CFPB announces appointments to Consumer Advisory Board; Community Bank Advisory Council; Credit Union Advisory Council and Academic Research Council

CFPB on September 12 announced the appointment of 25 people to its newly formed  Consumer Advisory Board  which will provide advice to CFPB leadership on a broad range of consumer financial issues and emerging market trends.

“This group of experts truly represents the interests of the diverse people and communities we serve,” said CFPB Director Richard Cordray. “The Consumer Advisory Board will be a key resource to the CFPB and I look forward to working with its members to further our mission to protect American consumers.”

The Dodd-Frank Wall Street Reform and Consumer Protection Act charges the CFPB with establishing a Consumer Advisory Board to advise and consult with the Bureau’s director on a variety of consumer financial issues. In February, the CFPB issued a Federal Register Notice outlining the board’s responsibilities and the duties of its members and solicited recommendations for nominees.

The newly appointed board members include experts in consumer protection, financial services, community development, fair lending, civil rights, and consumer financial products or services. They also represent depository institutions that primarily serve underserved communities, and they represent communities that have been significantly impacted by higher-priced mortgage loans.

The first meeting of the Consumer Advisory Board will take place Sept. 27, 2012 and Sept. 28, 2012 in St. Louis, Mo. By statute, the board will meet no less than twice per year. Members will have staggered three-year terms.

CFPB also announced appointments for two additional advisory councils that will provide the CFPB with feedback and recommendations to inform its policy development, research, rulemaking, and engagement functions. These groups are the Credit Union Advisory Council (CUAC) and the Community Banks Advisory Council (CBAC).  The Dodd-Frank Act gives the CFPB authority to create advisory councils as an additional way to reach out to stakeholders with an interest in the CFPB’s activities.

Members of the CBAC and the CUAC are appointed by the CFPB Director and must be employed by a company with total assets of $10 billion or less, and cannot be affiliates of companies with total assets of more than $10 billion.

The CBAC and CUAC will convene publicly and provide public summaries or reports of their meetings.   Members on both councils will serve two-year terms; they are not eligible for reappointment. CBAC’s first meeting will be Oct. 10, 2012. CUAC’s first meeting will be Oct. 11, 2012

The CFPB conducts research, performs analysis, and reports on topics relating to the Bureau’s mission, including developments in markets for consumer financial products and services, consumer awareness, and consumer behavior. To support the Bureau’s commitment to fact-based policy development, the CFPB established the Academic Research Council, a consultative body comprised of scholars with relevant subject matter expertise. The council advises the CFPB on research methodologies, data collection, and analytic strategies, and provides feedback regarding the Bureau’s research and strategic planning process.

The Academic Research Council will meet in-person once annually and maintain ongoing communications throughout the year. The first in-person meeting of the council was held July 27, 2012.

Members of each are: CFPB Consumer Advisory Board; CFPB Community Bank Advisory Council Members; CFPB Credit Union Advisory Council Members and CFPB Academic Research Council Members

Consumer Advisory Board Charter

Community Bank Advisory Charter

Credit Union Advisory Charter

Academic Research Charter


FHFA – Increased Transparency and Certainty for Lenders

Washington, DC – The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac are launching a new representation and warranty (rep and warranty) framework for conventional loans sold or delivered on or after Jan. 1, 2013. The new rep and warranty approach, part of a broader series of strategic initiatives called seller-servicer contract harmonization, aims to clarify lenders’ repurchase exposure and liability on future deliveries.

“Ultimately, better quality loan originations and underwriting, along with consistent quality control, help maintain liquidity in the mortgage market while protecting Fannie Mae and Freddie Mac from loans not underwritten to prescribed standards,” said Edward J. DeMarco, Acting Director of FHFA. “These efforts contribute to a firm foundation for a new, sustainable housing finance system for the future.”

