Please check out the latest edition of our UDAAP Round-Up — a periodic review of federal activities regarding the prohibition on unfair, deceptive, or abusive acts or practices (“UDAAPs”) in the consumer financial services space. In this edition, we cover notable policy, enforcement, and supervisory developments from October 2022 through March 2023
Residential Mortgage Loans: Capital Relief Through Synthetic Securitization
Banking organizations looking to reduce the amount of risk-based regulatory capital required to support residential mortgage loan portfolios can use synthetic securitization to convert the capital treatment of their exposures from wholesale or retail exposures to securitization exposures. In this Legal Update, we discuss how regulatory capital requirements impact banking organizations that hold portfolios of…
New Issue of Licensing Link
Mayer Brown has published a new edition of Licensing Link, a periodic publication that will keep you informed on hot topics and new developments in state licensing laws, and provide practice tips and primers on important issues related to state licensing across the spectrum of asset classes and financial services activities.
In this issue, we…
The FDIC’s Observations on Lead Generation and RESPA Compliance
Lead generation and the Real Estate Settlement Procedures Act (“RESPA”) compliance remain hot topics following the Consumer Financial Protection Bureau’s (“CFPB”) February 2023 advisory opinion regarding digital comparison shopping platforms. In its March 2023 issue of Consumer Compliance Supervisory Highlights, the Federal Deposit Insurance Corporation (“FDIC”) discusses certain examination observations and regulatory developments, including those related to FDIC-insured banks’ payments for leads under Section 8 of RESPA. The Highlights indicate that, while fact specific, indicators of risk under RESPA in connection with lead generation arrangements include third parties that do one or more of the following activities:…
Continue Reading The FDIC’s Observations on Lead Generation and RESPA Compliance
Inaugural Issue of Licensing Link
By Krista Cooley & Francis L. Doorley on
Mayer Brown is publishing its first edition of Licensing Link, a new periodic publication that will keep you informed on hot topics and new developments in state licensing laws, and provide practice tips and primers on important issues related to state licensing across the spectrum of asset classes and financial services activities.
CFPB Junk Fees Special Edition
The CFPB marketed its latest set of supervisory highlights as the “Junk Fees Special Edition.” The splashy headline is consistent with the agency’s recent focus on fees that it asserts are hidden from the competitive process. In speeches, press releases, and blog posts (and now a single proposed rule), the CFPB has stressed its growing concern with “junk” fees. The CFPB even created a section of its web site solely devoted to press releases on “junk” fees.
Gleaning compliance guidance from Supervisory Highlights is not always straightforward, as they do not provide full details. However, in this Special Edition, the CFPB notes that it has characterized the following types of fees and practices as junk:
- Overdraft Fees – specifically, those charged when the consumer had a sufficient balance when the financial institution authorized the transaction, but not at the time of settlement.
- Multiple Non-Sufficient Funds Fees for the Same Transaction.
- Late Fees that Exceed the Credit Contract or After Acceleration/Repossession.
- Estimated Repossession Fees that Greatly Exceed Average Costs – even if the excess was refunded.
- Payment Processing Fees – specifically, those that exceed processing costs, when free payment options are only available for checks or ACH transfers.
- Fees to Retrieve Personal Property from Repossessed Vehicles – the CFPB said such fees were “unexpected” and unfair.
- Premature Repossession and Related Fees – charging late fees and repossessing vehicles before title loan payments became due.
Mortgage Loan Servicing…
RESPA Hot Topics: Marketing Alliances in a Competitive Mortgage Market
High rates and a steep reduction in mortgage refinance applications have created stiff competition for the origination of purchase-money mortgages. Settlement service providers often seek creative strategic alliances to help secure more business. Companies can refer to recent informal guidance from the Consumer Financial Protection Bureau relating to marketing services agreements and other promotional opportunities.
Chopra’s First Year – A Statistical View
Much has been written about Rohit Chopra’s tenure as Director of the Consumer Financial Protection Bureau (CFPB or Bureau). While many expected an aggressive enforcement posture, in part because of an aggressive hiring spree in enforcement, his tenure has been marked more by an aggressive use of guidance and exhortation. Recently released statistics bear this…
Loan Originator Compensation – CFPB says Errors are not Unforeseen
The Consumer Financial Protection Bureau issued its latest set of Supervisory Highlights and reminded us that “unforeseen” means “unforeseen.”
The CFPB’s regulations generally prohibit reducing a loan originator’s compensation in selective cases. While lower compensation sounds good for consumers, the CFPB asserts that allowing loan originators to decrease their compensation in selective cases is actually…
The Date Is Set: California DFPI Adopts Final Commercial Financing Disclosure Rules and Announces Effective Date
After an almost two-year regulatory process, the California Department of Financial Protection and Innovation (DFPI) adopted final administrative regulations to implement the state’s 2018 commercial financing disclosure law. Most importantly, the final rules come with a long-awaited effective date: December 9, 2022. The effective date honors prior DFPI statements that a six-month window for compliance…