CFPB Sharing Consumer Complaint Data with State Agencies

December 11, 2012 the CFPB announced plans to share data from those complaints with state regulatory agencies.  They currently have a database to collect complaints on credit cards, mortgages, student loans, checking accounts, savings accounts, credit reporting, bank services, and other consumer loans.

When a consumer files a complaint, we screen it to make sure that it’s complete and not a duplicate of another complaint we’re already working on for that consumer. Next, we send it to the company in question and ask them to reply to the complaint within 15 days and expect them to close all but the most complicated complaints within 60 days. After the company responds, we publish a selection of the data (with information identifying the consumer removed) in our public Complaint Database.

According to the CFPB website their “goal in sharing consumer complaints with state agencies is to enhance efficient, transparent, and effective government to better protect American consumers”

Initially consumer complaints will be shared via a secure channel that protects the confidentiality of personally identifiable information. In the future, they are planning on building ways to accept complaints and information from the agencies as well, and to make the data available to other federal agencies, state attorneys general, local agencies, congressional offices as appropriate, and other governmental organizations like the California Monitor (a program of the California Attorney General) and the Office of Mortgage Settlement Oversight.


Never on a Sunday…..CFPB will release the LO Comp Final Rule

The CFPB has announced they will release the LO Comp Final Rule on Sunday, July 20th.

The final rule revises Regulation Z to implement amendments to the Truth in Lending Act (TILA).

The Proposed Rule had provisions to prohibit compensation based on the term of a transaction or proxy for a term; dual compensation; a required zero point loan and loan originator qualifications.

We will have to wait until tomorrow apparently Never on a Sunday is not for the Mortgage Industry.


Qualified Mortgage to Be ‘Unveiled’ January 9, 2013

Qualified Mortgage Timeline:

We are about to enter a new era in consumer lending, the era of the qualified mortgage. But how did we reach this point? Here’s a quick look back:

July 21, 2010 — The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law. Among other things, the Dodd-Frank Act is designed to “promote the financial stability of the United States by improving accountability and transparency in the financial system [and] protect consumers from abusive financial services practices.”

July 21, 2011 — The Consumer Financial Protection Bureau (CFPB) begins operation. The CFPB’s creation was mandated by the Dodd-Frank Act. One of the bureau’s first tasks is to develop the final definition of a qualified mortgage, or QM.

May 31, 2012 — CFPB opens a public comment period to receive input on the new regulations.

July 9, 2012 — The comment period is closed.

July 11, 2012  – The House Subcommittee on Financial Institutions and Consumer Credit held a hearing addressing consumer and market perspectives of mortgage reforms made by The Dodd-Frank Wall Street Reform and Consumer Protection Act. Both consumer and industry members provided testimony, including the Mortgage Bankers Association and American Bankers Association.  The ongoing CFPB rulemaking to implement the Dodd-Frank ability to repay rule and special status under the rule for qualified mortgages was the focus of both trade groups’ testimony

July – Dec 2012 — CFPB considers comments provided by consumers, industry groups, U.S. senators and others. Toward the end of the year, they say they are on schedule to finalize the QM rules by their January 21, 2013 deadline.

November 11, 2012 — The publishers of the Home Buying Institute launch a not-for-profit website, to serve as a central source of information on QM-related subjects.

December 28, 2012 — Inside Mortgage Finance reports that “the agency’s Qualified Mortgage rule will be unveiled the evening of January 9″ 2013.

Lenders are concerned and have been discussing the proposal and what might happen.  The rule will change the way many of them do business and will affect all areas of the mortgage market.

We are at a wait and see moment.

