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  • FTC settles credit card laundering lawsuit

    Federal Issues

    On March 9, the FTC entered into a settlement with a credit card merchant and its individual officer (collectively, “defendants”) relating to an allegedly deceptive credit card telemarketing operation. According to the FTC’s amended complaint, the defendants violated the FTC Act and the Telemarketing Sales rule by assisting a telemarketing company in masking its identity by processing the company’s credit card payments through multiple fictitious companies. The FTC previously had banned the telemarketing company from selling fraudulent “work-at-home” opportunities in 2015. The settlement, among other things, prohibits the defendants from processing payments or acting as an independent sales organization. The order also stipulates a judgment of approximately $1.3 million, which will be suspended unless it is determined that the financial statements defendants submitted to the FTC contain any inaccuracies.

    Federal Issues Payment Processors FTC Act Telemarketing Sales Rule FTC Settlement

  • Financial Stability Board releases supplementary guidance on sound compensation practices

    Federal Issues

    On March 9, the Financial Stability Board (FSB) announced the release of its Supplementary Guidance to the FSB Principles and Standards on Sound Compensation Practices (Supplementary Guidance) relating to FSB’s Principles and Standards published in 2009. The Supplementary Guidance arises out of a 2015 workplan implemented to address concerns about compensation practices that could create misaligned incentives within financial institutions. The Supplementary Guidance, which does not contain new or additional principles and standards, provides recommendations presented in three parts: (i) “governance of compensation and misconduct risk”; (ii) “effective alignment of compensation with misconduct risk”; and (iii) “supervision of compensation and misconduct risk.” The Supplementary Guidance notes that “inappropriately structured compensation arrangements can provide individuals with incentives to take imprudent risks,” which may lead to potential harm for financial institutions and their customers or stakeholders. The Supplementary Guidance suggests that financial institutions use compensation tools as part of an overall strategy to limit risks and address misconduct, and cautions that “compensation should be adjusted for all types of risk.” 

    Federal Issues Financial Stability Board Risk Management Compensation

  • Fannie and Freddie extend temporary suspension of foreclosure sales

    Federal Issues

    On March 7, Fannie Mae, in Lender Letter LL-2018-01, and Freddie Mac, in Guide Bulletin 2018-04, extended the suspension of foreclosure sales through May 31 of mortgaged properties in FEMA-declared disaster areas in Puerto Rico and the U.S. Virgin Islands due to Hurricanes Irma and Maria.

    Find continuing InfoBytes coverage on Disaster Relief here.

    Federal Issues Disaster Relief Fannie Mae Freddie Mac Foreclosure Mortgages

  • Department of Education: states do not have the authority to regulate student loan servicers

    Federal Issues

    On March 12, the U.S. Department of Education published an Interpretation in the Federal Register, which takes the position that state regulation of servicers of loans made under the William D. Ford Federal Direct Loan Program (Direct Loans) and the Federal Family Education Loan Program (FFEL Program Loans) is preempted by Federal law. Specifically, the Department noted that state “regulation of the servicing of Direct Loans” is preempted because it “impedes uniquely Federal interests,” and state regulation of the servicing of FFEL Program Loans “is preempted to the extent that it undermines uniform administration of the program.” The Interpretation was issued in response to several states having recently enacted regulatory regimes, or sought to apply existing consumer protection statutes, imposing additional requirements on such student loan servicers. The Ranking Member of the House Committee on Education and the Workforce, Representative Bobby Scott, D-VA, issued a statement following the notice of publication on March 9, disagreeing with the Department’s Interpretation: “Congress has not given the Secretary the authority to preempt state consumer protection law for student borrowers. . . . I urge the Secretary to reverse this egregious overreach of Federal authority to rescind states’ ability to protect student borrowers and hold unscrupulous servicers accountable.”

    Federal Issues Department of Education Student Lending Preemption Federal Register

  • CFPB releases RFI on rulemaking process

    Federal Issues

    On March 7, the CFPB released its seventh Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment regarding “the overall efficiency and effectiveness of its rulemaking processes.” The RFI emphasizes that the Bureau is not seeking information related to the particular content of any proposed or final rule—existing rules will be addresses in separate RFIs—or information related to elements of the rulemaking process which are required by law. Specifically, the RFI requests feedback regarding the discretionary aspects of the Bureau’s rulemaking processes, including (i) mechanisms (such as RFIs) the Bureau uses to gather information from stakeholders in advance of initiating a rulemaking; (ii) the Small Business Regulatory Enforcement Fairness Act (SBREFA) panel process; (iii) the content and structure of notices of proposed rulemaking (NPRMs); (iv) the NPRM comment process, including time periods and feedback mechanisms; and (v) the content and structure of notices of final rules. The RFI is expected to be published in the Federal Register on March 9. Comments will be due 90 days from publication.

    Federal Issues RFI CFPB Succession Consumer Complaints Agency Rule-Making & Guidance Federal Register

  • House passes several bills focused on regulatory relief

    Federal Issues

    On March 6, the House passed H.R. 2226, the “Portfolio Lending and Mortgage Access Act,” amending TILA and expanding the safe harbor provisions provided to qualified residential mortgages held in portfolio by banks with less than $10 billion in assets. Under the bill, a mortgage lender would not be subject to civil liability for violating specified ability-to-repay requirements if, among other things, the loan was originated and held continuously in portfolio by a covered institution and complies with certain limitations and requirements related to prepayment penalties and points and fees..

