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CFPB Reports Increase in Longer-Term Auto Loans
On November 1, the CFPB released a report finding an increase in the number of auto loans with terms of six years or longer. Specifically, the report notes that these longer-term loans made up 42 percent of auto loans originated in 2017, an increase from 26 percent of auto loans originated in 2009. The report observes that, while longer-term loans may make monthly payments more affordable, it is not clear that consumers are “better off” or more likely to repay such loans because of the increased financing costs and larger amounts financed.
The report is a product of the CFPB’s Consumer Credit Trends tool (previously covered by InfoBytes) – a web-based resource that collects data on the auto finance, credit card, mortgage, and student loan markets. The tool’s data is drawn from a “nationally representative sample of credit records” kept by one of the top three U.S. credit reporting companies.
Trump Signs Legislation to End Arbitration Rule
On November 1, President Trump signed a resolution repealing the CFPB’s embattled arbitration rule (Rule). The resolution, which passed the Senate two weeks ago, was issued under the Congressional Review Act (previously covered by InfoBytes here). Trump’s signature came two days after Richard Cordray, the Director of the CFPB, wrote to the President requesting he veto the resolution. In his letter, Cordray sought to appeal to the President’s business experience in an attempt to explain the necessity of going to court when “treated unfairly.” With Trump’s signing of the resolution, the Rule is now unenforceable. The Rule has previously come under scrutiny from federal regulators (see previous InfoBytes coverage here and here), as well as from industry trade groups (see previous InfoBytes coverage here). After the President’s signing, Keith A. Noreika, Acting Comptroller of the OCC, praised Congress and the President for vacating the rule, touting it as a “victory for consumers” because upholding the Rule would have “significantly increased the cost of credit.”
CFPB Launches Beta Version of HMDA Platform
On November 3, the CFPB announced the beta release of the new HMDA Platform. The beta version enables financial institutions to become familiar with the platform and permits entities to establish test log-in credentials, upload sample files and validate data, receive edit reports, and confirm test their test submissions. Entities can test and retest throughout the beta period, and any test data will be removed from the system when the 2017 filing period opens on January 1, 2018.
As previously covered by InfoBytes, in November 2016 the Federal Financial Institutions Examination Council (FFIEC) announced that it was discontinuing its HMDA Data Entry Software and instead requiring that financial institutions file HMDA data through a new web-based interface. In August, the CFPB issued the final rule amending the 2015 HMDA Rule, with most of the revisions taking effect January 1, 2018 (see InfoBytes coverage here).
The CFPB is requesting feedback on the platform and test experiences during the beta period time.
Third Treasury Report Calls on HUD to Reconsider Application of Disparate Impact Rule to the Insurance Industry
On October 26, the U.S. Treasury Department published a report outlining a number of recommendations for ways to manage systemic risk primarily within the asset management and insurance industry. A section of the report, however, also discusses HUD’s potential application of the disparate impact rule to the insurance industry—specifically related to homeowner’s insurance. The report, “A Financial System That Creates Economic Opportunities—Asset Management and Insurance,” is the third in a series of four the Treasury plans to issue in response to President Trump’s Executive Order 13772 (EO), which mandated a review of financial regulations for inconsistencies with promoted “Core Principles.” (See Buckley Sandler Special Alert on the EO here and InfoBytes coverage on the first two reports here.)
HUD is authorized to adjudicate housing discrimination claims and issue rules relating to the Fair Housing Act. According to the report, Treasury recommends that HUD reconsider the use of the disparate impact theory to the insurance industry. The report notes a number of problems and challenges that would arise from applying disparate impact to the insurance industry. In particular, the report identifies potential challenges because (i) “state insurance regulations ordinarily prohibit the consideration of protected characteristics in the evaluation and pooling of risk” and at least one state expressly prohibits the collection of this data; (ii) the rule could impose unnecessary burdens on insurers and lead to actions that are not actuarially sound in an effort to avoid underwriting practices that may result in disparate outcomes; and (iii) it may be inconsistent with the McCarran-Ferguson Act and other existing state laws.
The report also recommends, among other things, that Congress clarify the “business of insurance” exception that generally excludes these services from the CFPB’s jurisdiction. The report recommends clarification to this exception to eliminate uncertainty about the CFPB’s jurisdiction and the potential overlap between the Bureau and state insurance regulators. A fact sheet accompanying the report further highlights Treasury’s recommendations to evaluate systemic risk, streamline regulations, rationalize international engagement, and promote economic growth.
CFPB Releases Web-Based Tool to Track Trends in Mortgage Delinquency Rates
On October 30, the CFPB announced the release of a “Mortgage Performance Trends” tool that tracks delinquency rates across the nation. The tool is comprised of data from the National Mortgage Database (jointly launched by the CFPB and the FHFA in 2012) and tracks monthly changes in delinquencies in two categories – borrowers who are 30-89 days delinquent and borrowers who are 90 or more days delinquent. The tool is interactive and contains national-level data as well as data for all 50 states and the District of Columbia. According to the Bureau’s press release, the tool shows that national mortgage rates of serious delinquency rates are at their lowest level since the financial crisis.
