Recent developments indicate that credit reporting concerns are likely to be at the forefront of the CFPB’s agenda in the coming months. Last month, CFPB Director Rohit Chopra spoke before the House Committee on Financial Services and discussed several key topics, including credit reporting issues. Earlier this month, the CFPB published a report called “Disputes on Consumer Credit Reports” that discusses trends in consumer credit disputes and how such disputes are resolved. Shortly after the CFPB published its report, a group of Democratic senators sent a letter to Director Chopra, urging the CFPB to address credit reporting issues within the industry. This blog post highlights some of the key points in Director Chopra’s testimony, the CFPB report, and Senate Democrats’ letter to Director Chopra.
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Supreme Court Limits Scope of TCPA
Businesses that place phone calls or send text messages to consumers may find some relief in a recent United States Supreme Court decision that limits the applicability of the Telephone Consumer Protection Act (“TCPA”). The TCPA prohibits any person from placing phone calls (including text messages) to a wireless number using an automated telephone dialing
The Debt Collection “Overhaul” Is Officially Here: CFPB Issues Final Rule Implementing the Fair Debt Collection Practices Act
On October 30, 2020, the US Consumer Financial Protection Bureau announced a final rule, Regulation F, to implement the Fair Debt Collection Practices Act. The final rule comes nearly 18 months after the proposed rule and more than four years after the CFPB first released an initial outline of debt collection proposals. The final rule
Fannie Mae and Freddie Mac Issue Guidance for LIBOR-less World
We recently discussed the efforts of the Alternative Reference Rates Committee (ARRC) to prepare for the upcoming discontinuance of LIBOR as an index rate for residential mortgage and consumer loans. Our alert examined ARRC’s recommendations regarding an appropriate substitute rate (the Secured Overnight Financing Rate, or SOFR) and ARRC’s recommended changes to implement SOFR. We
Texas Voters Consider Big Changes to Home Equity Loan Restrictions
On November 7, Texas voters will have the opportunity to make some significant changes to the state’s homestead equity loan restrictions. As summarized below, Texas Proposition 2 will, if approved: (1) revise the strict fee limits for such loans; (2) add to the list of lenders that are authorized to make the loans; (3) eliminate the “once-a-home-equity-loan, always-a-home-equity-loan” rule; (4) allow borrowers to sign an affidavit of compliance regarding certain new refinancings of such loans; and (5) allow advances on lines of credit up to 80% loan-to-value (LTV) ratio.
The Texas Constitution imposes strict limits on the types of loans that validly may be secured by Texas homestead property. For home equity loans (other than purchase-money loans or rate/term refinances), the Texas Constitution imposes a long list of limitations and requirements, the violation of which invalidates the lien and can result in the forfeiture of principal and interest. A lender or holder has an opportunity to cure at least some of those violations. Since the limitations are part of the state constitution, relief can come only through legislative resolutions on which the public must then have the opportunity to vote.
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CFPB to Publish Servicing Rule; Requirements Effective October 19, 2017
The Consumer Financial Protection Bureau (CFPB) has offered its new mortgage servicing rule for public inspection today, meaning it is scheduled to be published in the Federal Register on October 19, 2016. The CFPB informally released the rule on its website in August.
The effective date of the rule is tied to its publication date,
CFPB Finalizes Servicing Rule Revisions
Today the CFPB finalized the final mortgage servicing rules update that it proposed at the end of 2014. The rule adds new protections for mortgage borrowers in financial distress, including provisions that require servicers to:
- Provide some borrowers with foreclosure protections more than once over the life of the loan;
- Provide protections to an expanded
Recent Texas Supreme Court Decisions Affect Home-Equity Lending in Texas
The Texas Constitution is strict about protecting the homestead. In fact, until 1997, the Texas Constitution did not permit home-equity loans to be secured by borrowers’ homesteads. Even now, home-equity liens are allowed only under certain conditions, among which is the requirement that a home-equity loan be made on the condition that the lender or holder will forfeit principal and interest if the loan is constitutionally noncompliant and the lender fails to cure particular issues, using one of six listed corrective actions, within 60 days of receiving notice of the violation from the homeowner. On May 20, 2016, the Texas Supreme Court announced two decisions (Garofolo and Wood) that will significantly affect home-equity lending in Texas.
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Guidance by Snapchat? CFPB Issues TRID Forms with Mapping Citations
On May 12, 2016, the Consumer Financial Protection Bureau (“CFPB”) published annotated model forms (“TILA Mapping Forms”) for the Loan Estimate and Closing Disclosure. The CFPB intends those annotations to indicate the statutory requirements in Chapter 2 of the Truth in Lending Act (“TILA”) on which it relied in implementing specific portions of those forms. Unfortunately, the Mapping Forms are subject to such extensive disclaimers that the CFPB might as well have issued them over Snapchat – this “guidance” could disappear at any time.
The TILA-RESPA Integrated Disclosure/Know Before You Owe Rule (“TRID”) implements portions of the Real Estate Settlement Procedures Act (“RESPA”), TILA, and the Dodd-Frank Act. Civil liability for violations of TRID is governed by the underlying statutes. To the extent the CFPB promulgated a particular TRID requirement solely under RESPA or the Dodd-Frank Act, a consumer generally would not have a private right of action for a violation of the requirement. However, a creditor – and in some circumstances, an assignee – is more likely to be subject to liability when a TRID violation involves a requirement the CFPB promulgated in whole or in part to implement Chapter 2 of TILA (also sometimes referred to as Part B of TILA).
The TRID Rule and its Commentary do not, however, address the extent to which a creditor or assignee may be held civilly liable for any particular TRID violation. In the rule’s preamble, the CFPB briefly mentions the statutory authority on which it relied in connection with each TRID requirement, but that preamble discussion is often ambiguous, difficult to parse, and occasionally even contradictory. The CFPB apparently published the TILA Mapping Forms yesterday in response to industry requests for clearer guidance. While the Mapping Forms are helpful, they do not resolve all of the complicated TRID liability issues that creditors and assignees continue to face. Perhaps most importantly, the Mapping Forms are subject to a general disclaimer that they do not represent the CFPB’s legal interpretation, guidance, or advice. They also do not purport to bind the agency or create any enforceable rights, benefits, or defenses that can be asserted by any party, in any manner. The CFPB declined to state what the Forms do represent, if anything.
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O.M.G(AO). – New Report Recommends Stronger Government Oversight of Nonbank Mortgage Servicers
On April 11, 2016, the Government Accountability Office (“GAO”) released a hundred-plus page report analyzing the effects of the growth of nonbank servicers in the mortgage market. Although the report did not contain any shocking revelations about the increasing role of nonbank mortgage servicers, it did contain some surprising recommendations with respect to increasing the regulatory oversight of nonbank mortgage servicers. While the GAO recognized that nonbank mortgage servicers already are extensively regulated at both the state and federal levels, its report identified perceived gaps in that oversight. In particular, the report recommended Congress grant the Federal Housing Finance Agency (“FHFA”) additional authority to directly examine nonbank mortgage servicers of loans owned by Fannie Mae and Freddie Mac (collectively, the “GSEs”), akin to the prudential banking regulators’ jurisdiction over service providers to depository institutions. The report also suggested the Consumer Financial Protection Bureau (“CFPB”) collect data on the identity and number of nonbank servicers, possibly by requiring the registration of such entities at the federal level.
We summarize the major findings of the report below.
Continue Reading O.M.G(AO). – New Report Recommends Stronger Government Oversight of Nonbank Mortgage Servicers