Dodd-Frank News Center

CFPB issues report on mortgage borrowers' experiences

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued a report that provides information about the first set of responses to the National Survey of Mortgage Originations, which is jointly administered by the Federal Housing Finance Agency and the bureau. The survey collects information from a representative sample of 2013 mortgage borrowers about their experiences in choosing and in taking out a mortgage. According to the bureau, the survey is designed to provide researchers, policy makers, and others with comprehensive data about the consumer experience when getting a mortgage.

CFPB takes action against former Wells Fargo employee over mortgage-fee-shifting scheme

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has taken action against former Wells Fargo employee David Eghbali for an illegal mortgage-fee-shifting scheme, according to a bureau press release. The CFPB alleged that while serving as a loan officer for the Wilshire Crescent Wells Fargo branch in Beverly Hills, Calif., Eghbali referred a substantial number of loan closings to a single escrow company, New Millennium Escrow, Inc., which shifted its fees from some customers to others at Eghbali's request.

According to the CFPB, this fee-shifting scheme allowed Eghbali to manipulate loan costs and ultimately increase the number of loans he closed, which increased his commissions. The CFPB filed an administrative consent order requiring Eghbali to pay an $85,000 penalty to the bureau's Civil Penalty Fund and banning him from working in the mortgage industry for one year.

• Press release
• Consent Order
• Stipulation

NCUA issues guidance on Reg. Z amendments

This story appeared in Bank Digest.

The National Credit Union Administration has issued a regulatory alert to federally insured credit unions regarding three final rules issued by the Consumer Financial Protection Bureau that amended Regulation Z, which implements the Truth in Lending Act. According to the NCUA, the amendments apply to credit unions that originate or service closed-end mortgages secured by a dwelling, including small creditors operating in rural or underserved areas. The agency also said the changes affect some special provisions and exemptions related to the ability to repay/qualified mortgage rule, balloon-payment high-cost mortgages, and escrow requirements for higher-priced mortgage loans.

The agency's guidance, in the form of charts and a summary, listed the main changes made by the final rules and said that taken together, the changes may give credit unions more flexibility in complying with applicable standards.

OFR’s Berner speaks at credit market conference in New York

This story appeared in Bank Digest.

The Office of Financial Research has posted remarks by Director Richard Berner on May 24, 2016, at a conference in New York City on "New Research and Outlook on Credit Markets" hosted by S&P Global Market Intelligence, New York University Salomon Center and Stern School of Business, and S&P Global Institute. In his prepared remarks, Berner focused on credit risk, discussing how the OFR measures and monitors credit and other risks, the interplay between credit and other types of risk, and some of the tools policymakers might use to mitigate those risks.

Berner also discussed financial stability; volatility, leverage, and credit risk; and credit risk in banks and nonbanks.

House subcommittee examines CFPB’s arbitration proposed rule

This story appeared in Bank Digest.

The House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled “Examining the CFPB’s Proposed Rulemaking on Arbitration: Is it in the Public Interest and for the Protection of Consumers?” on May 18, 2016 (webcast). The subcommittee examined the bureau’s 2015 report and its recent proposed rule, which would prohibit mandatory arbitration agreements that prevent consumers from filing or participating in a class action. Subcommittee chairman Randy Neugebauer (R-Texas) said that the CFPB’s own 2015 study on arbitration showed more favorable outcomes for consumers using arbitration as compared to class actions.

CFPB issues report on single-payment vehicle title loans

This story appeared in Bank Digest.

The CFPB has issued a report that examines consumer usage and default patterns for single-payment vehicle title loans. In vehicle title loans, according to the report, a lender takes a security interest in the borrower’s vehicle, and the loan approval and amount are primarily based on the vehicle’s value, rather than a credit check and traditional underwriting. The bureau’s press release described these loans as high-cost, small-dollar loans borrowers use to cover an emergency or other cash-flow shortage between paychecks or other income.

The bureau’s report found that one in five borrowers who take out a single-payment auto title loan have their car or truck seized by the lender for failing to repay the debt. The report also found that more than four in five of these loans are renewed the day they are due because borrowers cannot afford to repay them with a single payment and that more than two-thirds of such loan business comes from borrowers who eventually take out seven or more consecutive loans and are stuck in debt for most of the year.

CFPB Director Richard Cordray said the report’s findings present “real concerns for consumers.” He went on to say, “When borrowers lose their personal vehicles, they also lose mobility. For those who have to walk away from a loan without their car or truck, the collateral damage can be severe if they experience serious challenges getting to their job or even to the doctor’s office.”

Emmer introduces CFPB Dual Mandate and Economic Analysis Act

This story appeared in Bank Digest.

Representative Tom Emmer (R-Minn) has introduced the CFPB Dual Mandate and Economic Analysis Act (H.R. 5211), which would amend the mission of the Consumer Financial Protection Bureau to require it to focus more on competition and consumer choice while continuing to focus on fairness and transparency. The bill also would establish an Office of Economic Analysis at the CFPB to review and assess proposed guidance, orders, rules, and regulations.

According to Emmer's press release, the OEA would analyze how CFPB actions would affect consumer choice, price, and access to financial products. The office's findings would be published in the Federal Register to allow the public to comment on actions proposed by the bureau. The OEA would also review CFPB actions after one, two, five, and 10 years of implementation so their effectiveness can be evaluated.

Federal Housing Finance Agency Issues Foreclosure Prevention Report

This story appeared in Bank Digest.

The Federal Housing Finance Agency has issued its latest Foreclosure Prevention Report. According to the report, Fannie Mae and Freddie Mac (the Enterprises) completed 16,208 foreclosure prevention actions in February 2016, bringing the total to 3,674,849 since the Enterprises were placed into conservatorship in September 2008. The FHFA also said that there were 10,095 permanent loan modifications in February, bringing the total to 1,918,846 since the start of the conservatorships.

OFR releases paper on financial regulatory data collections as part of new series

This story appeared in Bank Digest.

The Office of Financial Research has released its first paper in a new Viewpoint Series, as well as an accompanying blog post by OFR Director Richard Berner. Unlike other OFR paper series, the OFR Viewpoint Series offers the views and opinions of the OFR.

The current paper offers guidelines for collecting comprehensive, high-quality, and interoperable data for financial stability analysis, market monitoring, and policymaking. The paper also identifies pitfalls that financial regulators may encounter.

GAO issues report on Capital Purchase Program

This story appeared in Bank Digest.

The Government Accountability Office has issued a report on the status of the Capital Purchase Program, the financial condition of institutions remaining in the program, and the Treasury Department's strategy for winding down the program. According to the GAO, the CPP was established as the primary means of restoring stability to the financial system under the Troubled Asset Relief Program.

The report stated that the CPP has largely wound down and that Treasury's returns on CPP investments surpassed the original amount disbursed. The GAO said that as of Feb. 29, 2016, 16 of the 707 institutions that originally participated in CPP remained in the program, and most of these remaining institutions have continued to exhibit signs of financial weakness. The report also said that Treasury expects most remaining CPP institutions to exit through restructurings but has not set time frames for winding down the program.