On March 11, 2021, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) rescinded its January 24, 2020 Statement of Policy Regarding Prohibition on Abusive Acts or Practices (“Policy Statement”).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 In reality, the rescinded guidance is unlikely to have a major impact on the Bureau’s supervisory and enforcement efforts.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

As expected, New York has broadened the reach of its new commercial financing disclosure law less than two months after its enactment.

S.B. 5470 imposed a range of Truth in Lending-like disclosure requirements on a variety of commercial financing transactions. On February 16, 2021, New York Governor Andrew Cuomo signed S.B. 898 into law, clarifying and broadening the effect of the previous legislation.

Read more about the changes that commercial financers should note in Mayer Brown’s Legal Update.

The CFPB announced today that it expects to propose a rule to delay the July 1, 2021 date to comply with the new Qualified Mortgage (“QM”) rule.

The CFPB’s statement provides that the extension would allow lenders more time to make QM loans based on their debt-to-income ratio (and Appendix Q), or based on the fact that they are eligible for purchase by Fannie Mae or Freddie Mac. The CFPB’s goal is to “ensure consumers have the options they need during the pandemic and the financial crisis it has caused, as well as to provide maximum flexibility to the market.”

The statement also is scheduled to appear in the Federal Register on February 26th.

Even more changes could be on the horizon. In addition to the possible delay described above, the CFPB hinted that it may revisit the Seasoned QM Final Rule, and that it will “consider at a later date” whether to initiate another rulemaking to reconsider other aspects of the General QM Rule.

One thing the CFPB did not mention in today’s statements is whether it intends to postpone the availability, scheduled for March 1, 2021, of the new General QM category, which targets loans below a certain annual percentage rate threshold.

On February 22, 2021, the Consumer Financial Protection Bureau (CFPB) filed its first lawsuit since the election and the resignation of former Director Kathy Kraninger. The lawsuit alleges that the defendant engaged in deceptive and abusive practices by charging detained immigrants large upfront and monthly fees to arrange for payment of immigration bonds securing the immigrants’ release. The complaint lays out a rather damning set of facts alleging that the defendant misrepresented the nature of its services to consumers, many of whom do not speak English, and then engaged in aggressive collection actions. As the CFPB’s first lawsuit of the Biden administration, it offers some clues as to the direction of CFPB enforcement. Continue Reading Four Takeaways from the CFPB’s First Lawsuit in the Post-Kraninger Era

On February 4, 2021, the California Department of Financial Protection and Innovation (DFPI or the Department) issued an invitation for stakeholder comments on potential rules that will govern the operations and authority of the Department. This invitation is the first opportunity for industry participants to weigh in on the functions of the DFPI—a newly reconstituted regulator whose oversight will significantly affect many financial services companies operating in California.

The DFPI (formerly known as the Department of Business Oversight) was established by the California Consumer Financial Protection Law (CCFPL), which was enacted last September. In addition to renaming and reorganizing one of California’s financial regulators, the CCFPL grants the DFPI authority very similar to that granted to the CFPB under the Dodd-Frank Act, including expanded regulatory and enforcement powers. And while many licensees are exempt from these new authorities—e.g., mortgage lenders licensed under the state’s Real Estate Law—uncertainty around their scope and implementation should lead all potentially relevant market participants to monitor and consider participating in the rulemaking process. Continue Reading California DFPI Invites Comments on Rules Governing its Operations and Authority

On January 4, 2021, Representative Al Green of Texas, the Chairman of the Subcommittee on Oversight and Investigations for the House Financial Services Committee, re-introduced H.R. 166, titled the Fair Lending for All Act, a bill he previously introduced in 2019. The proposed bill would significantly revise the application and enforcement of the Equal Credit Opportunity Act (ECOA) and would further expand lenders’ collection and reporting obligations under the Home Mortgage Disclosure Act (HMDA). Continue Reading Re-introduced Fair Lending for All Act Proposes Stiffer ECOA Penalties and CFPB Testing Office

In response to the significant impacts of the COVID-19 pandemic, the US Consumer Financial Protection Bureau (“CFPB”) announced in July 2020 that it would shift its supervisory priorities and begin performing Prioritized Assessments instead of planned examinations. On January 19, 2021, the CFPB issued its findings in a COVID-19 Prioritized Assessments Special Edition of Supervisory Highlights (the “Report”), which is explained further in this Legal Update. Supervised entities in the areas discussed should evaluate the Report findings, as these may become future supervisory and enforcement priorities.

Read more in Mayer Brown’s Legal Update.

We are pleased to present the Winter 2021 edition of the Mayer Brown Fair Lending Newsletter. In this edition, we discuss some of the fair housing priorities that President-elect Biden previewed during the presidential campaign, and take a look at notable developments from the past quarter. We hope you will enjoy reading.

Read the newsletter

From a new Policy Statement on Abusiveness to the use of novel deception claims in public enforcement actions, 2020 was an active year in the application of the prohibition on unfair, deceptive, or abusive acts or practices (“UDAAP”) in the consumer financial services space. In this inaugural edition of the UDAAP Round-Up, we look back on how federal regulators applied the prohibition on UDAAP in the policy, enforcement, and supervisory contexts, and look ahead to what 2021 may bring. You can read the Round-Up here.

 

On January 28, 2021, the Consumer Financial Protection Bureau (CFPB or the Bureau) provided the first official details regarding its new direction under the Biden administration. In a statement originally issued internally to Bureau employees, Acting Director Dave Uejio outlined his two main priorities: (1) relief for consumers facing hardship due to COVID-19 and the related economic crisis and (2) racial equity. While these two areas of focus were largely expected, the details of Acting Director Uejio’s statement provide helpful clarity to companies subject to the Bureau’s supervisory and/or enforcement jurisdiction. Continue Reading CFPB will Prioritize COVID-19 Relief and Racial Equity under Acting Director Uejio