Along with other federal agencies, the Consumer Financial Protection Bureau recently released its Fall 2019 regulatory agenda, announcing its intentions over the next several months to address the GSE QM Patch, HMDA, payday/small dollar loans, debt collection practices, PACE financing, business lending data, and remittances. Over the longer-term, the CFPB indicated it may even address feedback on the Loan Originator Compensation Rule under the Truth in Lending Act.

  • Qualified Mortgages. As we have previously described, the CFPB must in short order address the scheduled expiration of the temporary Qualified Mortgage status for loans eligible for purchase by Fannie Mae or Freddie Mac (often referred to as the “Patch”). The Patch is set to expire on January 10, 2021, leaving little time to complete notice-and-comment rulemaking, particularly on such a complex and arguably controversial issue. The CFPB has indicated that it will not extend the Patch, but will seek an orderly transition (as opposed to a hard stop). The CFPB asked for initial public input over the summer, and announced that it intends to issue some type of statement or proposal in December 2019.
  • Home Mortgage Disclosure Act. The CFPB intends to pursue several rulemakings to address which institutions must report home mortgage data, what data they must report, and what data the agency will make public. First, the CFPB announced previously that it was reconsidering various aspects of the 2015 major fortification/revamping of HMDA reporting (some – but not all – of which was mandated by the Dodd Frank Act). The CFPB announced its intention to address in one final rule (targeted for next month) its proposed two-year extension of the temporary threshold for collecting and reporting data on open-end lines of credit, and the partial exemption provisions for certain depository institutions that Congress recently enacted. The CFPB intends to issue a separate rule in March 2020 to address the proposed changes to the permanent thresholds for collecting and reporting data on open-end lines of credit and closed-end mortgage loans.

Continue Reading CFPB Announces its Fall 2019 Regulatory Agenda

On October 28, 2019, the U.S. Department of Housing and Urban Development announced: (1) proposed revisions to lenders’ loan-level lender certifications in Federal Housing Administration (FHA)-insured mortgage transactions; (2) issuance of a revised Defect Taxonomy; (3) execution of a Memorandum of Understanding (MOU) with the U.S. Department of Justice regarding False Claims Act (FCA) actions against lenders for alleged violations of FHA requirements; and (4) approval of a new FHA annual lender certification.

With these continuing efforts to clarify FHA penalties and remedies, and to align them with the severity of the deficiencies, HUD is beckoning back to FHA those depository institutions and other lenders that retreated in recent years.

Read more in Mayer Brown’s Legal Update.

Last week — roughly 8 1/2 years after the CFPB published a letter to financial institutions promising to develop rules “expeditiously” — the CFPB held an information-gathering symposium on Section 1071 of the Dodd-Frank Act. Section 1071 amended the Equal Credit Opportunity Act to require that financial institutions collect and report information concerning credit applications made by women- or minority-owned businesses and by small businesses.

As we previously noted, once Section 1071 is implemented, institutions will be required to collect information regarding the race, sex, and ethnicity of the principal owners of small businesses and women- and minority-owned businesses. Collection of this information is designed to “facilitate enforcement of fair lending laws,” among other things. Applicants can refuse to provide required information, but the financial institution must retain the required demographic information that it collects and submit it to the CFPB. Section 1071 mandates that, where feasible, a financial institution’s underwriters, officers, employees, or affiliates involved in making credit determinations should not have access to this demographic information, and applicants must receive notice if those individuals do receive access to demographic information.

While the CFPB is responsible for drafting rules to implement Section 1071, it had not previously taken significant steps to meet that obligation other than reporting on some preliminary research it conducted in 2017. The CFPB had moved the Section 1071 rulemaking to “long-term” status. However, in its Spring 2019 rulemaking agenda, the CFPB indicated that it expected to resume pre-rulemaking activities related to Section 1071. Continue Reading CFPB Holds Symposium on Dodd-Frank Section 1071; Outlines Plan in Court Documents

Last week, the CFPB announced that it will hold a symposium on Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) on November 6, 2019. This will be the third in a series of symposia held by the CFPB. Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (“ECOA”) to require financial institutions to collect, report, and make public information about credit applications made by women- and minority-owned businesses and small businesses. The CFPB is responsible for drafting rules to implement Section 1071, but, other than issuing a Request for Information in 2017, has not yet taken significant steps to meet this statutory requirement. The stated purpose of the symposium is to hear various perspectives on the small business lending marketplace and CFPB’s implementation of Section 1071. The CFPB had moved the Section 1071 rulemaking to long-term status, but indicated in its Spring 2019 rulemaking agenda that it expected to resume pre-rulemaking activities. With this symposium, the CFPB appears to be (re)starting those activities.