CFPB Releases 50-State Snapshots of Student Debt, Servicemember Complaints
On October 27, the CFPB published a blog post highlighting the Bureau’s October 20 “50-state snapshot of student debt,” which illustrates how the “more than $1.4 trillion in student loan debt” is spread across the country. The snapshot also provides data on the more than 50,000 student loan complaints and 10,000 debt collection complaints received by the CFPB through September 2017 (over the course of 5 years). Specifically, for each state, the snapshot provides (i) the “total outstanding student loan debt balance as of 2016”; (ii) the “total student loan complaints handled”; (iii) the “change in volume of student loan complaints handled”; (iv) the “total debt collection complaints handled related to student loans”; and (v) the “change in volume of debt collection complaints handled related to student loans.” The blog post also provides tips and tools intended to assist student loan borrowers navigate problems with their loans.
On October 31, the CFPB published a blog post releasing the Bureau’s “50 state snapshot of servicemember complaints,” which provides state-specific data on the over 91,000 complaints received from servicemembers, veterans, and their families since 2011 (which the CFPB collectively defines as, “servicemember”). Specifically, for each state, the snapshot provides (i) the total number of servicemember complaints handled since 2011, (ii) distribution of complaints by product for both servicemembers and non-servicemembers; (iiI) distribution of complaints by branch of service; and (iv) a visual representation of complaints by zip code.
CFPB Posts Strategic Plan for Fiscal Years 2018-2022
On October 18, the CFPB released and requested feedback on its draft strategic plan for fiscal years 2018-2022. This strategic plan identifies the Bureau’s long-term goals and objectives.
The proposed strategic plan outlines four broad goals for the next five years with multiple objectives and various strategies defined for each goal. Consistent with previous CFPB releases, these objectives reflect the Bureau’s continued use of data and technology to advance its mission. The four goals are:
- “Prevent financial harm to consumers while promoting good practices that work for consumers, responsible providers, and the economy as a whole.” Objectives include creating and modifying regulations; supervising institutions; and enforcing consumer financial laws.
- “Empower consumers to make informed financial choices to reach their own life goals and enhance their own financial well-being.” Objectives include handling complaints and sharing data; and creating and offering educational resources.
- “Inform the public, policy makers, and the CFPB’s own policy-making with market intelligence and data-driven analysis of consumer financial markets and consumer behavior.” Objectives include monitoring markets and producing research reports.
- “Advance the CFPB’s performance by maximizing resource productivity.” Objectives include hiring a diverse work force; using technology for public engagement; ensuring effective and efficient management; and maintaining meaningful channels for feedback.
The CFPB is requesting comments by November 18.
CFPB Consumer Advisory Board Public Meeting Notice
The CFPB Consumer Advisory Board will host a public meeting on Thursday, November 2, at 10:00am EST in Tampa, Florida. According to the notice, published in the Federal Register on October 17, the board will discuss Know Before You Owe: Reverse Mortgages; financial well-being; trends and themes; and payday, vehicle title, and certain high-cost installment loans.
Attendees must RSVP by noon, November 1, to CFPB_CABandCouncilsEvents@cfpb.gov.
OCC to Host Workshop for Bank Directors in December; FDIC, CFPB Announce Webinar to Discuss Financial Education Resources
On October 23, the OCC announced it will host a workshop December 4-6 in Albuquerque, New Mexico, for directors, senior management team members, and other key executives of OCC-supervised national community banks and federal savings associations. The “Building Blocks for Directors” workshop will (i) focus on the duties and cores responsibilities of directors and management; (ii) discuss major laws and regulations; and (iii) provide insight on the examination process.
Also on October 23, the FDIC and CFPB announced they will co-host a webinar on November 15 to discuss financial education resources designed to help people with disabilities make informed financial decisions. Topics of discussion will include recent enhancements to the FDIC’s Money Smart curriculum and the CFPB’s Your Money, Your Goals toolkit.
Senate Nullifies CFPB Arbitration Rule
On October 24, the Senate cleared a resolution under the Congressional Review Act to nullify the CFPB’s recently adopted final arbitration rule, with Vice President Mike Pence casting the deciding vote to break the 50-50 tie. As previously covered in InfoBytes, the House passed H.J. Res. 111 earlier in July to invalidate the rule, which prohibits the use of mandatory pre-dispute arbitration clauses in certain contracts for consumer financial products and services. The resolution now heads to President Trump.
Both CFPB Director Richard Cordray and Acting Comptroller of the Currency Keith A. Noreika issued statements following the vote. Noreika stated: “The elected representatives acted to stop a rule from going into effect that would have likely increased the cost of credit for hardworking Americans and made it more difficult for small community banks to resolve differences with their customers without achieving the rule’s goal of deterring future financial abuse.” Noreika labeled the action by Congress as a “victory for consumers and small banks across the country.”
However, according to many media outlets, Director Cordray condemned the Senate’s action. Cordray explained: “Tonight's vote is a giant setback for every consumer in this country. Wall Street won and ordinary people lost. This vote means the courtroom doors will remain closed for groups of people seeking justice and relief when they are wronged by a company.”