Consumer Financial Protection Bureau (CFPB)

Announces New Rule

According to the CFPB website “the new rule is amending certain mortgage servicing rules that were issued by the bureau in 2013. This new rule will serve to clarify, revise or amend existing legislation regarding force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X. The rule addresses proper compliance regarding certain servicing requirements when a person is a potential or confirmed successor in interest, a debtor in bankruptcy, or sends a cease communication request under the Fair Debt Collection Practices Act. “

The new rule is also supposed to make technical corrections to several provisions of Regulations X and Z. The Bureau is issuing along with this final rule, an interpretive rule under the Fair Debt Collection Practices Act concerning servicers’ compliance with certain mortgage servicing rules.

CFPB Uses Testers for the First Time to Deter Discriminatory Bank Practices

Without admitting any wrongdoing, a Memphis-based regional bank agreed to a $10.6MM settlement with the Consumer Financial Protection Bureau (CFPB) for discriminatory mortgage lending practices. Using testers or mystery shoppers, African and White 'customers' with comparable financial and credit profiles sought home mortgage loans from the institution. The CFPB uncovered discriminatory practices such as illegal redlining (refusing to lend money to locations with African American majorities), higher mortgage interest rates and lower mortgage application acceptance rates for African American prospective and actual homebuyers. This marks the first time the CFPB has used testers for enforcement.

A major bank in Omaha Receives Hefty Fines for Deceptive Credit Card Marketing and Billing Practices

The Consumer Financial Protection Bureau (CFPB) determined a major bank in Omaha conned more than 250,000 consumers with deceptive marketing for a  credit card payment protection product add-on and cyclical billing of a non-existent credit card monitoring product. The former practice continued for more than a decade and the latter for several years until both practices were discontinued after a supervisory bank examination. Mandated civil relief for affected consumers in nearly $28MM. The CFPB will also receive $4.5 MM in civil money penalties.

Department of Justice

The Department of Justice anounced that it plans to discontinue with private prisions

August 18^th 2016, The Department of Justice announced that it plans to discontinue contracting with private prisons. This decision was made a week after the DOJ inspector general concluded a report on the safety, security, and oversight of these facilities. The research found that private prisons had higher rates of assault and contraband, as well as a number of other safety and security concerns.

Mortgage Bankers Association

The Uniform State Test

This week, Florida announced that it would be adopting the Uniform State Test beginning January 2017. The Uniform State Test is the first major change to the SAFE MLO requirements since the SAFE act was first launched in July of 2009. UST will replace the state-specific questions for the states that adopt it. UST will add 25 new questions to the exam.

FHFA

Adopting New Exemptions

It was announced this month that, effective October 1^st 2016, several agencies including the OCC, FDIC, FCA, and the FHFA will be adopting new exemptions from the initial and variation margin requirements published in 2015. These exemptions will agree with sections 731 and 764 of the Dodd-Frank act. The final rule exempts certain non-cleared swaps and non-cleared security-based swaps with certain financial and nonfinancial end users that qualify.

FTC

Ransomware Event

This week the FTC announced the agenda for its September 7^th event focused on Ransomware. Ransomware is one of the most significant cybersecurity threats facing modern consumers and businesses. The event will feature two panel discussions to provide the most current statistics on Ransomware. Also, the FTC’s Office of Technology Research and NYU’s computer science department will present research based on a study of dozens of Ransomware variants.

The event will take place at the FTC’s Constitution Center offices, 400 7^th St SW, Washington, DC, and will begin at 1 p.m. and continue until 4:30 p.m. A full schedule and other details on the forum can be found on the event’s webpage. The event is free and open to the public and will be webcast. No pre-registration is necessary.