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  • OCC allows institutions affected by severe flooding in Gulf Coast to temporarily close

    Federal Issues

    On July 12, the OCC issued a proclamation permitting OCC-regulated institutions, at their discretion, to close offices affected by severe weather along the Gulf Coast “for as long as deemed necessary for bank operation or public safety.” In issuing the proclamation, the OCC noted that only bank offices directly affected by potentially unsafe conditions should close and that institutions should make every effort to reopen as quickly as possible to address customers’ banking needs. The proclamation directs institutions to OCC Bulletin 2012-28 for further guidance on actions they should take in response to natural disasters and other emergency conditions.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues OCC Disaster Relief

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  • CFPB settles lawsuit against debt settlement provider

    Federal Issues

    On July 9, the CFPB announced a $25 million settlement with the nation’s largest debt settlement provider to resolve allegations that the company engaged in deceptive acts and practices in violation of the Telemarketing Sales Rule and the Consumer Financial Protection Act. As previously covered by InfoBytes, in 2017 the Bureau claimed, among other things, that the company (i) misled consumers about its ability to negotiate with creditors that the company knew maintained policies against working with settlement companies; (ii) charged advance fees without settling consumers’ debts; and (iii) failed to inform consumers about their rights to refunds from their deposit accounts if they left the settlement program. The proposed stipulated final judgment and proposed order requires the company to pay $20 million in restitution to affected consumers and a $5 million civil money penalty (CMP), in addition to providing certain upfront disclosures to consumers before enrollment. The settlement further enjoins the company from engaging in the alleged unlawful conduct in the future and stipulates that $493,500 of the CMP will be remitted in light of a penalty the company previously paid under a consent order issued by the FDIC in 2018.

    Federal Issues CFPB Enforcement Debt Settlement Telemarketing Sales Rule CFPA

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  • CFPB issues latest fair lending report to Congress

    Federal Issues

    On June 28, the CFPB issued its seventh fair lending report to Congress, which outlines the Bureau’s efforts in 2018 to fulfill its fair lending mandate. According to the report, in 2018, the Bureau continued to focus on promoting fair, equitable, and nondiscriminatory access to credit, highlighting several fair lending priorities that continued from years past such as mortgage origination, mortgage servicing, and small business lending. The Bureau also noted two new focus areas for fair lending examinations or investigations: (i) student loan origination, specifically, whether there is discrimination in underwriting and pricing; and (ii) debt collection and model use, specifically, whether there is discrimination in governing auto servicing and credit card collections, including the use of models that predict recovery outcomes. Additionally, the report highlighted several other Bureau activities from 2018, including, among other things (i) issuing guidance to facilitate the implementation of the August 2018 HMDA final rule (covered by InfoBytes here); and (ii) recommending supervisory reviews of third-party credit scoring models, noting that the “use of alternative data and modeling techniques may expand access to credit or lower credit cost and, at the same time, present fair lending risks.”

    Federal Issues Fair Lending CFPB Mortgage Origination Mortgage Servicing Small Business Lending Student Lending Debt Collection Alternative Data

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  • FTC and NY AG settle with phantom debt operation

    Federal Issues

    On July 1, the FTC announced, together with the New York attorney general, a settlement with two New York-based phantom debt operations and their principals (collectively, “defendants”) resolving allegations that the operations bought, placed for collection, sold lists of, and collected on fake debts that consumers did not owe. As previously covered by InfoBytes, the June 2018 complaint alleged that the defendants ran a deceptive and abusive debt collection scheme in violation of the FTC Act, the FDCPA, and New York state law. The settlement order against one company and its owners bans the defendants from debt collection activities, including buying, placing for collection, and selling debt. The order requires the defendants to pay a combined $676,575, suspending the total judgment of $6.75 million, due to inability to pay. The settlement order against the other company and its owner prohibits the defendants from engaging in unlawful collection practices and requires the payment of $118,000, suspending the total judgment of $4.94 million, due to inability to pay.

    Federal Issues State Issues Enforcement FTC State Attorney General Debt Collection FTC Act FDCPA Settlement

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  • FDIC announces centralized division for large, complex financial institution activities

    Federal Issues

    On June 27, the FDIC announced that it will form a new division titled, “Division of Complex Institution Supervision and Resolution (CISR),” to centralize and consolidate the supervision and resolution activities for the largest banks and complex financial institutions. The division will be responsible for the supervision and monitoring of banks with assets greater than $100 billion for which the FDIC is not the primary federal regulator. It will also be responsible for planning and executing the FDIC's resolution mandates for such banks and for other financial companies if necessary to protect U.S. financial stability. FDIC Chairman McWilliams stated that the new division, which will consolidate functions currently handled by three separate areas of the FDIC, “will enable [the FDIC] to take a more holistic approach to the supervision and resolution of these institutions and the unique challenges they present.” The division is expected to be operational on July 21.

    Federal Issues FDIC Supervision

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  • Federal Reserve releases Comprehensive Capital Analysis and Review results

    Federal Issues

    On June 27, the Federal Reserve (Fed) released the results of the Comprehensive Capital Analysis and Review (CCAR) conducted for 18 banking firms. The Fed considers quantitative and qualitative factors in its evaluation, including projected capital ratios under hypothetical severe economic conditions and the strength of the firm’s capital planning process, including its risk management, internal controls, and governance practices. The Fed did not object to the capital plans of any of the 18 firms, but did require one to address “limited weaknesses” the test identified. The Fed noted that, “On balance, virtually all firms are now meeting the Federal Reserve's capital planning expectations, which is an improvement from last year's assessment. The firms in the test have significantly increased their capital since the first round of stress tests in 2009.”