The objective of the new framework, developed at the direction of FHFA, is to clarify lenders’ repurchase exposure and liability on future deliveries. The new rep and warranty approach does not affect loans sold to Fannie Mae or Freddie Mac prior to Jan. 1, 2013. With this new framework:


    • Lenders will be relieved of certain repurchase obligations for loans that meet specific
    • payment requirements, for example, rep and warranty relief will be provided for loans
    • with 36-months of consecutive, on-time payments;
    • Home Affordable Refinance Program (HARP) loans will be eligible for rep and
    • warranty relief after an acceptable payment history of only 12 months following the
    • acquisition date;
    • Information about exclusions for rep and warranty relief, such as violations of state,
    • federal and local laws and regulations will be detailed;
    • Fannie Mae and Freddie Mac will continue to make available for lenders a range of tools
    • to help improve loan quality.

The new model moves the focus of quality control reviews from the time a loan defaults up to the time the loan is delivered to Fannie Mae or Freddie Mac. An FHFA review of past repurchase requests issued by Fannie Mae and Freddie Mac revealed that these requests were based on substantive underwriting and documentation deficiencies. These deficiencies have led to substantial losses for Fannie Mae and Freddie Mac, and hence, taxpayers. Fannie Mae and Freddie Mac will continue to work with their lenders to resolve contractual claims resulting from such deficiencies, arising primarily from loans originated before the conservatorships in September 2008. With the new model FHFA is directing Fannie Mae and Freddie Mac to:


    • Conduct quality control reviews earlier in the loan process, generally between 30 to 120 days after loan purchase;
    • Establish consistent timelines for lenders to submit requested loan files for review;
    • Evaluate loan files on a more comprehensive basis to ensure a focus on identifying significant deficiencies;
    • Leverage data from the tools currently used by Fannie Mae and Freddie Mac to enable earlier identification of potentially defective loans;
    • Make available more transparent appeals processes for lenders to appeal repurchase requests.

Fannie Mae’s Lender Announcement and Lender Letter, and Freddie Mac’s Lender Bulletin and Industry Letter will provide further details.

Reps and Warrants Release and FAQ 091112


CFPB – Extends time for comments on proposed changes to the definition of the finance charge

CFPB announced the following today:

“One part of our proposed rule to improve the disclosures consumers receive when applying for and closing on a mortgage was a change to the current definition of “finance charge.” The finance charge is intended to reflect the cost of credit for consumers as a dollar amount. It’s used to calculate the Annual Percentage Rate or “APR.”

The proposed rule would eliminate numerous exceptions that exclude common costs (such as title insurance) from the finance charge. We want APR to be a more accurate reflection of the overall cost of credit. However, higher APRs and finance charges could affect the number of loans subject to other legal requirements and protections, such as special disclosures and restrictions for high-cost mortgages.  In another rulemaking, we also proposed an adjustment that would prevent that from happening, by changing the coverage test for the high-cost mortgage protections to account for the higher APRs.

Comments on the proposed changes to the definition of the finance charge and the proposed change to the high-cost mortgage coverage test were originally due on September 7, 2012. Based on the feedback received, the Bureau now believes that it is appropriate to provide the public with additional time to prepare their comments. These comments are now due November 6, 2012. All other deadlines under both proposed rules remain unchanged.”


CFPB Recruits Undercover Agents

The Consumer Financial Protection Bureau is seeking to recruit investigators to possibly pursue cases against America’s financial institutions.

According to a Washington Times report, the CFPB is running recruitment advertisements seeking new employees to go undercover at financial institutions. One recruitment advertisement described the job duties as being able to “establish and conduct surveillance activity to develop both intelligence and evidence to further investigation and Utilize surveillance activities to identify subjects, their activities and their associates, corroborate source information and collect evidence.”

The CFPB said that investigators may earn between $98,000 to $149,000 per year and that the recruits could be required to set up and oversee contracts with private investigators.

“Investigative work conducted by our staff will be covered by [CFPB] policies to ensure all practices comply with applicable laws and regulations and protect individuals’ privacy rights,” Moira Vahey, a CFPB spokeswoman, said, according to The Washington Times. “The investigation activities described in the posting are intended to inform our enforcement office about what consumers may experience with different financial products or services. We anticipate that the type of information gathered generally will be information available to the general public. Investigation activities like these are typical among agencies charged with civil law enforcement.”


