Dodd-Frank News Center

CFPB issues report on differences between large and small mortgage servicers

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has released a report examining the differences between large and small mortgage servicers. The report found that smaller servicers, such as community banks and credit unions, play an outsize role in rural areas, that the loans they service are less likely to be sold to Fannie Mae or Freddie Mac or to be government-backed, and that during the financial crisis they experienced lower delinquencies.

CFPB issues interpretive rule on requirements regarding loan originators with temporary authority

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued an interpretive rule clarifying screening and training requirements for financial institutions that employ loan originators with temporary authority to originate loans. The rule will be effective on Nov. 24, 2019.

According to the Bureau's press release, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) contemplated two categories of loan originators—those working for state-licensed mortgage companies and those working for federally regulated financial institutions. The Economic Growth, Regulatory Relief, and Consumer Protection Act established a third category—loan originators with temporary authority to originate loans, which may act as loan originators for a temporary period of time in a state while that state considers their application for a loan originator license.

 

Agencies adjust exemption threshold for higher-priced mortgage loans

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau, Federal Reserve Board, and Office of the Comptroller of the Currency are finalizing amendments to the official interpretations for their regulations that implement Section 129H of the Truth in Lending Act, which establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies’ regulations.

These agencies, along with the Federal Deposit Insurance Corporation, National Credit Union Administration, and Federal Housing Finance Agency, issued joint final rules implementing these requirements, effective Jan. 18, 2014. These rules exempted, among other loan types, transactions of $25,000 or less and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Based on the CPI-W in effect as of June 1, 2019, the exemption threshold will increase from $26,700 to $27,200, effective Jan. 1, 2020.                          

 

Democrats urge CFPB to continue to collect all HMDA data points

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) and several other committee Democrats have sent a letter to Consumer Financial Protection Bureau Director Kathleen Kraninger requesting that the Bureau continue to collect all Home Mortgage Disclosure Act data points added in the CFPB's 2015 final rule.

According to the senators, "Since HMDA was enacted in 1975, Congress and regulators have repeatedly updated the HMDA statute and regulation to ensure that the data helps fulfill HMDA's stated purposes of determining whether financial institutions are serving the housing needs of their communities; assisting in distributing public-sector investment; and identifying possible discriminatory lending and enforcing antidiscrimination laws."

They went on to say, "We are deeply troubled that the CFPB announced that it would reopen the 2015 HMDA rule before the new data points had even been collected. We urge you to follow the intent of Congress and maintain collection of all data points added by the 2015 final rule."

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.