    On the same day, the House also passed H.R. 4725, the “Community Bank Reporting Relief Act,” to amend the Federal Deposit Insurance Act to reduce the regulatory reporting burden on community banks. Specifically, federal banking agencies would be required to issue regulations allowing qualified depository institutions with less than $5 billion in assets to submit abbreviated call reports (consolidated reports of condition and income) every other quarter rather than submitting full call reports every quarter.

    Finally, by a vote of 264-143, the House passed H.R. 4607, the “Comprehensive Regulatory Review Act,” a measure to amend the Economic Growth and Regulatory Paperwork Reduction Act of 1996’s regulatory review process. Among other things, the bill requires federal financial regulators to perform a comprehensive review at least every seven years, instead of every ten years as currently required, to identify regulations that may be tailored to limit burdens on insured depository institutions. 

    Federal Issues Federal Legislation U.S. House Qualified Mortgage Mortgages Community Banks EGRPRA Federal Deposit Insurance Act Bank Regulatory

  • FHA and VA extend foreclosure moratoriums on certain disaster areas

    Federal Issues

    On March 1, the Federal Housing Administration (FHA) released Mortgagee Letter ML 2018-02 (ML 2018-02), which extends the 180-day foreclosure moratorium on FHA-insured properties in Puerto Rico & the U.S. Virgin Islands affected by Hurricane Maria for an additional 60-days. The foreclosure moratorium is now in effect until May 18.

    The Department of Veterans Affairs (VA) also released updates to VA circulars 26-17-23, 26-17-27, and 26-17-28, extending the foreclosure moratorium on VA-insured properties affected by Hurricanes Harvey, Irma, and Maria from 180 days to 270 days.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues Disaster Relief Foreclosure Mortgages Department of Veterans Affairs FHA

  • Fannie Mae updates Selling Guide with HomeStyle Renovation policy changes

    Federal Issues

    On February 27, Fannie Mae updated its Selling Guide including changes to its HomeStyle Renovation (Renovation) policy. According to Fannie Mae SEL-2018-02, the updates to the Selling Guide include, among other changes, the following: (i) sellers/servicers no longer need to be approved for the Renovation loan through Fannie Mae if they choose to wait to deliver all Renovation loans until after renovations are complete; (ii) fixed-rate mortgages for one-unit, principle residences now have a maximum allowable LTV ratio of 97% if the loan is underwritten through Desktop Underwriter; (iii) manufactured homes that do not require structural changes are eligible for Renovation loans; and (iv) removal of the requirement that the renovation must add value to the property. Lenders are required to be in compliance with the Renovation policy changes by September 1, 2018.

    The Selling Guide also (i) added flexibilities in the HomeStyle Energy policy to allow for increased utilization of the program; (ii) added definitions and requirements for business continuity and disaster recovery procedures; and (iii) updated age of document requirements for loans securing properties impacted by a natural disaster. 

    Federal Issues Fannie Mae Selling Guide Disaster Relief Mortgages

  • Buckley Special Alert: Mulvaney says the CFPB will depend heavily on state Attorneys General for enforcement of consumer protection laws

    Federal Issues

    Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, in a February 28 speech, outlined the Bureau’s overall direction and strategic priorities, and described plans to coordinate with state Attorneys General in enforcing federal consumer financial protection law. Mulvaney made the remarks in Washington, D.C., at the winter meeting of the National Association of Attorneys General (NAAG).

    * * *

    Click here to read the full special alert.

     

    If you have questions about the remarks or other related issues, please visit our State Attorneys General and Consumer Financial Protection Bureau practice pages, or contact a Buckley attorney with whom you have worked in the past.

    Federal Issues CFPB Succession State Attorney General Enforcement Special Alerts

  • CFPB releases RFI on complaint reporting

    Federal Issues

    On March 1, the CFPB released its sixth Request for Information (RFI) in a series seeking feedback on the bureau’s operations. This RFI solicits public comment regarding “potential changes that can be implemented to the Bureau’s public reporting practices of consumer complaint information.” Under the Dodd-Frank Act (Dodd-Frank), one of the Bureau’s primary functions is “collecting, investigating, and responding to consumer complaints.” Dodd-Frank requires the Bureau to annually report to Congress information and analysis of the consumer complaints it receives, and to include an analysis of complaints in its semi-annual reports to the president and certain congressional committees. In addition to its specific statutory obligations, the Bureau also produces monthly complaint reports, special edition complaint reports, and a variety of reports from the Bureau’s special population offices relating to consumer complaints.

    The RFI broadly requests feedback on all aspects of consumer complaint reporting and publication practices but also highlights specific topics on which comment is requested, including suggestions consistent with the Bureau’s statutory obligations on (i) the frequency of complaint reporting; (ii) the data fields provided in the Consumer Complaint Database; (iii) whether the Bureau should supplement consumer complaints with observations of company responses to complaints; (iv) the inclusion of information related to product and service size and company share; and (v) whether companies should be notified of their inclusion in a public report prior to publication. The RFI is expected to be published in the Federal Register on March 7. Comments will be due 90 days from publication.

    Federal Issues RFI CFPB Succession Consumer Complaints

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