CFPB Releases Report Showcasing 2012 Highlights

Today, the Consumer Financial Protection Bureau (CFPB) released their Semi-Annual Report highlighting the Bureau’s work in the first half of 2012. One year ago, the CFPB became the nation’s first federal agency solely focused on protecting Americans in the consumer financial products and services marketplace.

“Consumers deserve to be treated fairly, and to have someone stand on their side when they are not,” said CFPB Director Richard Cordray. “The CFPB has used the tools at our disposal for the benefit of consumers in the past year, and we pledge to continue to do so as we work to promote a transparent, fair, and competitive consumer financial marketplace.”

The Dodd-Frank Wall Street Reform and Consumer Protection Act created the CFPB not only to protect consumers but also to help provide consistent enforcement of federal consumer financial laws.

Today’s report covers the Bureau’s actions from January 1, 2012 through June 30, 2012. It showcases how the Bureau has used its multiple authorities, including regulation, supervision, enforcement, market research, financial education, and the authority to deal directly with consumer complaints regarding consumer financial products and services.

Testimony on Ability to Repay – Qualified Mortgage Rules

On Wednesday 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.

Both trade groups agreed that a qualified mortgage should be broadly defined so that qualified loans can be made to a wide range of borrowers. It is generally viewed by the trade groups as well as the consumer groups that if this is not done many deserving consumers will not be able to obtain mortgage loans.

The other point made by all was the need for a safe harbor, without a clear definition the threat of litigation might significantly limit lending through the tightening of already conservative underwriting standards and with some lenders actually exiting the business.

Both trade groups recently submitted letters during the comment period on the ability to repay rule including litigation costs.

MBA Testimony
ABA Testimony
ABA-Ability to Repay
MBA-Ability to Repay

CFPB Targets Reverse Mortgages

CFPB Report to Congress on reverse mortgages recently issued indicates that the reverse mortgage industry should expect more scrutiny and regulation from the CFPB.  Among the CFPB’s  key findings in the report is that  existing disclosures and available counseling may not sufficiently protect borrowers and  “stronger regulation, supervision of reverse mortgage companies, and enforcement of existing laws may also be necessary.”

The CFPB also posted on its website a new four-page CFPB Consumer Guide on reverse mortgages and updated the answers to common reverse mortgage questions posted on its website.

The CFPB has also issued a notice and request for information on topics identified in the study as warranting further research “to help determine if additional consumer education or regulatory action is needed.”

Systemic Risk Council Formed

The council, a group of former regulators, lawmakers and business leaders holding an inaugural meeting in Washington yesterday, was formed to counter industry lobbying that members say may undermine Dodd-Frank Act measures enacted in response to a collapse that led to U.S. bailouts for the biggest banks and nonbank companies including American International Group Inc. (AIG)

The panel is led by former Chairman Sheila Bair of the Federal Deposit Insurance Corp.The group’s members also include former U.S. Treasury Secretary Paul O’Neill; John S. Reed, former co-chairman and co- chief executive officer of Citigroup Inc. and Brooksley Born, former chairman of the U.S. Commodity Futures Trading Commission. Former Federal Reserve Chairman Paul Volcker will serve as the council’s senior adviser. Bair, now a senior adviser to Washington-based Pew Charitable Trusts, said in an interview that while the panel is not anti-industry, “it’s independent of the industry.”

Council members, who have criticized delays in Dodd-Frank implementation, plan to monitor the regulatory overhaul and identify systemic risks to U.S. financial markets. buy a domain . They will provide commentary on, and release reports to, the Financial Stability Oversight Council ((As established under the Dodd-Frank Act, the Financial Stability Oversight Council (FSOC) will provide, for the first time, comprehensive monitoring to ensure the stability of our nation’s financial system. The Council is charged with identifying threats to the financial stability of the United States; promoting market discipline; and responding to emerging risks to the stability of the United States financial system. The Council consists of 10 voting members and 5 nonvoting members and brings together the expertise of federal financial regulators, state regulators, and an insurance expert appointed by the President)) and the Treasury Department’s Office of Financial Research, both created by Dodd-Frank.


