Skip to main content
Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • CFPB Sets Date for Second Field Hearing on Arbitration

    Consumer Finance

    On September 22, via blog post, the CFPB announced that it will host its second field hearing addressing pre-dispute arbitration agreements in various consumer financial contracts. Scheduled for October 7, 2015, the hearing will take place in Denver, Colorado and feature remarks from CFPB Director Richard Cordray, testimony from consumer groups, industry representatives, and members of the public. Previous InfoBytes coverage on arbitration can be seen here.

    CFPB Arbitration

  • CFPB Spotlights Mortgage Complaints in Latest Monthly Report

    Consumer Finance

    On September 22, the CFPB published the third volume of its monthly consumer complaints report, examining mortgage complaints received through its complaint database. In its latest snapshot report, the CFPB revealed that it has received more than 190,000 mortgage complaints as of September 1, 2015, making mortgage the most-complained-about financial product. Specifically, the report finds that ongoing questions persist with respect to (i) how consumers can prevent foreclosure; (ii) how and when to make payments when mortgage loans are transferred to a different servicer; and (iii) how to ensure accurate payment on mortgage loans. According to the CFPB, as of September 1, 2015, over 700,000 complaints have been handled since the consumer complaint database’s inception.

    CFPB Consumer Complaints

  • CFPB Publishes Final Rule Amending Various Annual Dollar Threshold Adjustments

    Consumer Finance

    On September 21, the CFPB issued a final rule amending certain dollar thresholds for provisions implementing amendments in Regulation Z, which implements the Truth in Lending Act (TILA), under the CARD Act, HOEPA, and ATR/QM. The CFPB is required to adjust based on the annual percentage change reflected in the Consumer Price Index in effect on June 1, 2015. For 2016, the minimum interest charge disclosure threshold will remain unchanged. Permissible penalty amounts will remain $27 for the first late payment; however, for each subsequent violation within the following six months, the allowed penalty amount will decrease from $38 to $37. Similarly, the CFPB is adjusting the combined points and fees trigger-threshold for compliance with HOEPA to $1,017. Lastly, to satisfy the underwriting requirements under the ATR/QM rule, a covered transaction will not be considered a QM unless the combined points and fees do not exceed 3 percent of the total loan amount for a loan greater than or equal to $101,749; $3,052 for a loan amount greater than or equal to $61,050 but less than $101,749; 5 percent of the total loan amount for a loan greater than or equal to $20,350 but less than $61,050; $1,017 for a loan amount greater than or equal to $12,719 but less than $20,350; and 8 percent of the total loan amount for a loan amount less than $12,719.

    The rule becomes effective on January 1, 2016.

    CFPB Agency Rule-Making & Guidance

  • CFPB Finalizes Rule Allowing Small Creditors to Increase Lending in Rural and Underserved Areas

    Consumer Finance

    On September 21, the CFPB issued a final rule, amending certain mortgage rules and comments relating to lending activities by small creditors in rural and underserved areas. Initially proposed in January 2015, the final rule, among other things (i) increases the loan origination limit for determining eligibility for small-creditor status from 500 loans to 2,000 non-portfolio loans; (ii) includes the assets of the creditor’s affiliates, which regularly make covered transactions, in calculation of the creditor’s assets to determine whether the creditor is within the $2 billion threshold for small-creditor status; (iii) restores the one-year look back period in place of the three-year look back period for the time period that determines whether a creditor is operating predominantly in rural or underserved areas; (iv) revises escrow exemptions to prevent creditors from losing eligibility for the escrow exemptions as a result of escrow accounts before the effective date of the rule; (v) broadens the definition of “rural” to include (a) counties that meet the current definition of rural county, and (b) census blocks that are not in an urban area (as defined by the Census Bureau); (vi) adds safe harbor provisions to facilitate the determination of “rural” by permitting automated address search tools provided by the CFPB and the Census Bureau; and (vii) extends the temporary two-year transition period, which permits certain small creditors to make balloon-payment qualified mortgages and balloon-payment high-cost mortgages (whether or not they operate predominantly in rural or underserved areas), to include applications received by April 1, 2016.

    The final rule will take effect on January 1, 2016.

    CFPB Agency Rule-Making & Guidance

  • Buckley Hosts Webinar on TRID for Investors

    Consumer Finance

    On September 15, Buckley hosted a webinar, "TRID for Investors" presented by Buckley. The webinar addressed what purchasers of mortgage loans need to know about the TILA-RESPA Integrated Disclosure rule (TRID rule) that goes live on October 3, 2015. Specifically, evolving assignee liability, identifying risks, correcting errors, and identifying apparent errors. They also discussed ambiguous liabilities and common misconceptions, and focused on information that will help investors develop instructions and procedures that reduce litigation risk without unnecessarily limiting the pool of loans meeting those standards. For additional information and resources on the TRID rule, please visit our TRID Resource Center.