It’s the end of the year…but many things to look forward to…

January 21st a BIG day for regulations:


  • ATR/QM Rule  –  Ability to Repay/Qualified Mortgage; Issued May, 2011, originally  to come out in final 4/12 – Rule before January 21, 2013, implementation date unknown
  • HOEPA Rule – High Cost Mortgage Loans (Reg Z)  issued July  9, 2012, Comments submitted  September 9 – Rule before January 21, 2013, implementation date unknown
  • Loan Officer Compensation Rule – Mortgage Originator Standards (Reg Z) issued August 17, 2012, Comments due October 16, 2012 – Rule before January 21, 2013, implementation date unknown
  • Servicing Rule – Mortgage Servicing (Regulation X; Reg Z) issued August 10,  2012, Comments due October 9, 2012 – Rule before January 21, 2013, implementation date unknown
  • Escrow Rule  – Requirements for Escrow Accounts  (Reg Z)  Rule before January 21, 2013, implementation date unknown
  • ECOA Appraisal Disclosure Rule – Final rule before January 21, 2013, implementation date unknown

More to look forward to later in the year:


  • HUD Disparate Impact Rule –   Final rule issuance date and implementation date unknown
  • QRM rule – Six rule makers (not including CFPB) Final rule to be published after QM. Effective date unknown
  • RESPA-TILA Integration Rule – TILA/RESPA Mortgage Disclosure Integration (Regulation X;  Reg Z) Proposed rule issued July 9, 2012, First comments due  and submitted September 7, 2012, Second (main set) due November 6, 2012.  Final rule and effective date unknown
  • Basel III Rule- Three rule makers ( FRB, OCC & FDIC) Issued June 7, Comments due October 22, 2012. Final Rule, effective date, unknown
  • HMDA Pre-Rule –  Home Mortgage Disclosure Act (Reg C) Proposal and final rule dates unknown
  • Loan Originator Anti-Steering Rule – Proposal and final rule dates unknown

Happy New Year to all..

CFPB Issues Second Annual Report to Congress

The CFPB has issued its second annual report to Congress on the CFPB’s workforce. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires the Consumer Financial Protection Bureau (CFPB) to submit this report annually to Congress with its:


    • Recruitment and Retention Plan
    • Training and Workforce Development Plan
    • Workforce Flexibilities Plan

The plans presented in this report represent the CFPB’s current goals for recruitment and retention, training and workforce development, and workforce flexibilities.

Over the past year, the CFPB continued to build its workforce by identifying and recruiting the best qualified people to meet immediate and long-term staffing needs.
As of November 3, 2012, the Bureau had 1,014 employees. The Bureau’s growth since FY2011 is indicated in below:

CFPB and DOJ Coordinate on Fair Lending

On December 6, the Consumer Financial Protection Bureau (CFPB or Bureau) and the U.S. Department of Justice (DOJ) announced a Memorandum of Understanding (MOU) to coordinate enforcement of the federal fair lending laws, including the Equal Credit Opportunity Act (ECOA). Simultaneously, the CFPB issued its first annual Fair Lending Report to Congress as required by the Dodd-Frank Act, which describes the Bureau’s efforts to build its Office of Fair Lending and Equal Opportunity and reviews its fair lending accomplishments. Together, these initiatives demonstrate that the CFPB and DOJ are continuing to work together closely to aggressively enforce the federal fair lending laws.

Memorandum of Understanding Regarding Fair Lending Coordination

The new MOU supplements an existing Information Sharing Agreement Regarding Fair Lending Investigations among the DOJ, the U.S. Department of Housing and Urban Development, and the Federal Trade Commission, which allows these fair lending enforcement agencies to share confidential information related to fair lending investigations, screening procedures, and investigative techniques. It also follows a general cooperation MOU that the DOJ and CFPB entered into earlier this year.

The new MOU focuses on information sharing and referral of matters alleging ECOA violations, but also governs the agencies’ referral processes for other fair lending-related laws and joint fair lending investigations.

Referral of ECOA Violations to DOJ: The MOU explains the circumstances under which the CFPB will refer potential ECOA violations to the DOJ for further investigation or prosecution. Consistent with the established practice of the prudential federal bank regulators, the MOU requires the CFPB to refer to the DOJ all matters where it has “reason to believe” that one or more creditors has engaged in a pattern or practice of lending discrimination. The CFPB may also refer to DOJ any violation of Section 701(a) of ECOA, including a recommendation that a civil action be commenced if the CFPB cannot obtain compliance from the financial institution.

Following referral, the DOJ has 60 days to determine whether to proceed with its own investigation. Within that period, the CFPB may not unilaterally commence its own action with regard to the referred violation(s). Even if exigent circumstances arise during the 60-day review period, the CFPB must first consult with the DOJ before taking independent action.