Consumer Financial Protection Bureau (CFPB) Announcement

The Consumer Financial Protection Bureau (CFPB)  announced several changes to senior leadership positions within the agency. Among those named are: Associate Director for Supervision, Enforcement, and Fair Lending; General Counsel; Senior Advisor and Counselor to the Director; Assistant Directors for the Office of Financial Empowerment and the Office of Financial Education; and Ombudsman.

Richard Cordray

The following CFPB staffing changes were announced:

Steven L. Antonakes

Steven L. Antonakes, who will now serve as the Associate Director for Supervision, Enforcement, and Fair Lending at the CFPB, previously served as the Assistant Director of Large Bank Supervision at the Bureau. Mr. Antonakes began his professional career as an entry level bank examiner with the Commonwealth of Massachusetts Division of Banks in 1990. He served in numerous managerial capacities before being appointed by successive Governors to serve as the Commissioner of Banks from December 2003 until November 2010, becoming only the second career bank examiner to ever serve in that capacity. In addition, he served as first state voting member of the Federal Financial Institutions Examination Council (FFIEC), as the Vice Chairman of the Conference of State Bank Supervisors (CSBS), and as a founding member of the governing board of the Nationwide Mortgage Licensing System (NMLS). Mr. Antonakes received a B.A. from Penn State University, an M.B.A. from Salem State College, and a Doctorate of Philosophy in Law and Public Policy from Northeastern University.

Paul Sanford, who has been serving as Chief of Staff for Large Bank Supervision, will now serve as Acting Assistant Director of Large Bank Supervision.

Meredith Fuchs

Meredith Fuchs, who will now serve as CFPB General Counsel, joined the Bureau in 2011 as Principal Deputy General Counsel before serving as Chief of Staff to CFPB Director Richard Cordray. Prior to joining the CFPB, she served as Chief Investigative Counsel of the United States House of Representatives Committee on Energy and Commerce. Previously, Ms. Fuchs held positions as Vice President and General Counsel of the National Security Archive at George Washington University, litigation partner at Wiley Rein LLP, and an officer on the D.C. Bar Board of Governors. She is the recipient of the American Library Association’s James Madison Award. Ms. Fuchs served as a law clerk for Judge Patricia M. Wald on the D.C. Circuit Court of Appeals and Judge Paul L. Friedman on the United States District Court for the District of Columbia. She is a graduate of the New York University School of Law and the London School of Economics and Political Science.

Garry Reeder, who has been serving as Senior Advisor to the Deputy Director, will now serve as Acting Chief of Staff.

Len Kennedy

Len Kennedy, who will now serve as Senior Advisor and Counselor to Director Richard Cordray, most recently held the position of General Counsel and CFPB Associate Director. In his role, he assembled and led the legal team that advises the Director and Bureau leadership. Prior to joining the CFPB, Mr. Kennedy served as General Counsel, Corporate Secretary and Chief Government Affairs Officer for Sprint Nextel Corporation, where he advised the board of directors, CEO, and senior management on all aspects of the company’s business and legal affairs. He previously served for five years as General Counsel of Nextel. In 2008, he was a recipient of Corporate Board Member’s America’s Top General Counsel Award. Kennedy twice served as a Senior Legal Advisor at the Federal Communications Commission and has served on the board of many Washington-area non-profit organizations, including as Co-President and Co-Chairman of the Appleseed Foundation, a national, nonpartisan legal organization promoting systemic reform locally. He is a graduate of the Cornell University College of Arts and Sciences and Law School.

Camille Busette

Camille Busette joined the CFPB as Assistant Director of the Office of Financial Education. Before joining the Bureau, Ms. Busette was a Senior Fellow at the Center for American Progress where she focused on financial opportunities for low income populations. Previously, Ms. Busette served as Vice President of EARN, the leading non-profit provider of micro savings services to low income families in the United States. She also was the Deputy Director of Government Relations for PayPal where she managed PayPal’s regulatory advocacy globally. She also headed the privacy function at Intuit, and the consumer and market research division at NextCard. Ms. Busette is a former Ford Foundation Post-doctoral Research Fellow, and holds a PhD in Political Science from the University of Chicago.

