Dodd-Frank News Center

CFPB report shows increase in VA mortgages by first-time homebuying servicemembers

This story appeared in Bank Digest.                                   

A CFPB report shows an increase in the use of Department of Veterans Affairs mortgages by first-time homebuying servicemembers and a decrease in the use of conventional mortgages among servicemembers and non-servicemembers. The report, "Mortgages to First-Time Homebuying Servicemembers," which is the Bureau's latest quarterly consumer credit trends report, also shows that the median amount on servicemember first-time homebuyer VA loans increased.

 In addition, early delinquency rates among nonprime borrowers fell after 2009, with early delinquency rates among first-time homebuying servicemembers differing between active duty and veteran borrowers.

A related CFPB blog post says that the share of first-time homebuying servicemembers using VA mortgages dramatically increased, from 30 percent before 2007 to 63 percent in 2009, with the increase reaching 78 percent by 2016. The increase in the VA home loan share was similar across servicemembers with prime or nonprime credit scores.

FTC provides CFPB with summary of ECOA enforcement activities

This story appeared in Bank Digest.                                     

Federal Trade Commission staff has provided the Consumer Financial Protection Bureau with an annual summary of the Commission's activities enforcing the Equal Credit Opportunity Act during 2018. The FTC is responsible for ECOA enforcement and education regarding most nonbank financial service providers.

According to a press release, the FTC's document describes the Commission's work on ECOA-related policy issues, including activities addressed in research and policy development, and also outlines its business and consumer education efforts on fair lending issues.

CFPB moves to eliminate payday lenders' underwriting obligations

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau is proposing amendments to its 2017 final rule governing "Payday, Vehicle Title, and Certain High-Cost Installment Loans" that would allow lenders to extend short-term, high-cost loans to consumers without needing to satisfy regulatory underwriting requirements. In addition to proposing to eliminate the underwriting requirements, the Bureau is proposing to extend the Aug. 19, 2019, compliance date of the rule's mandatory underwriting provisions until Nov. 19, 2020, which would enable the CFPB to eliminate the requirements before they take effect.

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) issued a statement saying, "Eliminating these common sense protections will result in millions of hardworking families trapped in a cycle of debt and poverty." Similarly, House Financial Services Committee Chairwoman Maxine Waters (D-Calif) said she was "deeply troubled by the Consumer Bureau's proposal to gut a much-needed rule that would have reined in payday lenders and ensure consumers can afford to pay off their loans."

But House Financial Services Committee Ranking Member Patrick McHenry (R-NC) said the Bureau's "announcement on an updated payday lending rule and extended comment period will allow all stakeholders another chance to weigh in and establish new underwriting criteria. Most importantly, it will give consumers the opportunity to make their own decisions on credit availability needs for themselves and their families."

Democrats introduce Home Loan Quality Transparency Act

This story appeared in Bank Digest.                                     

Several Democrat senators have introduced the Home Loan Quality Transparency Act to reinstate Dodd-Frank Act reporting requirements repealed last year. According to a press release issued by Sen. Catherine Cortez Masto (D-Nev), one of the bill's sponsors, the legislation would restore the requirement that loan quality criteria be made publicly available by any lender issuing a significant number of mortgages and home equity lines of credit each year. Last year's law significantly raised the reporting requirement exemptions, but the current bill would restore them to their prior levels.

The bill is intended to give regulators and advocates the information they need to hold banks accountable for discriminatory or unfair lending practices, the release said. Representative Nydia M. Velázquez (D-NY) has introduced a companion bill (H.R. 963) in the House of Representatives.

CFPB blog post discusses reports assessing ability-to-repay, mortgage servicing rules

This story appeared in Bank Digest.                                     

A Consumer Financial Protection Bureau blog post discusses two reports assessing significant CFPB rules--one assessing the effectiveness of the Bureau's Ability-to-Repay and Qualified Mortgage Rule and another assessing the effectiveness of the Mortgage Servicing Rule issued under the Real Estate Settlement Procedures Act. Both rules were issued in January 2013 and took effect in January 2014.

According to the post, the Ability-to-Repay and Qualified Mortgage Rule was issued to implement provisions of the Dodd-Frank Act requiring lenders, before entering into a residential mortgage loan, "to make a reasonable and good faith determination that the consumer has a reasonable ability to repay the loan."

The RESPA Mortgage Servicing Rule was issued "to implement certain provisions of the Dodd-Frank Act imposing new obligations on mortgage servicers," and it "also added new protections, which the Bureau deemed appropriate or necessary to carry out the consumer protection purposes of RESPA."

Democrats request that CFPB resume supervisory role over MLA

This story appeared in Bank Digest.                                   

