Consumer Financial Protection Bureau (CFPB)

Nearly four years after the Consumer Financial Protection Bureau (“CFPB”) first promulgated its rule regulating payday loans, a federal district court in Texas upheld the payment provisions of the rule against various constitutional and other challenges. The court, which had previously stayed the rule’s original compliance date, also provided that the provisions would become effective in 286 days—on June 13, 2022.
Continue Reading CFPB Payday Rule Upheld

On August 10, 2021, the CFPB’s Office of Supervision Policy published a report titled Mortgage Servicing COVID-19 Pandemic Response Metrics: Observations from Data Reported by Sixteen Servicers (“Servicing Metrics Report”).  Although the Servicing Metrics Report doesn’t allege any compliance deficiencies in the servicers’ performance, the topics addressed in the report and the CFPB’s accompanying press release indicate areas of focus for the CFPB, and servicers should take note.

Continue Reading CFPB Report on Servicers’ COVID-19 Response Signals Enforcement Priorities

The set of federal agencies tasked with determining which residential mortgage loans may be exempt from credit risk retention in securitizations are continuing to think about it. Late last month, the Securities and Exchange Commission, Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve Board, Federal Housing Finance Agency (“FHFA”), and the Department of Housing and Urban Development (together, the “Agencies”) announced that they hope to have more answers by the end of this year. It seems likely those Agencies will continue to define those exempt mortgage loans (called “qualified residential mortgages,” or “QRMs”) in a manner that is fully aligned with the “qualified mortgage” (“QM”) definition of the Consumer Financial Protection Bureau (“CFPB”) (which interestingly is not among the Agencies tasked with the QRM/risk retention rules). If it were that easy, though, the Agencies probably would have done that by now. Of course, the CFPB’s QM definition has been a moving target itself.
Continue Reading Agencies Still Pondering QRM

The Dodd-Frank Act provides the Consumer Financial Protection Bureau (“CFPB”) with authority to obtain a broad range of legal and equitable remedies, as well as civil money penalties. Our recent Legal Update discusses a recent opinion from the 7th Circuit in CFPB v. Consumer First Legal Group, LLC, which provides critical judicial guideposts for how

A mortgage loan product is a bundle of loan terms. That is what the Consumer Financial Protection Bureau (CFPB) reminds us in its latest Supervisory Highlights.

The CFPB first used that phrase back in 2013, but you may have missed it. It appeared in the fine print of footnote 82 in the CFPB’s lengthy

The Consumer Financial Protection Bureau is finalizing its proposal to extend until October 1, 2022 the mandatory effective date of the new Qualified Mortgage definition based largely on a loan’s annual percentage rate (the “APR-Based QM”). For applications received prior to that date, lenders seeking to make QMs may opt for either the original QM

A little more than a month after rescinding its prior Policy Statement on abusive acts or practices, the Consumer Financial Protection Bureau (CFPB) has brought its first post-rescission abusiveness claim. In a complaint against a debt settlement company, the CFPB alleged that the company’s alleged practice of prioritizing the settlement of debts owed to affiliated lenders constituted an abusive act or practice. The complaint against the company quotes its website as stating that the company’s “‘skilled negotiators work to get your creditors to agree to discounted lump sum payoff amounts’” and quotes its sales scripts as saying that the company is “‘not owned or operated by any of your creditors.’” In reality, according to the complaint, the company’s owner was also the owner of one of the prioritized creditors and the owner of the other prioritized creditor was a former employee of the company’s owner. Taking these facts together, the CFPB alleged that the company violated the prong of the abusiveness prohibition that prohibits acts or practices that take unreasonable advantage of a consumer’s reasonable reliance on a company to act in the interests of the consumer.
Continue Reading Abusiveness: Muddying the Waters

In January, we wrote about the CFPB’s latest lawsuit predicating an alleged federal UDAAP violation on the violation of a state law. The case involves claims against a mortgage lender who allegedly employed individuals working as loan originators, but who were not licensed as loan originators as required by state law. We noted that the

One of the great ironies of the Supreme Court’s decision in Seila Law v. CFPB, in which the Supreme Court held that the Consumer Financial Protection Bureau’s (CFPB) structure was unconstitutional, is that it effectively provided no relief to Seila Law, the party that took the case all the way to the Supreme Court. On remand, the Ninth Circuit held that the CFPB’s case against Seila Law could continue. Now, for the first time, a court has held that a pending CFPB enforcement action must be dismissed because of that constitutional infirmity. On March 26, 2021, a federal district court dismissed the CFPB’s action against the National Collegiate Student Loan Trusts, a series of fifteen special purpose Delaware statutory trusts that own $15 billion of private student loans (the NCSLTs or Trusts), finding that the agency lacked the authority to bring suit when it did; that its attempt to ratify its prior action came too late; and that based on its conduct, the CFPB could not benefit from equitable tolling. In doing so, the court avoided ruling on a more substantial question with greater long-term implications for the CFPB and the securitization industry—whether statutory securitization trusts are proper defendants in a CFPB action.
Continue Reading CFPB Suffers First Loss After Seila Law

On March 11, 2021, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) rescinded its January 24, 2020 Statement of Policy Regarding Prohibition on Abusive Acts or Practices (“Policy Statement”). The Acting Director of the CFPB, David Uejio, has been working quickly to reverse Kraninger-era policies, and the Policy Statement is the latest victim. Under the original Policy Statement, the CFPB said that it would: (1) generally rely on the abusiveness standard to address conduct only where the harm to consumers outweighs the benefit, (2) avoid making abusiveness claims where the claims rely on the same facts that the Bureau alleges are unfair or deceptive, and (3) not seek certain types of monetary relief against a covered person who made a good-faith effort to comply with a reasonable interpretation of the abusiveness standard.

In rescinding the Policy Statement, the CFPB highlighted the Policy Statement failed to (1) provide clarity to regulated entities on the abusiveness standard and (2) prevent consumer harm. In reality, the rescinded guidance is unlikely to have a major impact on the Bureau’s supervisory and enforcement efforts. Below, we highlight key takeaways from the announcement.
Continue Reading CFPB Rescinds Policy Statement on Abusiveness