The CFPB may also refer to the DOJ possible violations of fair lending-related laws for which the CFPB has no statutory examination or enforcement authority, but for which the DOJ possesses enforcement authority, including the Fair Housing Act and the Servicemembers Civil Relief Act. Despite its lack of statutory authority to enforce these laws, the CFPB’s Supervision & Examination Manual provides resources to identify such potential violations for purposes of referrals to another federal agency.

Joint Investigations: With regard to joint investigations, the MOU provides only that “[w]hen appropriate, the DOJ and the CFPB will seek to collaborate on investigations, and conduct joint investigations of entities allowing the Agencies to leverage resources and expertise.” The agreement calls for quarterly meetings to discuss investigative activity, but allows each agency to retain “independent authority to proceed in the manner that it determines is appropriate.”

Information Sharing: The MOU describes how the parties have agreed to designate, share, use, and protect as non-public, certain information related to investigations of potential ECOA violations, including confidential supervisory information collected by the CFPB under its supervision and examination authority. The MOU allows for additional case- or investigation-specific information sharing agreements as appropriate, based on a form agreement provided as an attachment to the MOU. Section 7 of the form agreement indicates that “sharing of any confidential information [between the CFPB and DOJ] under this Agreement does not constitute a waiver of, or otherwise affect, any privilege any agency or person may claim with respect to such information under federal law.”

The Consumer Financial Protection Bureau’s Ombudsman Releases it’s First Report

On November 30, 2012 the CFPB released the first annual report on the Ombudsman’s office.

The Bureau’s Ombudsman office was established as part of the Dodd-Frank Act in December 2011. The office, headed by Wendy Kamenshine, advocates for a fair process  between consumers, the providers of consumer financial products and services, and the CFPB. In addition, the Ombudsman tracks issues raised in inquiries to highlight trends and make recommendations to the CFPB.

In the nearly 10 months since the CFPB Ombudsman Office opened, it received 775 inquiries. Over 80 percent of those inquiries were consumer questions or issues regarding the processes, services, products, or entities under the CFPB’s jurisdiction.

For the next fiscal year, the CFPB Ombudsman will continue addressing individual and systemic inquiries that we receive from consumers and providers of consumer financial products and services.

2013 focus will be  focus on:

  • Inreach – Continuing to share information about the Ombudsman’s role with CFPB staff nationwide, and particularly with new staff who join the Bureau.
  • Outreach – Building on our outreach to make consumers and the providers of consumer financial products and services aware of the Ombudsman resource.
  • Statistics – Sharing additional statistical data with CFPB leadership to highlight the issues received by the Ombudsman and further inform the CFPB on recommendations for change.

2012 Ombudsman Office Annual Report

FTC Warns Mortgage Advertisers that Their Ads May Violate Federal Law

Reporting today the FTC warns about Mortgage Advertisers.

After reviewing hundreds of mortgage advertisements, the Federal Trade Commission staff has sent letters to 20 companies, warning them that their ads may be deceptive.

The FTC sent its warning letters to real estate agents, home builders, and lead generators, urging them to review their advertisements for compliance with the Mortgage Acts and Practices Advertising Rule and the FTC Act.

The FTC sent letters in coordination with the Consumer Financial Protection Bureau (CFPB), which issued warning letters to approximately a dozen other companies.  The CFPB sent its warning letters to mortgage brokers and lenders.  Both agencies have opened nonpublic law enforcement investigations of other advertisers that may have violated federal law.

The agencies reviewed approximately 800 mortgage ads from a wide variety of media that included web sites, Facebook, direct mail, and newspapers.  The agencies seek to spur compliance with the Mortgage Acts and Practices Advertising Rule, known as Regulation N since rule making authority for it transferred from the FTC to the CFPB. The rule prohibits material misrepresentations in advertising or any other commercial communication regarding consumer mortgages.  The FTC and the CFPB share enforcement authority over non-bank mortgage advertisers such as mortgage lenders, brokers, servicers, and advertising agencies.  Mortgage advertisers that violate the Rule may be required to pay civil penalties.

