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  • CFPB Issues Revised Remittance Transfer Rule

    Fintech

    On April 30, the CFPB issued a revised final rule to amend regulations applicable to consumer remittance transfers of over fifteen dollars originating in the United States and sent internationally. Generally, the rule requires remittance transfer providers to (i) provide written pre-payment disclosures of the exchange rates and fees associated with a transfer of funds, as well as the amount of funds the recipient will receive, and (ii) investigate consumer disputes and remedy errors. The revised rule makes optional the original requirement to disclose (i) recipient institution fees for transfers to an account, except where the recipient institution is acting as an agent of the provider and (ii) taxes imposed by a person other than the remittance transfer provider. Instead, the revised rule requires providers to include a disclaimer on disclosures that the recipient may receive less than the disclosed total value due to these two categories of fees and taxes. The revised rule exempts from certain error resolution requirements two additional errors: (i) providing an incorrect account number or (ii) providing an incorrect recipient institution identifier. For the exception to apply, a remittance transfer provider must (i) notify the sender prior to the transfer that the transfer amount could be lost, (ii) implement reasonable measures to verify the accuracy of a recipient institution identifier, and (iii) make reasonable efforts to retrieve misdirected funds. In addition, the revised rule provides institutions more time to comply with the new remittance transfer standards. The final regulations, as revised by this rule, take effect on October 28, 2013.

    CFPB EFTA Remittance Money Service / Money Transmitters

  • CFPB Publishes Additional Mortgage Rule Compliance Guides

    Lending

    On May 2, the CFPB published three additional guides to assist companies seeking to comply with its HOEPA rule, ECOA valuations rule, and TILA high-priced mortgage appraisal rule. As with other prior guides it has released, the CFPB cautions that the guides are not a substitute for the rules and the Official Interpretations, and that the guides do not consider other federal or state laws that may apply to the origination of mortgage loans. BuckleySandler also has prepared detailed analyses of these and other CFPB mortgage rules.

    CFPB TILA Mortgage Origination ECOA HOEPA

  • CFPB Amends Credit Card Ability-to-Pay Rule

    Fintech

    On April 29, the CFPB amended Regulation Z to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. Regulation Z generally requires that credit card issuers consider an applicant’s independent ability to pay regardless of age. A Federal Reserve Board rule adopted to implement the Credit CARD Act, which took effect on October 1, 2011, required card issuers to consider only an individual card applicant’s independent income or assets. The rule received criticism from members of Congress and other stakeholders who argued the rule limited access to credit for stay-at-home spouses and partners. The CFPB’s revised rule allows credit card issuers to consider third-party income for a consumer who is 21 or older, if the applicant has a reasonable expectation of access to such income. The CFPB rule does not change the independent ability to pay requirement for individuals under 21 years old. The rule is effective as of May 3, 2013 and compliance with the rule is required by November 4, 2013.  Card issuers may, at their option, comply with the rule prior to that date.

    Credit Cards CFPB TILA

  • CFPB Issues Semiannual Servicemember Complaint Report

    Consumer Finance

    On May 1, the CFPB’s Office of Servicemember Affairs published its Semi-Annual Complaint Report, which states that the volume of complaints from servicemembers, veterans, and their families has steadily increased since the CFPB first started accepting complaints in July 2011. The report provides limited summary information about the complaints, noting that mortgage complaints predominate, followed by credit card and credit reporting complaints. In a related blog post, the CFPB states that it has received more than 5,000 servicemember complaints to date, and calls again for additional questions or complaints from the entire military community.

    CFPB Servicemembers Consumer Complaints

  • CFPB, FTC Announce Roundtable on Data Integrity in Debt Collection

    Fintech

    On May 1, the FTC and the CFPB announced a roundtable to “examine the flow of consumer data throughout the debt collection process” and discuss (i) the amount of documentation and other information currently available to different types of collectors and at different points in the debt collection process, (ii) the information needed to verify and substantiate debts, (iii) the costs and benefits of providing consumers with additional disclosures about their debts and debt-related rights, and (iv) information issues relating to pleading and judgment in debt collection litigation. The event will be held on June 6, 2013 in Washington, DC and is open to the public.

    CFPB FTC Debt Collection Data Collection / Aggregation Privacy/Cyber Risk & Data Security

  • CFPB Announces Consumer Advisory Board Meeting

    Consumer Finance

    On May 1, the CFPB announced its next Consumer Advisory Board Meeting, scheduled for May 15, 2013 in Los Angeles, CA. The meeting agenda includes a public session that will feature remarks from CFPB Director Cordray and comments from consumer groups, community and industry representatives, and members of the public.