Once Section 1071 is implemented, institutions will be required to collect information regarding the race, sex, and ethnicity of the principal owners of small businesses and women- and minority-owned businesses. Applicants have the right to refuse to provide required information. Financial institutions must retain required demographic information and submit it to the CFPB. Continue Reading Ladies and Gentlemen, (Re)start Your Engines — CFPB Symposium on Women/Minority/Small Businesses Credit Data

It’s been 100 years since the time of jazz clubs, speakeasies and flappers. A time when new inventions such as radios, movies, telephones and automobiles introduced a new modern lifestyle. One hundred years later, technology has significantly evolved, and no doubt our jazz age ancestors would think the internet is the cat’s pajamas.

With that in mind, renewal season is quickly approaching and the Consumer Financial Services practice group at Mayer Brown understands you’d like to ring in the New Year partying like it’s 1920. Don’t worry old sport, we’ve got the goods to get you started on a quick and efficient renewal process to prepare for 2020.

  1. Review your Company and Individual records – Make sure your records are current and accurate, and that you have resolved any posted deficiencies prior to filing for a license renewal in a state.  States may challenge a licensee’s attestation and eligibility for renewal if there are inaccuracies in the record, or open deficiency items. Renewal season starts November 1st, but the sooner you update your records, the more time you will have to work with regulators to resolve their questions outside of your renewal timeline.
  2. Review expiration dates – Criminal Background Checks (“CBC”) through the Nationwide Mortgage Licensing System (“NMLS”) were introduced in 2016 and expire after three years. Work with control persons to re-attest to their records and submit new electronic fingerprints as soon as you can. CBCs require MU2 attestation, an MU1 filing prior to submission of the renewal request, and actions on behalf of the Control Persons (which may necessitate a visit to an outside vendor) to complete the process.
  3. Review renewal checklists – Prepare any documentation required to be submitted outside of NMLS. In many states, submitting the renewal request online does not complete your renewal filing – you must also provide the documentation outlined in the renewal checklist by a specific due date for renewal approval. See the Renewal Page of the NMLS Resource Center.
  4. Check in with Qualified Individuals and Branch Managers – Make sure they complete any continuing education requirements in a timely manner. Failure to complete the continuing education or to submit an individual renewal request could delay or preclude renewal of the company’s main and/or branch license. As it may take up to seven days for a course provider to report continuing education course completions to NMLS, plan accordingly. Again, while renewals are not available to be filed until November 1st, continuing education can be completed early. See the NMLS for additional information.
  5. Watch Due Dates – While many states will indicate licensees have until December 31st to file renewals, reading the fine print may reveal that there is an earlier submission deadline to ensure the state has sufficient time to process your renewal before license expiration. Also, note the states in which your license must be approved before December 31st in order to continue activities past the new year. In several states, if your renewal is not approved by December 31st, you are not permitted to continue to engage in licensable activities on January 1st. See downloadable NMLS Company and Individual renewal charts and checklists.
  6. Monitor deficiency items and respond quickly – With several hundred renewal requests to be processed in a short period of time, state regulators will not be sending out frequent reminders about outstanding deficiency items. Log onto NMLS daily to review new deficiencies, or manage your notification settings in NMLS to ensure you receive an email when a new deficiency items is posted.
  7. Use a credit card – Submit NMLS renewal fees using a credit card to reduce the likelihood of a delayed ACH transaction.
  8. For those of you who are also pursuing Transitional Authority for Qualified Mortgage Loan Originators – The Transitional Authority for qualified mortgage loan originators to originate loans in a state in which a license application is pending goes into effect on November 24, 2019. However regulators in some states have publicly indicated that because their Mortgage Licensing Act has not been amended to provide for Transitional Authority, they will not allow mortgage loan originators seeking Transitional Authority to originate loans in their state until the individual is licensed in their state. Companies should make sure that a state recognizes Transitional Authority before allowing a mortgage loan originator to originate loans in a state in which a person is not licensed as a mortgage loan originator, and only has a license application pending.
  9. File Early – File on November 1st. Make sure your NMLS record is up-to-date and you’ve prepared all necessary documentation for renewal, and submit your renewal request as early as possible. The sooner you file a complete renewal application, the faster your renewals are approved.

We trust these tips will make your renewal process a little easier, leaving you more time to dance the Charleston. Of course, should you need help in getting through the licensing process, overcoming a deficiency, or learning the Charleston, please give us a call at Mayer Brown. Our team is the bee’s knees, and has handled hundreds of renewal questions. We would be happy to spill the beans to help you complete your filings.

