in the areas of consumer reporting, debt collection, deposits, fair lending, mortgage servicing, and payday lending. The findings of the report, which are published to assist entities in complying with applicable consumer laws, cover examinations that generally were completed between September and December of 2019. Highlights of the examination findings include:
- Consumer Reporting. The Bureau cited violations of the FCRA’s requirement that lenders first establish a permissible purpose before they obtain a consumer credit report. Additionally, the report notes instances where furnishers failed to review account information and other documentation provided by consumers during direct and indirect disputes. The Bureau notes that “[i]nadequate staffing and high daily dispute resolution requirements contributed to the furnishers’ failure to conduct reasonable investigations.”
- Debt Collection. The report states that examiners found one or more debt collectors (i) falsely threatened consumers with illegal lawsuits; (ii) falsely implied that debts would be reported to credit reporting agencies (CRA); and (iii) falsely represented that they operated or were employed by a CRA.
- Deposits. The Bureau discusses violations related to Regulation E and Regulation DD, including requiring waivers of consumers’ error resolution and stop payment rights and failing to fulfill advertised bonus offers.
- Fair Lending. The report notes instances where examiners cited violations of ECOA, including intentionally redlining majority-minority neighborhoods and failing to consider public assistance income when determining a borrower’s eligibility for mortgage modification programs.
- Mortgage Servicing. The Bureau cited violations of Regulation Z and Regulation X, including (i) failing to provide periodic statements to consumers in bankruptcy; (ii) charging forced-placed insurance without a reasonable basis; and (iii) various errors after servicing transfers.
- Payday Lending. The report discusses violations of the Consumer Financial Protection Act for payday lenders, including (i) falsely representing that they would not run a credit check; (ii) falsely threatening lien placement or asset seizure; and (iii) failing to provide required advertising disclosures.
The report also highlights the Bureau’s recently issued rules and guidance, including the various responses to the CARES Act and the Covid-19 pandemic.
On May 7, the FDIC updated its list of frequently asked questions for financial institutions affected by Covid-19. The recent updates include the addition of one FAQ describing amendments to Regulation D that remove the six-per-month limit on transfers and withdrawals from savings deposits and one FAQ that discusses additional grace periods for force-placed flood insurance.
California Department of Business Oversight issues guidance to finance lenders, PACE administrators, deferred deposit originators, and premium finance companies
On April 3, the California Department of Business Oversight (DBO) issued guidance to finance lenders, Property Assessed Clean Energy (PACE) administrators, deferred deposit originators, and premium finance companies requesting such licensees work with their customers by offering payment plans and extensions at no additional cost to the customer. The DBO also requests that premium finance companies grant a grace period similar to the grace periods being granted by many insurance companies in order to prevent insureds from experiencing an interruption in insurance coverage.
On April 1, the Federal Reserve (Fed) released an interim final rule, which provides a short-term change to the calculation of the supplementary leverage ratio for holding companies (banks). This change temporarily allows banks to exclude their Treasury securities and Federal Reserve Bank deposits from the computation of the banks’ total assets, thus reducing the amount of capital the banks must maintain. The Fed suggested that the move will reduce the banks’ tier 1 capital requirements by around two percent, allowing them to take on more debt, resulting in an increase in available credit to households and businesses. The Fed stressed that it made this change to allow the banks to increase the flow of credit, and not to increase the banks’ capital distributions. The temporary change is effective immediately and will automatically revert on March 31, 2021. Comments on the rule must be submitted within 45 days of the announcement.
On March 19, the Kentucky governor signed S.B. 145, which establishes separate licenses for check cashing and deferred deposit service businesses. In addition, S.B. 145 creates a new section that allows the Department of Financial Institutions commissioner to (i) require license applications and certain other regulatory filings to also be filed with the State Regulatory Registry (Registry); (ii) report violations, enforcement actions, and other relevant information to the Registry; and (iii) access the Registry as “an agent for requesting information from and distributing information to the [DOJ] or other governmental agencies.” The act takes effect 90 days after adjournment of the legislature.
- Daniel P. Stipano to discuss "High standards: Best practices for banking marijuana-related businesses" at the ACAMS AML & Anti-Financial Crime Conference
- Daniel P. Stipano to discuss "Wait wait ... do tell me! Where the panelists answer to you" at the ACAMS AML & Anti-Financial Crime Conference
- Matthew P. Previn and Walter E. Zalenski to discuss "Is valid when made ... valid?" at the Women in Housing & Finance Partner Series webinar
- Warren W. Traiger and Caroline K. Eisner to discuss "CRA modernization and the OCC final rule" at CBA Live
- Daniel R. Alonso to discuss "Transnational corruption: A chat with former U.S. federal prosecutors in New York" at Marval Live Talks
- Sherry-Maria Safchuk and Lauren Frank to discuss "New CFPB interpretation on UDAAP" at a California Mortgage Bankers Association Mortgage Quality and Compliance Committee webinar
- Thomas A. Sporkin to discuss "Managing internal investigations and advanced government defense" at the Securities Enforcement Forum
- H Joshua Kotin to discuss "Mortgage servicing in a recession: Early intervention, loss mitigation and more" at the NAFCU Virtual Regulatory Compliance Seminar
- Daniel R. Alonso to discuss "Independent monitoring in the United States" at the World Compliance Association Peru Chapter IV International Conference on Compliance and the Fight Against Corruption
- Jonice Gray Tucker to discuss "The future of fair lending" at the Mortgage Bankers Association Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Regulatory Compliance Conference
- Kathryn L. Ryan to discuss "Pandemic fallout – Navigating practical operational challenges" at the Mortgage Bankers Association Regulatory Compliance Conference
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute