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Fannie Mae and Freddie Mac issue servicing updates
On September 26, Fannie Mae issued SVC-2018-07, which includes changes to the foreclosure and third party sale program. In order to encourage more third-party foreclosure sales, Fannie Mae is now requiring the use of Fannie Mae vendors for foreclosure sale marketing services in certain jurisdictions and encouraging the use of Fannie Mae vendors for public foreclosure auctions in certain jurisdictions. Servicers must implement the requirements for all sales scheduled on or after January 1, 2019. Additionally, effective October 28, Fannie Mae will now allow servicers to accept payment changes with future effective dates.
Freddie Mac released Guide Bulletin 2018-16, which announces new and revised requirements to facilitate a secondary market for mortgages in support of affordable housing preservation and rural housing, including (i) allowing the sale of Community Land Trust Mortgages to Freddie Mac (effective November 5); (ii) updating requirements for mortgages secured by properties subject to resale restrictions (effective November 5); and (iii) revising the Home Possible mortgage requirements to permit sweat equity as a source of funds to cover the entire amount of cash to close for the down payment and/or closing costs (effective September 26).
FDIC publishes August enforcement actions, fines individual for inaccurate past-due loan reports
On September 28, the FDIC announced a list of administrative enforcement actions taken against banks and individuals in August. Included among the actions is a removal and prohibition and civil money penalty assessment issued against an individual acting as an institution-affiliated party of a New Jersey-based bank for allegedly engaging in unsafe or unsound practices and breaches of fiduciary duty while employed as the bank’s chief lending officer. Among other claims, the respondent allegedly “originated loans and extended the maturity dates on existing loans to borrowers despite their inability to repay the loans, and caused inaccurate past-due reports on the loans to be provided to the Board of Directors of the Bank (Board), thereby preventing the Board from discovering that the borrowers were not making their payments to the Bank on a timely basis.”
Also on the FDIC’s list of August orders are five Section 19 orders, which allow applicants to participate in the affairs of an insured depository institution after having demonstrated “satisfactory evidence of rehabilitation,” six terminations of consent orders, and three terminations of orders for restitution. The FDIC database containing all August enforcement decisions and orders may be accessed here.
There are no administrative hearings scheduled for October 2018.
Department of Commerce requests comments on new federal approach to consumer privacy rules
On September 26, the National Telecommunications and Information Administration (NTIA) published a notice and request for comments on behalf of the Department of Commerce seeking input from stakeholders on ways to address consumer privacy concerns while protecting prosperity and innovation. The NTIA’s notice seeks comments on a proposed set of “user-centric privacy outcomes” to be addressed by future federal action on consumer privacy policy, along with a set of high-level goals that would establish the outlines for the direction these protections should take. Among other things, the NTIA also seeks feedback on ways to (i) increase harmonization across the regulatory landscape; (ii) ensure a balance between legal clarity, flexibility for innovation, and consumer privacy; (iii) prevent a fragmented regulatory approach by ensuring that any law is applied equally to all businesses not covered by sectoral laws; (iv) develop a regulatory framework “consistent with the international norms and frameworks”; and (v) provide the FTC with the necessary tools and resources to effectively enforce such rules.
The NTIA’s proposal follows the European Union’s General Data Protection Regulation (GDPR), which was implemented this past summer, and the recently enacted and amended California Consumer Privacy Act of 2018 (see previous InfoBytes coverage here). Comments on the notice must be received by October 26.
FCC fines health insurance lead generator $82 million for spoofed robocalls
On September 26, the FCC announced that it fined a telemarketer and associated companies more than $82 million for using allegedly illegal caller ID spoofing to market and generate leads for health insurance sales in violation of the Truth in Caller ID Act (the Act). The Act prohibits telemarketers from purposefully falsifying caller ID information with the intent to harm, defraud consumers, or wrongfully obtain anything of value. The FCC alleges that the telemarketer made more than 21 million robocalls with spoofed caller ID information, which makes it difficult for consumers to register complaints and for law enforcement to track and stop the illegal calls. According to the related Forfeiture Order (FCC 18-134), the FCC rejected the telemarketer’s argument that the value he received from the calls was not “wrongfully obtained,” concluding that the calls were placed without prior consent, including contacting consumers on the Do Not Call registry, and that the telemarketer knew the tactics he used to obtain the insurance leads were unlawful. The FCC also rejected the telemarketer’s request to reduce the penalty, stating “the proposed forfeiture of $82,106,000 properly reflects the seriousness, duration, and scope of [the telemarketer]’s violations.”
OCC releases bank supervision operating plan for fiscal year 2019
On September 26, the OCC’s Committee on Bank Supervision released its bank supervision operating plan (Plan) for fiscal year 2019. The Plan outlines the agency’s supervision priorities and specifically highlights the following supervisory focus areas: (i) cybersecurity and operational resiliency; (ii) commercial and retail credit loan underwriting, concentration risk management, and the allowance for loan and lease losses; (iii) Bank Secrecy Act/anti-money laundering compliance; (iv) change management to address new regulatory requirements; and (v) internal controls and end-to-end processes necessary for product and service delivery.
The annual plan guides the development of supervisory strategies for individual national banks, federal savings associations, federal branches, federal agencies, and service providers.
The OCC will provide updates about these priorities in its Semiannual Risk Perspective, as InfoBytes previously has covered.
CFPB issues report and RFI on data sources and use
On September 25, the CFPB released a report on the Bureau’s data governance program, including what data the Bureau collects, from where the data is sourced, and how the data is used and reused within the Bureau. The report emphasizes that data informs a large portion of the Bureau’s work, including rule writing, supervision, enforcement, consumer education, and market monitoring. The report details the more than 188 data collections from public sources, government agencies, commercial vendors, financial institutions, and consumers that the Bureau has undertaken to date. In connection with the report, the Bureau issued a request for information (RFI) seeking feedback on the Bureau’s data governance program and data use. Specifically, the RFI requests comments on, among other things, (i) the overall effectiveness and efficiency of the Bureau’s data collections; (ii) privacy issues related to the Bureau’s data collection practices; (iii) ways the Bureau should or should not reuse data collected for one purpose to inform other work; and (iv) ways the Bureau could make data reporting less burdensome. Comments must be received by December 27.
Federal Reserve seeks to repeal SAFE Act regulations to reflect CFPB authority
On September 21, the Federal Reserve Board (Board) issued a notice of proposed rulemaking seeking comment on the repeal of certain provisions of regulations that incorporate the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act), which the Board states are intended to reflect the transfer of rulemaking authority to the CFPB by the Dodd-Frank Act. Specifically, the Board proposes amending Regulation H (Membership of State Banking Institutions in the Federal Reserve System) and Regulation K (International Banking Operations) to repeal the provisions that incorporate the SAFE Act because of the change in rulemaking authority and because the CFPB finalized a rule that is substantially identical to the Board's regulations. Comments on the proposal are due within 60 days after publication in the Federal Register.
FTC and NYAG settle with debt collectors who falsely threatened consumers
On September 21, the FTC announced settlements with multiple New York debt collection operations and their principals (defendants) for unlawful debt collection practices. The settlements are a result of 2015 joint lawsuits by the FTC and the New York Attorney General, alleging the defendants unlawfully used threats and abusive language, including false threats that consumers would be arrested, to collect more than $45 million in supposed debts (previously covered by InfoBytes here). The settlement orders ban the defendants from the business of debt collection and prohibit the defendants from (i) misrepresenting information related to financial products and services; (ii) disclosing, using, or benefitting from the consumer information obtained through the course of the debt collection activities; and (iii) failing to disclose of such personal information properly. The two orders (located here and here) impose a $22.5 million judgment against one set of defendants, and a judgment of $4.4 million against other defendants. The judgments are suspended as to some of the defendants due to inability to pay.
Free security freezes available nationwide
On September 21, the FTC announced the nationwide availability of free security freezes and one-year fraud alerts, which were authorized under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). Specifically, Section 301 of EGRRCPA prohibits a national credit reporting agency from charging a fee to place, remove, or temporarily lift a security freeze. The law also allows parents to obtain a free credit freeze for any of their children who are under 16, and guardians, conservators, and those with a valid power of attorney can obtain a free freeze for the person for whom they have legal authority to act. Additionally, Section 301 extends the duration of the free fraud alert from 90 days to one year. Consumers are required to contact all three nationwide credit reporting agencies to place the security freeze, but only are required to contact one of the three for the fraud alert, as each bureau is obligated to notify the others of a fraud alert.
D.C. Circuit remands SEC case to be heard by new ALJ
On September 19, the U.S. Court of Appeals for the D.C. Circuit remanded an SEC case against an investment adviser and his company for a new hearing before another Administrative Law Judge (ALJ) or before the Commission in accordance with the U.S. Supreme Court decision in Lucia v. SEC. As previously covered by InfoBytes, in June, the Supreme Court held that SEC ALJs are “inferior officers” subject to the Appointments Clause of the Constitution. After the decision in Lucia, the SEC moved to remand the case for a new hearing. In response, the investment adviser moved to have the SEC’s previous orders, including those imposing penalties, set aside in whole, arguing that remand is not authorized in this circumstance; citing to Lucia, the investment adviser argued the penalties resulted from an unconstitutional hearing and the language concerning remand for a new hearing in Lucia was dicta and carried no weight. The D.C. Circuit rejected this argument and denied the motion to set aside in part, citing D.C. Circuit precedent in stating “carefully considered language of the Supreme Court, even if technically dictum, generally must be treated as authoritative.”