According to the CFPB, Franklin Loan Corporation paid its loan officers $730,000 in quarterly bonuses over 26 months – but the bonuses were allegedly based in part on the interest rates on loans, thus violating the Loan Originator Compensation Rule in Regulation Z. As a result, the CFPB entered into a…
No readers of this blog would disagree that the Dodd-Frank Wall Street Reform and Consumer Protection Act transformed the legal landscape for banks and consumer finance companies. In the area of enforcement, two of the Act’s most significant changes were (1) the creation of the Consumer Financial Protection Bureau and…
On Thursday, the CFPB issued a request for public comment on its proposed rule to regulate prepaid financial products. The rule would amend Regulation E, which implements the Electronic Funds Transfer Act (EFTA), and Regulation Z, which implements the Truth In Lending Act (TILA). SCOPE The CFPB’s proposed rule would…
In recent months, a number of class actions have been filed across the country against large banks in an attempt to hold those banks accountable for debiting consumers’ deposit accounts for payments to certain companies offering short-term, small dollar loans – often called “payday loans” – online. In all of…
The U.S. Supreme Court recently declined to review a debt collector’s appeal of the Third Circuit’s decision this summer that debtors were not required to dispute their debt under the Fair Debt Collection Practices Act (FDCPA) before filing suit. The Third Circuit decision reversed a district court’s dismissal of a class…
On November 3, 2014, Judge Richard J. Leon of the U.S. District Court for the District of Columbia struck down the U.S. Department of Housing & Urban Development’s (HUD) March 2013 much-discussed disparate impact rule. In American Insurance Association, et al. v. United States Department of Housing & Urban Development, et…
The latest CFPB Supervisory Highlights report details the Bureau’s concerns regarding student loan lenders. The report, which is the fifth edition of Supervisory Highlights, generally covers supervisory activities between March and June 2014. In it, the CFPB notes that its examiners found the following concerns when reviewing practices of student…
On October 22, the CFPB issued amendments to the Dodd-Frank Act mortgage rules that took effect in January 2014. The amendments include: ATR/QM Cure Provision: Under the Ability-to-Repay/Qualified Mortgage Rule, a mortgage loan must meet certain requirements to be considered a “qualified mortgage”. One such requirement is that the points and fees…
The Consumer Financial Protection Bureau (CFPB) has entered a consent order with a mortgage bank following CFPB’s allegations that the bank violated the new mortgage servicing rules. CFPB claimed that the bank: took an unreasonably long time to process borrowers’ applications for loan modifications or other foreclosure relief; failed to…
On September 16, the CFPB filed suit against Corinthian Colleges, Inc. in the Northern District of Illinois for engaging in alleged predatory student lending. This is the CFPB’s second predatory student lending suit against a for-profit college; the first being against ITT (reported by LenderLaw Watch here). The allegations and relief…
On September 23, the CFPB issued its final rule amending the regulation defining larger participants of certain consumer financial product and service markets specifically to add a definition for larger participants in the market for international money transfers. The rule defines such “larger participants” as those entities that have at least one million aggregate…
On September 10, 2014, the Federal Trade Commission (FTC) posted a comment in response to the Consumer Financial Protection Bureau’s (CFPB) request for information regarding the use of mobile banking services and products specifically utilized by economically vulnerable or underserved consumers. After briefly articulating some of the benefits of mobile…
On September 18, CFPB Director Richard Cordray delivered remarks at a Field Hearing about CFPB’s latest proposed rule, which would allow it to begin regulating “captive” finance companies – those entities owned by automotive manufacturers “for the primary purpose of facilitating sales for their parent companies and associated dealers.” In his…
The Federal Reserve Board recently made headlines when it repealed its Regulation AA to comply with the Dodd-Frank Act, leading some to wonder how, and to what extent, regulation of financial institutions might change going forward. But the federal agencies charged with regulating banking and credit activities have made it clear that they will continue to enforce prohibitions…
On August 27, 2014, the California Supreme Court granted a petition for review in which the Second Appellate District of the California Court of Appeals dismissed a mortgagor’s challenge to foreclosure proceedings, ruling that she had no standing to challenge assignment of her promissory note and the deed of trust…
On September 3, 2014, the CFPB issued a Bulletin warning credit card issuers about deceptive marketing of promotional annual percentage rate (APR) offers. According to the CFPB, it has observed solicitations that offer an initial low APR for certain kinds of transactions (such as convenience checks, deferred interest rate purchases, or…
The Department of Justice is investigating whether to bring civil claims under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) against GM Financial Company, Inc. for its origination and securitization of subprime auto loans. GM Financial revealed the investigation in a recent SEC 8-K filing, stating that…
On August 1, Congress passed the Money Remittances Improvement Act of 2014 (signed by President Obama on August 8, 2014), which reduces regulatory hurdles and duplication between state and federal regulation of money services businesses. Specifically, the Act permits the Secretary of the Treasury to “rely on examinations conducted by a…
Online shopping is widespread, and by now, most retailers have tailored their websites to ensure consumers are fully aware of their privacy, security, and dispute resolution rights and liabilities in buying products online. However, as retailers and other companies increasingly launch mobile applications to allow their customers to purchase items…
Borrowers who rescind their loans pursuant to the Truth in Lending Act (TILA) must return to the creditor what they borrowed. But a July 16, 2014 ruling by the Court of Appeals for the Ninth Circuit in Merritt v. Countrywide Financial Corp. makes it more difficult for lenders to win…