The Consumer Financial Protection Bureau’s recent action against two credit card vendors regarding credit monitoring and identity theft protection services is a reminder of the legal risks associated with certain add-on products. The July 1 settlement, in which the CFPB found that the vendors misled customers about the benefits of…
For the second time in recent weeks, the Consumer Financial Protection Bureau (CFPB) delayed the launch of the new integrated disclosures for residential mortgage loans under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). The launch date, now set for Saturday, October 3, was announced…
On June 10, 2015, the CFPB issued a Final Rule amending the scope of its regulatory authority to include “larger participants” of the automobile financing industry. Under the Final Rule, the CFPB will supervise certain nonbank auto finance companies that (1) originate loans for the purchase of automobiles; (2) refinance…
Last week, the U.S. House of Representatives passed a Bill that would both more permanently install two advisory boards for the CFPB and cap the Bureau’s future funding. Principally, HR 1195 — the Bureau of Consumer Financial Protection Advisory Board Act — would force the Director to create three advisory…
The mortgage servicing industry remains under scrutiny, as evidenced by the recent joint enforcement action against Green Tree Servicing, LLC by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). In a joint complaint filed in Minnesota, the regulators allege that Green Tree, through its collection activities…
On March 26, 2015, CFPB Director Richard Cordray announced a proposed outline of changes to payday lending that would vastly alter the current rules and regulations. The new rules would address both short-term and longer-term credit products such as payday loans; deposit advance products; high-cost installment loans; certain other open-end lines…
On March 9, 2015, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray held oral arguments in the first appeal of a CFPB administrative enforcement action. Both counsel for the CFPB and Respondents PHH Mortgage Corporation and Atrium Insurance Corporation appealed to Cordray from the Administrative Law Judge’s (ALJ) Recommended Decision,…
On March 10, 2015, the Consumer Financial Protection Bureau (CFPB) released its Arbitration Study, which concludes that arbitration agreements in contracts associated with consumer financial products constrain consumers’ ability to assert their rights if a dispute arises. The study, which the CFPB was directed to carry out under Section 1028(a)…
On March 3, 2015 CFPB Director Richard Cordray appeared before the House Committee on Financial Services to deliver testimony regarding the Bureau’s work. Director Cordray spent much of his semiannual address touting the Bureau’s efforts in the mortgage space. In his written statement, Director Cordray commented on the Bureau’s Qualified…
On April 28, 2014, the Supreme Court granted certiorari to decide whether, as held by the Eight Circuit, a borrower must file a lawsuit to exercise and preserve her TILA rescission right within three years of consummating the loan, or whether simply providing written notice of rescission is sufficient to…
State and federal regulation of payday lenders is far from a new phenomenon. Recently, litigation against entities using the “tribal lending” model, and government attempts to suppress certain online lending programs via Operation Chokepoint have put the spotlight back on industry. In past articles, we have noted that the Consumer Financial…
The Consumer Financial Protection Bureau (CFPB) recently announced that it had reached an agreement to give students of Corinthian College, Inc. at least $480 million in principal reductions on existing student debt. Former and current students will receive an immediate 40% reduction on existing principal balances of their loans with…
Speculation abounds regarding what the CFPB’s expected 2015 rules regarding first party debt collectors will be. Here’s the background you need to know. On November 12, 2013, the CFPB issued an Advance Notice of Proposed Rulemaking, seeking comments to its proposal to update the Fair Debt Collection Practices Act (“FDCPA”). As…
On Monday, November 17, we briefly discussed the CFPB’s newly proposed prepaid card rules. Today we elaborate on these newly proposed rules, and their effect on issuers if these new rules are implemented by the CFPB. Scope: The CFPB explained what it considers to be a prepaid card for purposes of…
The CFPB recently proposed additional amendments to its Mortgage Servicing Rules which, if implemented, would provide additional protections for mortgage borrowers facing default or foreclosure. These amendments, which the CFPB announced on November 20, 2014, are the latest in a series of revisions to the Rules (which we have discussed…
On December 3, New York governor Andrew Cuomo announced the final version of the state Department of Financial Services (DFS) regulations governing debt collection actions by third-party debt collectors and debt buyers. The regulations contain a number of new requirements for third party debt collectors, including: New / Enhanced Initial…
According to the CFPB, Franklin Loan Corporation paid its loan officers $730,000 in quarterly bonuses over 26 months – but the bonuses were allegedly based in part on the interest rates on loans, thus violating the Loan Originator Compensation Rule in Regulation Z. As a result, the CFPB entered into a…
No readers of this blog would disagree that the Dodd-Frank Wall Street Reform and Consumer Protection Act transformed the legal landscape for banks and consumer finance companies. In the area of enforcement, two of the Act’s most significant changes were (1) the creation of the Consumer Financial Protection Bureau and…
On Thursday, the CFPB issued a request for public comment on its proposed rule to regulate prepaid financial products. The rule would amend Regulation E, which implements the Electronic Funds Transfer Act (EFTA), and Regulation Z, which implements the Truth In Lending Act (TILA). SCOPE The CFPB’s proposed rule would…
The latest CFPB Supervisory Highlights report details the Bureau’s concerns regarding student loan lenders. The report, which is the fifth edition of Supervisory Highlights, generally covers supervisory activities between March and June 2014. In it, the CFPB notes that its examiners found the following concerns when reviewing practices of student…