    CFPB

  • CFPB Proposes Financial Education Policies

    Consumer Finance

    On April 30, the CFPB published policy recommendations for advancing K-12 financial education. The paper, “Transforming the Financial Lives of a Generation of Young Americans,” identifies perceived problems for young people in the financial marketplace and reviews current approaches to financial education for the target age groups. The CFPB recommends that state policymakers and educators (i) introduce key financial education concepts early and make a stand-alone financial education course a graduation requirement for high school students, (ii) include personal financial management questions in standardized tests, (iii) provide opportunities throughout the K-12 years to practice money management through innovative, hands-on learning opportunities, (iv) create consistent opportunities and incentives for teachers to take financial education training for use in teaching financial management to their students, and (v) encourage parents and guardians to discuss money management topics at home and provide them with the tools necessary to have conversations about money with their children.

    CFPB Financial Literacy

  • CFPB Explains Use of Civil Penalty Fund

    Consumer Finance

    On April 26, the CFPB issued a final rule that (i) establishes the governance structure of the Civil Penalty Fund, including the position of Civil Penalty Fund Administrator, (ii) identifies categories of victims who may receive funds and the amounts they may receive, (iii) establishes procedures for allocating funds for payments to victims and for consumer education and financial literacy programs, and for distributing allocated funds to individual victims, (iv) describes the circumstances in which payments to certain victims or classes of victims will be deemed impracticable, and (v) requires the Administrator to issue regular reports. While the CFPB issued the rule without a notice and comment period because the rule is exempt from the Administrative Procedures Act and other rulemaking requirements, it also issued a related proposal in which the CFPB seeks comment on, among other things, (i) whether it should make payments to victims of any type of “activities” for which it has imposed civil penalties, even if no enforcement action imposed a civil penalty for the particular “activities” that harmed the victim, (ii) whether it should limit payments to a share of the civil penalties collected for the particular violations that harmed a consumer, as opposed to using general Civil Penalty Fund dollars, and (iii) alternatives to the allocation procedures to be used when sufficient funds are not available to compensate fully the uncompensated harm of all victims to whom it is practicable to make payments. Comments on the proposal are due within 60 days of its publication in the Federal Register.

    CFPB

  • Federal Regulators Target Payday Loans, Deposit Advance Products

    Consumer Finance

    On April 24, the CFPB published a white paper on payday loan and deposit advance products that claims to show those products lead to a “cycle of high-cost borrowing.” On April 25, the FDIC and the OCC proposed guidance relating to deposit advance products based on similar concerns. The CFPB paper reflects the results of what the CFPB characterizes as a year-long, in-depth review of short-term, small-dollar loans, which began with a January 2012 field hearing. Although it acknowledges that demand exists for small dollar credit products, that such products can be helpful for consumers, and that alternatives may not be available, the CFPB concludes that such products are only appropriate in limited circumstances and faults lenders for not determining whether the products are suitable for each customer. The CFPB paper does not propose any rule or guidance, but is instead intended to present a clear statement of CFPB concerns. The paper notes that a related CFPB study of online payday loans is ongoing. The FDIC and OCC proposed guidance outlines the agencies’ safety and soundness, compliance, and consumer protection concerns about deposit advance products, and sets forth numerous expectations, including with regard to consumer eligibility, capital adequacy, fees, compliance, management oversight, and third-party relationships. For example, under the guidance the agencies would expect banks to offer a deposit advance product only to customers who (i) have at least a six month relationship with the bank, (ii) do not have any delinquent or adversely classified credits, and (iii) meet specific financial capacity standards. The guidance also would require, among other things, that (i) each deposit advance loan be repaid in full before the extension of a subsequent loan, (ii) banks refrain from offering more than one loan per monthly statement cycle and provide a cooling-off period of at least one monthly statement cycle after the repayment of a loan before another advance is extended, and (iii) banks reevaluate customer eligibility every six months.

    FDIC CFPB Payday Lending OCC Agency Rule-Making & Guidance

  • CFPB Proposes Changes to Qualified Mortgage and Mortgage Servicing Rules

    Lending

    On April 19, the CFPB proposed a rule to amend and clarify certain provisions of its final qualified mortgage rule and final mortgage servicing rule. The proposal addresses (i) preemption issues with regard to Regulation X’s servicing provisions, (ii) the small servicer exemption from certain of the new servicing standards, (iii) the use of government-sponsored enterprise and federal agency purchase, guarantee, or insurance eligibility for determining qualified mortgage status, and (iv) the determination of debt and income for purposes of originating qualified mortgages. With regard to small servicers, the proposal would clarify which mortgage loans to consider in determining small servicer status and the application of the small servicer exemption to servicer/affiliate and master servicer/subservicer relationships. It would exclude from consideration mortgage loans voluntarily serviced for an unaffiliated entity without remuneration, reverse mortgages, and mortgage loans secured by a consumer’s interest in timeshare plans. With regard to debt-to-income ratio assessments for purposes of offering qualified mortgages, the rule would amend language related to employment record and income, obtaining business credit reports and other issues related to self-employed borrowers, and the treatment of Social Security and rental income.

    CFPB Mortgage Servicing Qualified Mortgage

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