    CFPB TRID

  • CFPB Sues World Law Group Over Illegal Fees and False Promises in Debt-Relief Scheme

    Consumer Finance

    On September 15, the CFPB announced a preliminary injunction obtained against World Law Group and its senior leaders for allegedly running a debt-relief scheme that charged consumers costly and illegal upfront fees. According to the CFPB, “the debt-relief scheme falsely promised consumers a team of attorneys to help negotiate debt settlements with creditors, failed to provide legal representation, and rarely settled consumers’ debts.” Specifically, the complaint alleges that defendants charged consumers upfront fees before providing debt-relief services in violation of the Telemarketing Sales Rule. The complaint also alleges that World Law Group falsely promised legal representation to consumers who did not receive the promised legal representation. The underlying lawsuit remains pending following the granting of the preliminary injunction.

    CFPB UDAAP Debt Collection Telemarketing Sales Rule Debt Settlement

  • CFPB Issues Consent Orders Regarding Debt Collection Practices

    Consumer Finance

    On September 9, the CFPB ordered the two largest U.S. debt buyers and collectors to pay a combined total of nearly $80 million in civil penalties and consumer restitution related to their debt collection practices. The CFPB alleged that both companies, among other things, engaged in robo-signing, sued (or threatened to sue) on stale debt, made inaccurate statements to consumers, and engaged in other illegal collection practices. In particular, the CFPB criticized the practice of purchasing debts without obtaining important documentation or information about the debt, or verifying to ensure the debts were accurate and enforceable before commencing collection activities. Under the consent orders, one company agreed to provide up to $42 million in consumer refunds, pay a $10 million civil money penalty, and cease collecting on a portfolio of consumer debt with a face value of over $125 million. The other company agreed to provide $19 million in restitution, pay an $8 million civil money penalty, and cease collecting on a consumer debt portfolio with a face value of over $3 million. In addition, both companies are also generally prohibited from reselling consumer debt. In prepared remarks announcing the enforcement action, CFPB Director Richard Cordray noted, “the terms of the orders will help reform and improve the tactics and approaches” within the debt collection market. The CFPB’s action comes as the industry anticipates the CFPB’s issuance of new debt collection rules.

    CFPB FDCPA UDAAP Debt Collection Enforcement Debt Buying

  • Ninth Circuit Rules Against Title Insurer in Long-Running RESPA Litigation

    Consumer Finance

    On August 24, the Ninth Circuit held that a title insurer’s equity investments in title agencies in exchange for agreements that the agencies would refer customers to the insurer violated the anti-kickback provisions of the Real Estate Settlement Procedures Act (RESPA). Edwards v. First Am. Corp., 2015 WL 4999329 (9th Cir. Aug. 24, 2015). In this long-running case (covered in InfoBytes here, here, here, and here), borrowers filed a putative class-action lawsuit against the title insurer claiming violations of Section 8 of RESPA, which prohibits payments for the referral of settlement service business. In prior phases of the litigation, courts declined to certify the class, and the U.S. Supreme Court eventually granted certiorari but declined to rule on the merits of the litigation. In this appeal, the plaintiff-borrowers asked the Ninth Circuit to review the district court’s most recent denial of class certification, and the CFPB filed an amicus brief in the appeal as well. The Ninth Circuit affirmed the denial of the certification, finding that common issues did not predominate over individual issues for the proposed class. The court further stated that, while RESPA exempts payments for “goods,” “facilities,” and “services” from Section 8’s prohibition on referral fees, the title insurer’s equity investments in the title agencies were not payments for “goods,” “facilities,” or “services.” Further, the court found that RESPA’s exemption from Section 8 available to affiliated business arrangements did not apply because no compensable services were performed by the title agencies in exchange for the payments and the title insurer did not receive any payments from the title agencies as a return on its ownership interests.

    CFPB Class Action RESPA

  • CFPB Spotlights Credit Reporting Industry in Latest Complaints Report

    Consumer Finance

    On August 25, the CFPB released the second of its monthly complaint reports, highlighting complaints received from consumers regarding the credit reporting industry. In its latest snapshot report, the CFPB revealed a 56 percent increase in the number of credit reporting complaints submitted by consumers between June 2015 and July 2015, and a 45 percent increase in credit reporting complaints from last year. The report also stated that 77 percent of credit reporting complaints involved inaccurate information on consumers’ credit reports. Despite the large volume of data used to prepare the report, the Bureau cautioned that the data is not normalized and that company-specific information should be considered in context of a company’s size.

    CFPB Consumer Complaints

  • CFPB & NYDFS File Suit Against Two Pension Advance Lenders Over Misleading Consumers Related to Costs, Risks Associated to Advance Payments

    Consumer Finance

    On August 20, the CFPB, along with the New York Department of Financial Services (NYDFS), filed a joint complaint in federal court against two pension advance lenders and three of their managers for allegedly misleading consumers regarding the costs and risks associated with the companies’ pension advance loans. The CFPB and NYDFS contend that both companies coerced consumers into borrowing against their pensions by marketing the product as a sale rather than a loan, and misrepresented or failed to disclose interest rates and fees on lump-sum cash advances offered for agreeing to redirect the full or partial amount of the consumer’s pension payments over an extended period. In separate allegations, the NYDFS contends that both companies violated New York state specific laws related to usury and deception, and unlawfully transmitted money without a proper license. The complaint follows guidance issued earlier this year highlighting three business practices consumers should avoid when conducting business with pension advance lenders.

    CFPB UDAAP

Pages

Upcoming Events