Dodd-Frank News Center

CFPB's monthly complaint snapshot focuses on debt collection

This story appeared in Bank Digest.

The most common debt collection complaint made to the Consumer Financial Protection Bureau is about attempts to collect on a debt that the consumer said was not owed, according to the bureau's latest monthly complaint snapshot. This month's report also highlights trends seen in complaints from consumers in Florida.

Debt collection has been the most-complained-about financial product to the CFPB, with approximately 219,200 complaints submitted as of March 1, 2016. This represents 26 percent of the total complaints submitted.

As of March 1, 2016, consumers in Florida have submitted 80,200 of the 834,400 complaints the CFPB has handled nationally. Complaints from the three largest metro areas in Florida--Miami, Orlando, and Tampa Bay--accounted for nearly 60 percent of the complaints submitted from the state. Mortgages are the most-complained-about product in Florida, accounting for 30 percent of all complaints.

OIG reports on Enterprise implementation of representations and warranties framework

This story appeared in Bank Digest.

The Federal Housing Finance Agency’s Office of Inspector General has issued an audit report that reviewed the effectiveness of the FHFA's efforts to track and rate the performance of Fannie Mae and Freddie Mac (the Enterprises) on implementation of a new representations and warranties framework, which was an objective of the agency's 2013 Scorecard. The agency's annual scorecard sets objectives for each of the three goals in its Strategic Plan for Enterprise Conservatorships and sets specific targets for each objective, while the framework was a new policy regarding representations and warranties the Enterprises relied on when purchasing loans from sellers.

The report found that the FHFA's records of the tracking and rating process were imprecise and unclear, and the agency did not consistently communicate guidance to the Enterprises in writing. The OIG made several recommendations regarding the FHFA's tracking and rating process to improve clarity and avoid confusion and inconsistencies. The agency accepted the recommendations and reported that it had taken steps prior to the issuance of the report to address them.

Romero issues statement on sentencing of additional officers of TierOne Bank

Special Inspector General for TARP Christy Goldsmith Romero has issued a press statement concerning the sentencing of former officers of TierOne Bank, which was a $3 billion publicly traded commercial bank formerly headquartered in Lincoln, Neb., that was shut down by the Federal Deposit Insurance Corporation in June 2010.

Gilbert G. Lundstrom, of Lincoln, Neb., the former CEO of TierOne Bank, had previously been sentenced to 11 years in prison and ordered to pay a $1.2 million fine for orchestrating a scheme to defraud TierOne's shareholders and to mislead regulators by concealing more than $100 million in losses on loans and declining real estate. Lundstrom had applied for $86 million in TARP funds on behalf of the bank.

NCUA accepts $29M offer of judgment from Credit Suisse

This story appeared in Bank Digest.

The National Credit Union Administration has accepted a $29 million offer of judgment from Credit Suisse to resolve claims arising from losses related to purchases of residential mortgage-backed securities by Members United and Southwest corporate credit unions. According to the agency's news release, the offer of judgment includes $29 million in damages, prejudgment interest in an amount to be determined by the Court, and reasonable attorneys' fees to be determined by agreement between the parties or by the Court.

The release stated that the NCUA Board initiated litigation as liquidating agent for the failed corporate credit unions and that the agency has obtained more than $2.5 billion in legal recoveries in securities cases.

Foreclosure Prevention Report for fourth quarter of 2015 issued

This story appeared in Bank Digest.

The Federal Housing Finance Agency has issued its Foreclosure Prevention Report for the fourth quarter of 2015. According to the report, Fannie Mae and Freddie Mac (the Enterprises) completed 47,769 foreclosure prevention actions in the fourth quarter of 2015, bringing the total to 3,643,449 since the Enterprises were placed into conservatorship in September 2008. The report went on to state that 3,003,167 of these actions have helped troubled homeowners stay in their homes and include 1,898,826 permanent loan modifications.

In addition, approximately 30 percent of all permanent loan modifications in the fourth quarter of 2015 helped to reduce homeowners' monthly payments by over 30 percent, according to the report.

CFPB's HELP Act rule expands qualified mortgage coverage

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued an interim final rule that broadens the availability of certain special provisions for small creditors that operate in rural or underserved areas. The interim rule, which takes effect March 31, 2016, implements Congress's recent legislation, the Helping Expand Lending Practices in Rural Communities Act. The HELP Act was a legislative response to concerns that the CFPB's series of mortgage regulations issued in January and May 2013 had impacted small creditors operating in rural or underserved areas.