House Financial Services Committee Ranking Member Maxine Waters (D-Calif), committee member Denny Heck (D-Wash), and 21 other committee Democrats have sent a letter to Consumer Financial Protection Bureau Director Kathy Kraninger urging her to recommit the Bureau to fulfilling its supervisory role over consumer protection laws, including the Military Lending Act, which the representatives said provides protections for active-duty servicemembers and their families from predatory loans and credit gouging.

In their letter, the representatives expressed their "deep concerns that the Consumer Bureau has recently decided to cease supervising its regulated entities for compliance with the Military Lending Act ("MLA"), a failure to fulfill its responsibility under the law and which is nothing less than a dereliction of duty. We write to seek your written commitment that you will promptly ensure that the Consumer Bureau fulfills its explicit statutory purpose and mandates by resuming a consistent supervisory role over consumer protection laws, including the MLA, for the most robust and efficient protection of servicemembers and their families."

CFPB issues 'Fair Lending Report'

This story appeared in Bank Digest.                                     

The Consumer Financial Protection Bureau has issued its "Fair Lending Report of the Bureau of Consumer Financial Protection," which "describes the Bureau's fair lending activities for 2017, consistent with its statutory mandate to ensure that consumers are protected from discrimination," according to an introductory message from CFPB Acting Director Mick Mulvaney.

The report, from the Bureau's Office of Fair Lending and Equal Opportunity, is intended to fulfill the Dodd-Frank Act's requirement that the Bureau file an annual report to Congress describing the administration of its functions under the Equal Credit Opportunity Act, summarizing public enforcement actions taken by other agencies with administrative enforcement responsibilities under ECOA, and providing an assessment of the extent to which compliance with ECOA has been achieved. The act also requires the Bureau, in consultation with the Department of Housing and Urban Development, to report annually on the utility of the Home Mortgage Disclosure Act's requirement that covered lenders itemize certain mortgage loan data.

According to a related Bureau blog post by Patrice Ficklin, the director of the Office of Fair Lending and Equal Opportunity, the report "highlights how in 2017 we continued to focus on promoting fair, equitable, and nondiscriminatory access to credit in mortgage lending, continued fair lending supervision of servicing and small business lending, and embarked on new efforts to encourage innovation in expanding credit access."

CFPB and FHFA release dataset on borrowers' mortgage experiences

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau and Federal Housing Finance Agency have released for public use a new loan-level dataset collected through the National Survey of Mortgage Originations that provides insights into borrowers' experiences in getting a residential mortgage. According to the CFPB's press release, the NSMO is a component of the National Mortgage Database, launched by the Bureau and FHFA in 2012, which is the first comprehensive repository of detailed mortgage loan information designed to support policymaking and research efforts and to help regulators better understand emerging mortgage and housing market trends. 

According to FHFA Deputy Director Sandra Thompson, "The goal of the survey is to obtain information to help improve lending practices and the mortgage process for future borrowers." CFPB Acting Director Mick Mulvaney said the data collected through the survey "will allow greater transparency, accountability, and effectiveness around borrowers' mortgage experiences."

Fed proposes repealing S.A.F.E. Act provisions

This story appeared in Bank Digest.     

The Federal Reserve Board is proposing to amend Regulation H (Membership of State Banking Institutions in the Federal Reserve System) and Regulation K (International Banking Operations) to repeal provisions that incorporate the Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act). According to a press release, the proposal reflects the transferal of the Fed's rulemaking authority for the S.A.F.E. Act to the Consumer Financial Protection Bureau by the Dodd-Frank Act. Comments on the proposed rule must be received by Nov. 26, 2018.

CFPB updates FCRA model disclosures

This story appeared in Bank Digest.                                     

The Consumer Financial Protection Bureau has issued an interim final rule updating two model disclosures to reflect changes made to the Fair Credit Reporting Act by the Economic Growth, Regulatory Relief, and Consumer Protection Act. The Act requires nationwide consumer reporting agencies to provide national security freezes free of charge to consumers. The Act also requires that whenever the FCRA requires a consumer to receive either the Summary of Consumer Rights or the Summary of Consumer Identity Theft Rights, a notice regarding the new security freeze right also must be included. 

The FCRA requires the Bureau to write model forms of these documents, and the Bureau's interim final rule updates its model forms to incorporate the new required notice. The updated model forms also incorporate a requirement of the EGRRCPA that extends from 90 days to one year the minimum time that nationwide consumer reporting agencies must include an initial fraud alert in a consumer's file. 

The interim final rule is effective Sept. 21, 2018, and comments must be received within 60 days of its publication in the Federal Register.