    Federal Issues Federal Reserve CCAR Stress Test

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  • Legislation eliminates VA conforming loan cap

    Federal Issues

    On June 25, President Trump signed HR 299, the “Blue Water Navy Vietnam Veterans Act of 2019.” Among other changes, the bill (i) adjusts the loan fees applicable to the Department of Veterans Affairs’ (VA) home loan guaranty program by providing a new loan fee table; and (ii) eliminates the program limit on the guaranty amount, which is based on the Freddie Mac conforming loan limit determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act. The bill will allow VA borrowers to borrow above the conforming loan limit, currently set at $484,350, for loans guaranteed on or after January 1, 2020.

    Federal Issues Freddie Mac FHFA Department of Veterans Affairs Mortgages

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  • CFPB 's first in symposia series discusses 'abusive' standard

    Federal Issues

    On June 25, the CFPB held its “Abusive Acts or Practices Symposium,” the first event in a symposia series covering a range of consumer financial services topics. The event had two panels of experts discussing unfair, deceptive, or abusive acts and practices (UDAAP)—the first was a policy discussion, moderated by Tom Pahl, CFPB’s Policy Associate Director, Research, Markets and Regulation; and the second, examined how the “abusive” standard has been used in practice in the field and was moderated by David Bleicken, CFPB Deputy Associate Director, Supervision, Enforcement and Fair Lending. Director Kraninger began the symposium noting that it will help to “inform the Bureau’s thinking as to whether the Bureau should use its rulemaking or other tools to provide clarity about the general meaning of abusiveness—and, if so, which principles should be applied to determine the scope of abusiveness.”

    The policy panel focused on whether consumer harm was required for a practice to be considered abusive. One panelist noted that while the Dodd-Frank Act statutory definition of abusive does not specifically require proof of consumer harm, it would be surprising if consumer harm wasn’t a priority in weighing enforcement claims. As for what principles the Bureau should apply in determining the scope of abusive acts and practices, one panelist identified three: “fidelity, autonomy, and modesty,” meaning the Bureau should follow the statutory language, protect autonomy of consumer decision-making, and be careful not to tie its hands prematurely based on current market information.

    The practitioners’ panel focused on whether there was even a need to clarify the abusive standard, as it is already statutorily defined. Most panelists agreed that a guidance document or policy statement would be an important first step for the Bureau in providing clarity to the industry. Specifically, the panelists noted that the industry has struggled with examples of how abusiveness is different from unfairness or deception, arguing the Bureau has been “inconsistent at times” in the application of the abusive standard. One panelist explained that the Bureau often brings abusive claims in connection with a claim of deception or unfairness, stating “while this may work for the Bureau’s litigation strategy the market looks to enforcement for guidance on the policy. Standalone abusiveness claims that show how abusiveness is different from deception and unfairness would provide direction to staff and industry.” Because the standard is unclear to industry, a panelist argued that many companies choose to limit products or offerings to avoid unknown compliance risks. 

    An archived copy of the webcast will be available on the Bureau’s website.

    Federal Issues Agency Rule-Making & Guidance CFPB UDAAP Dodd-Frank Abusive

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  • Federal and state enforcement agencies coordinate on robocall crackdown

    Federal Issues

    On June 25, the FTC announced a major crackdown on illegal robocalls named “Operation Call it Quits,” which includes 94 enforcement actions from around the country brought by the FTC and 25 other federal, state, and local agencies. In addition to actions targeting the actors, the operation also includes a consumer education initiative and promotion of the development of technology-based solutions to block robocalls and fight caller ID spoofing. In addition to the 87 other enforcement actions brought under the initiatives, the FTC announced four new actions, some of which were filed by the DOJ on the FTC’s behalf, and three new settlements targeting robocallers for violations of the FTC Act and the Telemarketing Sales Rule (TSR), among other things. The FTC alleges many of the actors used illegal robocalls to contact financially distressed consumers regarding interest rate reductions, sell fraudulent money-making opportunities, pitch free medical alert systems, or develop leads for solar energy companies. The affected consumers in these actions were often listed on the Do Not Call Registry. The FTC provided a complete list of the 94 actions brought under Operation Call it Quits.

    State Attorneys General participating in the initiative are: Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Michigan, Missouri, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Texas, and Virginia. Additionally, local agencies include: the Consumer Protection Divisions of the District Attorneys for the Counties of Los Angeles, San Diego, Riverside, and Santa Clara, California; the Florida Department of Agriculture and Consumer Services; and the Los Angeles City Attorney. 

    Federal Issues FTC Robocalls FTC Act Enforcement State Attorney General Telemarketing Sales Rule Do Not Call Registry

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  • VA encourages relief for Arkansas borrowers

    Federal Issues

    On June 20, the Department of Veterans Affairs (VA) issued Circular 26-19-16, encouraging mortgagees to provide relief for VA borrowers impacted by severe storms and flooding in Arkansas. Among other forms of assistance, the Circular encourages loan holders and servicers to (i) extend forbearance to borrowers in distress because of the severe storms and flooding; (ii) establishes a 90-day moratorium from the disaster date on initiating new foreclosures on affected loans; (iii) waives late charges on affected loans; and (iv) suspends credit reporting. The Circular is effective until July 1, 2020. Mortgage servicers and veteran borrowers are also encouraged to review the VA’s Guidance on Natural Disasters.

    Find continuing InfoBytes coverage on disaster relief guidance here.

    Federal Issues Department of Veterans Affairs Disaster Relief

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