On August 19, the U.S. Department of Housing and Urban Development (HUD) published a proposed rule for the purpose of aligning HUD’s 2013 Disparate Impact Rule with the Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities. HUD sought comments from relevant stakeholders and the public on the proposed rule.

Mayer Brown partners Tori Shinohara and Melanie Brody helped prepare a comment letter on behalf of the American Financial Services Association (AFSA). AFSA’s comment letter, which was submitted on October 18, can be found here.

For many years it was unclear whether mortgage debt was covered under the California Rosenthal Fair Debt Collection Practices Act (the “Rosenthal Act”), which is California’s corollary to the federal Fair Debt Collection Practices Act (“FDCPA”). That issue was resolved on October 7, 2019, when California Governor Gavin Newsom signed into law legislation that expressly includes “mortgage debt” within the Rosenthal Act’s definition of “consumer credit.” Senate Bill 187 (“SB 187”), which is effective January 1, 2020, amends the Rosenthal Act to expressly apply to debt collection activities involving residential mortgage loans.

SB 187 also amends the Rosenthal Act so that it now includes attorneys in the definition of “debt collector.”  Until the amended Rosenthal Act goes into effect, attorneys are excluded from that definition. Continue Reading California Legislature Declares that Mortgage Debt Is Regulated under the State’s Debt Collection Law

Mayer Brown offers its Global M&A Podcast Series as an easy way to stay up-to-date on the latest M&A trends globally—legal issues and other related, timely topics. Available on iTunes, each episode draws on the perspective that our lawyers have gained from doing deals in various regions around the world.

In a recent episode, partners Nina Flax, Michelle Gross, and Melissa Richards of our Northern California offices discuss the impact of the California Consumer Privacy Act (CCPA) on M&A transactions.

*27 minutes, recorded on September 5, 2019

Listen Now > >

Subscribe to the Mayer Brown Global M&A Podcast Series via iTunes (recommended). (Subscribing will only work on a device with iTunes installed. Alternatively, you can access the audio here.)

Earlier this month, the Bureau released its Summer 2019 edition of Supervisory Highlights.  This is the second edition issued under Bureau Director Kathy Kraninger, who was confirmed to a five-year term in December 2018.  The report covers examinations that were generally completed between December 2018 and March 2019 and, as such, is the first edition of Supervisory Highlights to cover examination activities that occurred during Kraninger’s tenure as Director.  This edition is much the same as previous editions, but unlike many past versions, it does not address any mortgage servicing-related findings.  Instead the report focuses on, among other things, UDAAPs (including, notably, an abusiveness finding), furnishing of consumer report information, and technical regulatory violations.  The report also details supervision program developments.

Remarkably, there is no mention of any public enforcement action resulting from supervisory examination work.  It is standard practice for the Bureau to use these reports to tout both public and nonpublic remedial actions that stemmed from examinations—but here we don’t see that, and it is not clear whether that is because none of the enforcement actions the Bureau has taken as of late actually came out of supervisory exams or if they chose not to highlight remedial actions for some other reason.  Continue Reading CFPB’s Latest Supervisory Highlights Focuses on UDAAPs, Furnishing, and Technical Regulatory Requirements

The Department of Labor has finalized its new salary thresholds applicable to an employer’s obligation to pay overtime and minimum wage. Beginning on January 1, 2020, white collar employees who earn less than $684 per week will not qualify for the executive, administrative, or professional employee exemption, and therefore will be entitled to those protections. The Department estimates that the higher salary thresholds will create approximately 1.3 million additional eligible employees.

As we described here previously, the Department acknowledged earlier this year that the current thresholds are outdated, and sought to expand the eligibility for overtime to additional employees. The Department has long used a salary level test, as well as a duties test, to define who is a bona fide executive, administrative, or professional (“EAP”) employee who is exempt.

Effective January 1, 2020, the standard salary level for the EAP exemption will be $684 per week ($35,568 per year), with special salary levels applicable to employees in U.S. Territories. The final rule will allow employers to satisfy up to 10% of the standard or special salary levels with nondiscretionary bonuses or incentive payments, including commissions, provided that such payments are paid no less frequently than on an annual basis. Employers may meet the salary level requirement by making a catch-up payment within one pay period of the end of the 52-week period.

“Highly compensated” employees (“HCEs”), who receive a certain (higher) amount of compensation and meet a less-stringent duties test, also are exempt from federal overtime and minimum wage requirements. The Department’s final rule establishes the new HCE total annual compensation level at $107,432. Continue Reading U.S. Department of Labor Finalizes Overtime Rule