CFPB Bites of the Month – Top 10 for December | Hudson Cook, LLP


Every month we organize a 30 minutes online seminar Outlining the month’s key announcements and Consumer Financial Protection Bureau (CFPB) takeaways for financial service providers to consider. In this month’s article, we share some of our best “bites” from the previous month that we covered during the December 15th webinar.

So what happened at CFPB last month?

Bite # 10 – Director Chopra has issued ethical guidelines.

Director Chopra issued ethics guidelines for a “revolving door” of former CFPB employees, saying he was “committed to setting the highest standards of ethics and integrity for employees of the CFPB. CFPB “. The Director seemed to deal with situations where individuals moved back and forth between a job as a regulator and a job serving the interests of regulated entities. Director Chopra expressed concern that former employees had financial incentives to exploit confidential information to which they may have had access. At the same time as this announcement, the CFPB published advice remind staff to report any suspicious activity, so that the CFPB can detect the activities of former employees in violation of ethics and information disclosure laws.

Song # 9 – The CFPB has published two reports dealing with overdraft fees.

The first report, Overdraft / NSF Fee Exceeded Since 2015 – Proof of Bank Call Reports, has analyzed data from call reports since 2015 to study the changing reliance of banks on overdraft and NSF fees. The second report, Current account overdraft at financial institutions served by main processors, described the overdraft practices and results of several thousand credit unions and banks in 2014 using data provided by major processors.

Based on the reports, the CFPB has determined that banks continue to rely heavily on overdrafts and insufficient fund income, which reached around $ 15.47 billion in 2019. The CFPB has announced that it will strengthen its oversight of monitoring and enforcement of banks that are heavily reliant on overdraft fees.

Bite # 8 – Federal agencies announced dollar thresholds in regulations Z and M for exempt consumer credit and leasing transactions.

The Federal Reserve Board and CFPB announced the dollar thresholds used to determine whether certain consumer credit and leasing transactions in 2022 are exempt from Z and M regulations.

By law, agencies are required to adjust thresholds every year based on the annual percentage increase in the Consumer Price Index for urban and office workers, known as CPI- W. Transactions at or below the thresholds are subject to regulatory protections.

Based on the annual percentage increase in the CPI-W as of June 1, 2021, the protections in Regulations Z and M will generally apply to consumer credit transactions and consumer leases of $ 61,000 or more. less in 2022. However, private education loans and loans secured by real estate are subject to regulation Z regardless of the loan amount.

Bite # 7 – Federal agencies have announced the threshold for exempting small loans from the appraisal requirements for higher priced mortgages.

The CFPB, the Federal Reserve Board and the Office of the Comptroller of the Currency announced that the 2022 threshold for exempting loans from the special appraisal requirements for higher priced mortgages would increase from $ 27,200 to $ 28,500. The threshold amount will come into effect on January 1, 2022 and is based on the annual percentage increase in the Consumer Price Index for urban and office workers, known as CPI-W, on the 1st. June 2021. The Dodd-Frank Act added special appraisal requirements for higher priced mortgages, including that creditors get a written appraisal based on a physical visit inside the home before making a higher priced mortgage. The rules implementing these requirements contain an exemption for loans of $ 25,000 or less, adjusted annually to reflect increases in the CPI-W.

Bite # 6 – The CFPB ombudsman’s office has released its 2021 annual report.

The CFPB ombudsman’s office has published its annual report on process issues within the CFPB. The report shares the individual requests received by the Ombudsman’s office, along with the associated analyzes and data. It includes an update on its post-review survey of supervised entities and the next steps to launch the program in fiscal year 2022. He also shared the update Faq which include additional contact information for the office. A new section of the report, ‘The Ombudsman in Brief’, included observations on the choice and use of words by the CFPB to refer to certain stakeholder communities and the continued work on how the CFPB helps. small business owners.

Track # 5 – The CFPB has requested comments on its draft strategic plan for the 2022-2026 fiscal year.

The CFPB is required to publish a new strategic plan that communicates the mission, strategic goals and objectives of the CFPB for the next four years. The draft Strategic Plan for fiscal years 2022 to 2026 is posted on the Strategic plan page, as well as previous plans. Comments can be sent to [email protected] by January 3, 2022.

Bite # 4 – Director Chopra spoke to the National Association of Attorneys General.

Director Chopra told the AGs that the CFPB is exploring ways to make reparation funds available to victims identified in actions by state AGs enforcing federal consumer financial protection laws. Chopra also expressed concern for repeat offenders who violate federal consumer protection laws, especially those who violate agency court orders.

Bite # 3 – The CFPB has released its final rule to ease the transition from LIBOR.

The final rule sets out requirements on how creditors should select replacement indices for existing consumer loans linked to LIBOR after April 1, 2022. It requires creditors to choose an index comparable to LIBOR when they modify the index. index of a variable rate loan or to treat the loan as a “refinance” for the purposes of Regulation Z. The rule identifies an overnight guaranteed financing rate (SOFR) for consumer products as a comparable rate for replace LIBOR. The Final Rule also provides creditors with factors to use in determining whether a replacement index meets the “comparable” standard of Regulation Z for a particular LIBOR index. The rule also provides sample updated forms for certain adjustable rate mortgage products that replace LIBOR benchmarks with a SOFR index. The CFPB has also published an updated set of Faq to help creditors deal with other LIBOR transition matters, regulatory issues and general implementation considerations. It is estimated that around $ 1.4 trillion in consumer loans is currently tied to LIBOR.

Bite # 2 – CFPB surveillance highlights reported high profile violations.

The violations occurred in areas such as servicing auto loans, consumer reporting, debt collection, deposits, equity loans, mortgage origination and servicing, private student loan origination, payday loans and student loan service. Violations in the report include:

  • Some mortgage agents have allegedly charged inappropriate fees to borrowers registered with the CARES forbearance;
  • Fair loan violations;
  • Some payday lenders have reportedly debited consumers’ bank accounts inappropriately; and
  • Some transfer service providers have reportedly failed to investigate the error notices in a timely manner.

Bite # 1 – Director Chopra’s blog post discusses bank mergers.

Director Chopra announced that the FDIC board, of which he is a member, has voted to initiate a review of the agency’s policies on bank mergers. The FDIC will accept comments for 60 days from publication in the Federal Register. Chopra said the FDIC plays a vital role when it comes to reviewing bank mergers and ensuring the country’s financial stability. The board vote would have been taken without the approval of FDIC President Jelena McWilliams. She rejected the board vote seeking comment on the bank merger approval process.

Extra Bite – CFPB dealt with mortgage management violations.

Mortgage management violations handled by the CFPB allegedly include:

  • Charge borrowers late or default fees under CARES law forbearance programs.
  • Do not end electronic transfers of pre-authorized funds.
  • Charge unauthorized amounts to consumers.
  • Distort mortgage loan transactions and payment history in online accounts.
  • Failing to review borrower’s requests for loss mitigation options within 30 days.
  • Incorrect processing of partial payments.
  • Do not automatically terminate private mortgage insurance on time.

Always hungry?

If you missed our December 15 review, visit our CFPB bites page to request a replay. We look forward to seeing you in 2022!

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