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New CFPB Disclosure Requirements Come Up Short

February 26, 2015

Authors

Bryan Cave

New CFPB Disclosure Requirements Come Up Short

February 26, 2015

by: Bryan Cave

On October 28, 2014, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule amending Regulation P (the “Amendment”), which implements the consumer privacy provisions of the Gramm-Leach-Bliley Act (“GLBA”).  In most cases prior to the amendment, Regulation P required financial institutions to mail paper copies of the annual privacy disclosure, which many in the financial industry felt was overly costly and needlessly burdensome.  The new rule permits covered institutions to publish privacy notices electronically on their websites, but only after satisfying the following conditions:

  • The financial institution does not disclose nonpublic personal information to nonaffiliated third parties other than for the exception purposes that do not allow for consumer opt-outs, such as for servicing or processing the consumer’s account;
  • The financial institution’s information sharing practices do not trigger opt-out rights pursuant to Regulation P or Section 603 of the Fair Credit Reporting Act (“FCRA”);
  • The requirements of the affiliate
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  • CFPB Takes Aim at Indirect Auto Lending

    February 10, 2015

    Authors

    Bryan Cave

    CFPB Takes Aim at Indirect Auto Lending

    February 10, 2015

    by: Bryan Cave

    State and federal law enforcement agencies are now taking aim, on both the consumer protection and fraudulent loan securitizations fronts, at what they consider to be questionable practices by automobile lenders.

    On the consumer protection front, the Consumer Financial Protection Bureau (CFPB) initially dipped a toe into this area through a bulletin in May 2013, claiming that lenders that offer auto loans through dealerships are responsible for unlawful, discriminatory pricing. According to the CFPB, the main culprits are indirect auto lenders that allow the dealer to charge a higher interest rate than the rate the lender offers the dealer, with the result that the lender shares a portion of this markup with the dealer. Under the Dodd Frank Act, such a practice would be illegal if it involved payments to mortgage brokers that sell their customers into higher rate mortgage loans. The auto lending industry, however, was not similarly regulated

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    CFPB Regulations on Providing Applicants With Appraisals Go Into Effect

    February 6, 2014

    Authors

    Jerry Blanchard

    CFPB Regulations on Providing Applicants With Appraisals Go Into Effect

    February 6, 2014

    by: Jerry Blanchard

    Prior to Dodd-Frank, Section 701(e) of the Equal Credit Opportunity Act provided that a loan applicant had the right to request copies of any appraisals used in connection with his or her application for mortgage credit.  Section 1474 of Dodd-Frank amended Section 701(e) to require that lenders affirmatively provide copies of appraisals and valuations to loan applicants at no additional cost and without requiring applicants to affirmatively request such copies.

    The appraisal documentation must be provided to the loan applicant in a timely manner and no later than three days prior to the loan closing unless the applicant waives the timing requirement.  The lender must provide a copy of each written appraisal or valuation at no additional cost to the applicant, though the creditor may impose a reasonable fee on the applicant to reimburse the creditor for the cost of the appraisal.

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    CFPB Clarifies Mortgage Servicing Rules

    October 28, 2013

    Authors

    Danielle Parrington and Jennifer Odom

    CFPB Clarifies Mortgage Servicing Rules

    October 28, 2013

    by: Danielle Parrington and Jennifer Odom

    In January of 2013, the Consumer Financial Protection Bureau (“CFPB”) issued the new Mortgage Servicing Rules (the “Rules”), which go into effect on January 10, 2014.  The Rules establish extensive protections for borrowers, particularly delinquent borrowers who are facing foreclosure.

    On October 15, 2013, the CFPB issued new guidance on the Rules in order to resolve certain issues of interpretation regarding servicer communications with borrowers.  The bulletin (CFPB Bulletin 2013-12) and interim final rule issued on October 15, 2013 clarify three main issues: (1) how mortgage servicers should communicate with family members of a deceased borrower; (2) how mortgage servicers should contact delinquent borrowers under the Early Intervention Rule; and (3) how certain provisions of the Rules interact with the “cease communications” requirement of the Fair Debt Collection Practices Act.

    1. Communications with Family Members of a Deceased Borrower

    The Rules require mortgage servicers to implement

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    CFPB Warns Employers Against Mandatory Use of Payroll Cards

    October 1, 2013

    Authors

    Bryan Cave

    CFPB Warns Employers Against Mandatory Use of Payroll Cards

    October 1, 2013

    by: Bryan Cave

    While Employers Can Mandate Electronic Direct Deposit, Employers Are Prohibited From Requiring the Use of a Specific Payroll Card Selected by the Employer.

    On September 12, 2013, the Consumer Financial Protection Bureau (“CFPB”) published Bulletin 2013-10 (“Bulletin”) establishing that any “financial institution or other person” is prohibited from requiring that an employee receive wages only on a payroll card issued a particular financial institution of the employer’s choosing, based on the application of federal law to payroll card accounts. In particular, the Bulletin affirms that the Electronic Fund Transfer Act (“EFTA”) and its implementing regulation Regulation E (“Reg E”), prohibit mandatory payment of wages through a payroll card issued by a particular financial institution. Although “Regulation E permits an employer to require direct deposit of wages by electronic means,” the employee must be “allowed to choose the institution that will receive the direct deposit.” The CFPB explicitly

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    CFPB Finalizes Amendments To New Mortgage Servicing Rules