Although the 2013 mortgage regulations imposed, among other things, an ability-to-repay requirement, a qualified mortgages provision, and a prohibition on balloon payments for high-cost mortgages, and required escrow accounts for higher-priced mortgages, the CFPB fine-tuned the mortgage regulations to allow small creditors that "predominantly operated" in rural or underserved areas to originate qualified mortgages and high-cost mortgages with balloon payments.

The small creditor provisions also did not require these creditors to establish escrow accounts for higher-priced mortgages. The bureau construed "predominantly operated" to mean that the small creditor made more than half of its covered mortgage loans on properties located in rural or underserved areas in the prior calendar year.

The HELP Act amended the "predominantly operated" requirement to provide that a small creditor now will be eligible for these provisions if it operates in a rural or underserved area, even if that is not the predominant area of its operations. Comments on the interim final rule must be received within 30 days after its publication in the Federal Register.

FSOC releases meeting readout

This story appeared in Bank Digest.

The Financial Stability Oversight Council has made available a readout of its March 21, 2016, meeting, which was conducted via telephone. According to the readout, the FSOC discussed its ongoing assessment of potential risks to U.S. financial stability from asset management products and activities, including a discussion regarding potential financial stability risks related to liquidity and redemption risks and risks associated with the use of leverage by asset management vehicles. The FSOC noted that it expects to provide a public update on its analysis this spring.

Foreclosure Relief and Extension for Servicemembers Act passed by House

This story appeared in Bank Digest.

The House of Representatives has passed its companion bill (H.R. 4252) to the Foreclosure Relief and Extension for Servicemembers Act of 2015 (S. 2393), which extends foreclosure protection for military homeowners from 90 days to a one-year period until Jan. 1, 2018.

In 2012, Congress temporarily extended the foreclosure protection to one year. According to a press release issued by Rep. Stephen Fincher (R-Tenn), a Government Accountability Office study found that the revised timeframe successfully protected veterans from losing their homes and didn't cause any unintended consequences for veterans or lenders. In 2014, Congress again extended the foreclosure protection to one year through Dec. 31, 2015.

CFPB secures $172.8M judgment against debt-relief company Morgan Drexen

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has obtained a final judgment in federal district court against Morgan Drexen, Inc., in connection with the bureau's claim that the debt-relief company deceived consumers and charged unlawful up-front fees. The final judgment, recently entered by the U.S. District Court for the Central District of California, includes approximately $132.8 million as restitution to affected consumers, a $40 million civil penalty, and the incorporation of a permanent injunction imposed against the debt-relief company in June 2015. Morgan Drexen went out of business in June 2015 after filing for bankruptcy.

This final judgment against Morgan Drexen follows an October 2015 stipulated final judgment--approved by the court--against the company's president and CEO, Walter Ledda. Not only was Ledda banned from providing debt-relief services, he also was required to personally pay restitution and a civil penalty. Moreover, the court issued an order holding certain attorneys and their law firms associated with Morgan Drexen in contempt of court at that time. The attorneys have appealed the court's contempt order.

As part of its documentation for the March 16, 2016, final judgment against Morgan Drexen, the court also issued a "Civil Minutes" order granting the CFPB's motion to enter final judgment.

Shelby speaks at American Bankers Association Summit

This story appeared in Bank Digest.

Senate Banking Committee Chairman Richard Shelby (R-Ala) spoke at the American Bankers Association Summit on March 16, 2016. Shelby discussed the impact of the current regulatory framework in the United States on the future of banking in the country. Shelby said, "More regulation does not necessarily mean better regulation or a financial system that is less prone to crisis. In fact, an over-reliance on regulators to achieve financial stability can sometimes mean just the opposite."

In his remarks, he also said he believed "a well-capitalized banking system is much more preferable to the Dodd-Frank approach of regulatory micromanagement." He stated that under the structure put in place by the Dodd-Frank Act, "Main Street banks and other financial companies that had nothing to do with the crisis are treated as if they caused it.

Shelby referred to the Financial Regulatory Improvement Act of 2015, which was reported out of the Banking Committee in May of 2015, as a bill that "addresses dozens of concerns raised by small and community banks" and that "holds regulators more accountable and provides for a regulatory framework based on an institution's systemic risk profile, and not just its size."