The agencies’ review revealed several types of troubling claims that could be misleading to consumers.  Examples are illustrated in these mock ads.  The agencies’ review found, for example:

  • Advertisements offering a very low “fixed” mortgage rate, without discussing significant loan terms.
  • Advertisements containing statements, images, symbols, and abbreviations suggesting that an advertiser is affiliated with a government agency.
  • Advertisements “guaranteeing” approval and offering very low monthly payments, without discussing significant conditions on these offers.

CFPB Issues Second Financial Audit

November 15, 2012 CFPB  issued their Financial Report for fiscal 2012 as required by the Dodd-Frank Act.

The financial report has two main parts. The first part includes a narrative description of the bureau, including our mission, operating units, main activities, performance, and results. It provides some financial analysis and a description of our operating environment. The second section includes financial statements, notes, and the auditor’s report.

The report included information the bureaus key priorities:

Key priorities in support of this goal include:

  • Monitoring and enforcing compliance with the Federal consumer financial   laws through supervision in order to protect consumers from illegal acts or practices;
  • Protecting honest businesses from competitors who use unscrupulous practices to gain an unfair advantage by using enforcement authority to address violations of Federal consumer financial laws;
  • Promoting fair lending compliance and education by working with Federal agencies, state regulators, private industry, and fair lending, civil rights, and consumer and community advocates;
  • Engaging consumers in a timely way through innovative initiatives to educate them about financial issues and use consumer input, including consumer complaint and inquiry data, to identify needed policy changes with particular impact on students, older Americans, service members, and low-income and economically vulnerable consumers;
  • Addressing challenges in the mortgage market and evaluating potential policy problems in a range of consumer finance markets;
    Simplifying or updating regulations that have become unnecessary, outdated, overly burdensome, or are otherwise unduly difficult to understand and comply with;
  • Producing original research to improve understanding of consumer behavior and market operations and practices to support the CFPB’s policymaking and the general functioning of the market;
  • Monitoring various consumer financial markets for emerging risks, technological advances, and other important developments; and
  • Issuing rules that promote a fair, transparent, and competitive marketplace for consumer financial products and services after proper consideration of benefits and costs.



Federal Housing Finance Agency and Consumer Financial Protection Bureau to Partner on Development of National Mortgage Database

November 1, 2012 FHFA and CFPB announced creation of a National Mortgage Database—the first comprehensive repository of detailed mortgage loan information. The database will primarily be used to support the agencies’ policy making and research efforts and to help regulators better understand emerging mortgage and housing market trends.

“This partnership between FHFA and CFPB will create a unique resource that benefits the government and public as we seek to answer important questions about how the housing finance market is evolving and changing,” said FHFA Acting Director Edward J. DeMarco. “This collaborative effort is a great way to pool expertise and leverage resources for the benefit of regulators and the public.”

“In order to understand what is going on in the mortgage marketplace and develop appropriate consumer protections, we must have the best facts and data,” said CFPB Director Richard Cordray. “This database will be a valuable tool for regulators and researchers and we look forward to partnering with FHFA on this important work.”

Examples of how the National Mortgage Database can support the agencies’ work include:

  • Monitor the relative health of mortgage markets and consumers. The database will provide detailed mortgage loan performance information including whether payments are made on-time, as well as information regarding loan modifications, foreclosures, and bankruptcies. This will help policy makers better understand how various products are being used and how they are performing. 
  • Provide new insight on consumer decision making. Agencies will be able to use the database to conduct surveys to better understand consumer decision making and experiences across a range of topics such as mortgage shopping or distressed homeownership.
  • Monitor new and emerging products in the mortgage market. The database will allow the agencies to monitor volume and performance of products in the mortgage market and help regulators to identify potential problems or new risks. 
  • View both first and second lien mortgages for a given borrower. Policy makers increasingly need visibility into how many mortgages consumers may have and how they’re performing. The National Mortgage Database will be the first comprehensive database to permit such analysis.
  • Understand the impact of consumers’ debt burden. The database will also include information about a borrower’s other debt obligations, such as auto loans or student loans. This will permit policymakers to better understand emerging borrowing trends and overall consumer debt burden.

It is expected to have a first version out in 2013.