    September 30, 2013

    Authors

    Amy Thompson

    CFPB Finalizes Amendments To New Mortgage Servicing Rules

    September 30, 2013

    by: Amy Thompson

    On September 13, 2013, the Consumer Financial Protection Bureau (“CFPB”) issued final amendments and clarifications to its mortgage servicing regulations, which go into affect January 10, 2014.  These rules were initially issued in January 2013 and have been amended based on comments received during the implementation period.  The rules relating to loss mitigation procedures are set out in Regulation X of the Real Estate Settlement Procedures Act.  (12 CFR § 1024.41.)  Among the important loss mitigation rules that go into effect on January 10, 2014:

    I.    Rules Affecting Foreclosures.

    • Servicers may no longer begin a foreclosure until the borrower is more than 120 days delinquent.  In some states it is not uncommon for foreclosures to begin when borrowers are delinquent by as a little as 60 days.  It is therefore important that servicers take note of this new restriction.  Servicers must delay first legal action until the borrower
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    CFPB Issues Balloon Mortgage and Other Small Creditor Ability-to-Repay Relief

    May 29, 2013

    Authors

    Bryan Cave

    CFPB Issues Balloon Mortgage and Other Small Creditor Ability-to-Repay Relief

    May 29, 2013

    by: Bryan Cave

    On May 29, 2013, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending the Ability-to-Repay (ATR) and Qualified Mortgage (QM) rules it issued on January 10, 2013.  Within this final rule are two new categories of small creditor QMs.  The first, for small creditor portfolio loans, was adopted exactly as proposed alongside the January ATR rule and permits small creditors in all markets to make portfolio loans that are QMs even though the borrower’s DTI ratio exceeds the general QM 43% cap.  As a reminder, small creditors for these purposes are those with less than $2 billion in assets at the end of the preceding calendar year that, together with their affiliates, made 500 or fewer covered first-lien mortgages during that year.

    The second new QM is a welcome even if only temporary category of balloon mortgages.  Unlike the small creditor portfolio QM, this interim QM was not an express part

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    The Ability-to-Repay Roadmap for ARMs, Balloon-Payment Qualified Mortgages, & Non-standard Mortgage Refinances

    May 6, 2013

    Authors

    Bryan Cave

    The Ability-to-Repay Roadmap for ARMs, Balloon-Payment Qualified Mortgages, & Non-standard Mortgage Refinances

    May 6, 2013

    by: Bryan Cave

    Community bank lenders have responded to the CFPB’s Ability-to-Repay and Qualified Mortgage rules with questions about adjustable-rate mortgages (ARMs), balloon-payment qualified mortgages, and non-standard mortgage refinances.  The CFPB’s implementation of Dodd-Frank’s balloon-payment qualified mortgage concept, for example, turns on a narrow definition of the types of lenders that qualify to make such loans.  ARMs may be a viable alternative to balloon mortgages, but these loan products pose compliance and operational risks of their own.  Finally, lenders may still be considering the types of transactions that qualify for the special “non-standard mortgage” refinancing exemption from the general Ability-to-Pay rule.

    For a uniquely focused discussion on making these types of loans in light of the CFPB’s new mortgage regulations, join attorneys John ReVeal and Barry Hester for the latest installment of Bryan Cave’s webinar partnership with compliance training leader BAI Learning & Development.  This free presentation will be held on Wednesday, May 8, from

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    Gift Card Issuers Beware: CFPB Finds Limited Preemption of Unclaimed Property Laws

    May 1, 2013

    Authors

    Bryan Cave

    Gift Card Issuers Beware: CFPB Finds Limited Preemption of Unclaimed Property Laws

    May 1, 2013

    by: Bryan Cave

    CFPB Finds Limited Preemption; Gift Card Issuers Must Honor Cards Even After Funds Have Escheated to the State

    The Consumer Financial Protection Bureau (“CFPB”) recently published a final determination regarding whether the unclaimed property laws of Maine and Tennessee relating to unredeemed gift cards (“Applicable State Law”) are inconsistent with and preempted by the gift card provisions of the  Electronic Fund Transfer Act and Regulation E (“Federal Law”).  The applicable laws of Maine and Tennessee are quite similar for the issues at hand.  In its ruling, the CFPB determined that Maine’s unclaimed property law as applied to gift cards is not inconsistent with Federal Law, and therefore no preemption was found.  However, with respect to Tennessee’s unclaimed property law, the CFPB ruled in favor of preemption but only with respect to the provision permitting issuers to choose whether to honor an unclaimed gift card after

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    Barry Hester and Karen Neely Louis Deliver Next Installment of 2013 Bryan Cave-BAI Compliance Webinar Series on CFPB Mortgage Reforms on Tuesday, April 9

    April 3, 2013

    Authors

    Bryan Cave

    Barry Hester and Karen Neely Louis Deliver Next Installment of 2013 Bryan Cave-BAI Compliance Webinar Series on CFPB Mortgage Reforms on Tuesday, April 9

    April 3, 2013

    by: Bryan Cave

    The mortgage servicing rules issued by the CFPB in January, 2013, implement another wave of Dodd-Frank reforms and outline best practices even for institutions not subject to these new requirements.  Join Bryan Cave attorneys Barry Hester and Karen Neely Louis on Tuesday, April 9, from 3-4 pm Eastern, as they dissect these new rules and outline the higher servicing, foreclosure and eviction management expectations that follow. 

    More information and registration information for this free event, entitled “Servicing, Foreclosure and Eviction Management:  Best Practices in the CFPB Era,” is available here.

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