CFPB Announces Implementation Delays and Potential Changes to Two Financial Services Rules

On December 21, 2017, the Consumer Financial Protection Bureau (CFPB) announced delays and potential changes to its Home Mortgage Disclosure Act (HMDA) and pre-paid card regulations.  Both sets of regulations have been subject to criticism by industry participants and others.  Although lenders will have to comply with the CFPB’s HMDA regulations as of their January 1, 2018 effective date, its announcement suggests that the CFPB will take a relaxed approach to enforcing lenders’ 2018 data submission efforts and may ultimately roll back some of the recently promulgated HMDA compliance requirements.  In its announcement regarding the pre-paid card rule, the CFPB reported that it anticipates issuing a final rule shortly after the first of the year and that it expects to further extend the effective date of the rule.

By way of background, HMDA (a 1975 law) requires lenders to gather and report certain information related to loan applicants.  Dodd-Frank and the Consumer Protection Act tasked the CFPB with expanding the types of data lenders are required to collect.  In 2015, the CFPB promulgated a rule requiring lenders to collect additional data (including borrower credit scores, debt-to-income ratios, interest rates, and points and fees) beginning January 1, 2018.  The CFPB’s December 21 announcement indicates that some of those requirements may be rolled back over the coming months.  The CFPB explained that it intends to reconsider parts of the 2015 HMDA rule “such as the institutional and transactional coverage tests and the rule’s discretionary data points.”  Although the 2015 HMDA rule will take effect on January 1, 2018, the CFPB signaled some relief to financial institutions concerned about implementation.  It announced that it does not anticipate requiring resubmission of data collected in 2018 “unless data errors are material,” and that it does not anticipate requiring lenders to “pay penalties with respect to data errors.”  Further explaining, the CFPB noted that it views the 2018 data collection as an opportunity for lenders to test their implementation to identify gaps and to improve their compliance.

The CFPB also announced a further delay in implementation of its prepaid card rules.  Among other things, those rules (which we previously wrote about) cap consumer liability, require free access to annual and monthly statements, and require that lenders consider a consumer’s ability to repay before issuing a card.  The prepaid card rules were set to take effect in October 2017, but the CFPB pushed that date out to April 2018.  On December 21, the CFPB announced that it expects to further extend the implementation date.

Industry participants and watchers should continue to monitor developments in connection with both sets of rules over the coming months, as implementation dates are subject to change and revision.

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