Dodd-Frank News Center

CFPB issues latest edition of ‘Supervisory Highlights’

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued its latest edition of “Supervisory Highlights,” which includes examination findings in the areas of automobile loan origination, credit card account management, debt collection, furnishing, and mortgage origination that were generally completed between December 2018 and March 2019 (unless otherwise stated). The CFPB said the information in the report is disseminated to help institutions better understand how the Bureau examines institutions for compliance with the requirements of relevant laws and regulations.

In addition, the report does not impose any new or different legal requirements, and all violations described in the report are based only on the particular facts and circumstances reviewed by the Bureau as part of its examinations.

Brown and Hill issue statements on CFPB's qualified mortgage ANPR

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) and Rep. French Hill (R-Ark) have issued statements regarding the Consumer Financial Protection Bureau's Advance Notice of Proposed Rulemaking seeking information relating to the expiration of the temporary qualified mortgage provision in the Bureau's Ability to Repay/Qualified Mortgage (ATR/QM) Rule that is applicable to certain mortgage loans eligible for purchase or guarantee by Government Sponsored Enterprises Fannie Mae and Freddie Mac. This provision, also known as the GSE Patch, is scheduled to expire no later than Jan. 10, 2021, although the ANPR says the Bureau may allow a short extension, if necessary, to facilitate a smooth and orderly transition away from the patch. In the ANPR, the Bureau solicits comments on possible amendments to the ATR/QM Rule.

Brown said, "The focus of the Consumer Protection Bureau should be protecting consumers. The action they take on this critical rule should be first and foremost about providing access to sustainable mortgages that fit the needs of individual consumers in today's housing market, and they should hold lenders accountable when they don't live up to their obligations."

Hill supported the CFPB's decision to end the GSE Patch, saying, "Allowing Fannie and Freddie to continue loading up on high-debt mortgages, because of a temporary loophole, has had a harmful effect on the broader housing market."

CFPB issues 2018 Fair Lending Report

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has issued its Fair Lending Report to Congress for 2018, which describes the Bureau's "2018 activities to expand fair, equitable, and nondiscriminatory access to credit and to ensure that consumers are protected from discrimination," according to an introductory message from CFPB Director Kathleen Kraninger. As described in a related Bureau blog post, the report explains how in 2018, the CFPB: (1) convened a symposium entitled "Building a Bridge to Credit Visibility" that brought together diverse stakeholders to expand credit access; (2) monitored compliance with anti-discrimination laws; and (3) issued new guidance to facilitate implementation of the Home Mortgage Disclosure Act, among other activities.

 

CFPB proposes to raise HMDA thresholds; requests feedback on reporting HMDA data

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau is proposing to raise the coverage thresholds for collecting and reporting data about closed-end mortgage loans and open-end lines of credit under the Home Mortgage Disclosure Act rules. The proposed rule is intended to exempt smaller lenders from HMDA data reporting requirements and would clarify partial exemptions from certain HMDA requirements found in the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The Bureau has also issued an Advance Notice of Proposed Rulemaking seeking information on the costs and benefits of reporting certain data points under HMDA.

Comments on the proposed rule are due on or before 30 days after publication in the Federal Register, except that comments related to the Paperwork Reduction Act analysis must be received within 60 days of publication. Feedback on the ANPR must be received within 60 days of publication in the Federal Register.

Brown urges FSOC to address risks in leveraged loan market

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) has written a letter to Treasury Secretary Steven T. Mnuchin, who is also chair of the Financial Stability Oversight Council, urging the FSOC to take action to address heightened risks in the leveraged loan market. According to Brown, "The marked increase in the volume of leveraged loans originated by financial institutions has been accompanied by a notable decrease in underwriting standards. Like many financial activities, leveraged lending benefits banks and financial intermediaries that profit by packaging and selling risky loans."

He added that the "FSOC must consider whether this additional risk to the banking system serves as a public benefit to the real economy." Brown requested that he be provided with any FSOC analyses and documents relating to leveraged lending, along with other information.

 

CFPB updates ECOA baseline review procedures, HMDA examination procedures

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has updated its Equal Credit Opportunity Act baseline review procedures and its Home Mortgage Disclosure Act examination procedures. The ECOA Baseline Review Modules will be used by examiners during ECOA baseline reviews to evaluate how institutions' compliance management systems identify and manage fair lending risks under ECOA.

HMDA requires certain financial institutions to collect, report, and disclose information about their mortgage lending activity. An HMDA review includes transactional testing for HMDA data accuracy and is conducted using the HMDA Examination Procedures within the CFPB Supervision and Examination Manual. The updated HMDA procedures include updates to reflect the Bureau's interpretive and procedural rule, issued in August 2018, which was issued to implement and clarify Section 104 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

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.