Clifford Rosenthal

Clifford Rosenthal joined the CFPB as Assistant Director of Financial Empowerment. Before joining the Bureau, he served for more than 30 years as President and CEO of the National Federation of Community Development Credit Unions, the nonprofit association for credit unions serving low-income communities. Mr. Rosenthal laid the framework for the establishment of the Community Development Financial Institutions (CDFI) Fund with concept papers he wrote in the late 1980s and co-founded the CDFI Coalition in 1990. His work at the Federation was marked by innovative efforts to expand the reach of credit unions to low-income populations, by establishing networks and programs targeting the African-American, Latino, and disability communities. He received the highest awards of the National Credit Union Foundation, the Opportunity Finance Network, the Insight Center for Community Economic Development, the Urban Homesteading Assistance Board, the Network of Latino Credit Unions and Professionals, and others. He holds undergraduate and graduate degrees from Columbia University and was a mid-career Revson Foundation Fellow for the Future of the City of New York.

Wendy E. Kamenshine

Wendy Kamenshine, the CFPB Ombudsman, began at the CFPB in July 2011 as the Acting Ombudsman to establish the CFPB Ombudsman’s Office and officially joined the CFPB last month. Ms. Kamenshine previously served as the Senior Ombudsman for the Department of Homeland Security’s Citizenship and Immigration Services Ombudsman’s Office. This year, she started her second term as Chair of the Coalition of Federal Ombudsmen, an interagency group of federal ombudsmen. Before joining the federal government, Ms. Kamenshine practiced international trade law with the law firm Akin Gump Strauss Hauer & Feld LLP and was a Research Associate at the economics consulting firm, Economists Incorporated. She earned her A.B. in Economics with departmental and general honors from the University of Chicago and her J.D. from Duke University School of Law. She also has mediation training from Harvard’s Program of Instruction for Lawyers, the Northern Virginia Mediation Service, and Duke’s Private Adjudication Center.

New Rules Governing the CFPB’s Enforcement Work

On June 6, 2012 the CFPB is posted three final rules and one interim final rule that  have been  sent to the Federal Register for publication. The rules deal with our procedures and practices related to enforcing federal consumer financial law.

The three final rules deal with the agency’s investigative and adjudicative processes and their interactions with state law enforcement authorities. Interim versions of these rules were published in July of 2011.

Rule Relating to Investigations: This rule describes the CFPB’s procedures for investigating whether persons have engaged in conduct that violates federal consumer financial law. Similar to rules used by other regulators, it lays out an efficient and fair process for conducting CFPB investigations. This rule sets forth our authority to conduct investigations, including the procedures for issuing civil investigative demands. It also describes the rights of persons from whom the CFPB seeks to compel information in investigations.

Rule of Practice for Adjudication Proceedings: Under this rule, the CFPB can conduct administrative adjudications (hearings) to ensure or enforce compliance with federal laws and regulations. In developing this rule, we leveraged the experiences of other regulators and reviewed the public comments on the interim rule to create a fair and expeditious process for resolving administrative enforcement actions. The result is an adjudication process that is streamlined and protects parties’ rights to fair and impartial proceedings.

State Official Notification Rule: This rule is designed to help the CFPB stay informed about state-level legal developments relating to the Dodd-Frank Act. It describes the process through which state officials update the agency on certain legal actions they bring to enforce compliance with certain provisions of the Dodd-Frank Act and regulations the CFPB may issue. Proper notification will help ensure that the law is being enforced in a consistent manner.

The last rule is an interim final rule that implements the Equal Access to Justice Act (EAJA). They are now asking for public input on this interim final rule.

EAJA Implementation Rule: This rule implements the Equal Access to Justice Act. The Act provides that certain prevailing parties in administrative proceedings can recover attorney fees and expenses. The rule sets forth who can seek to recover these costs and how to do so. It is based on model rules and rules used by other agencies. The public can comment on the interim final rule for 60 days after its publication in the Federal Register.

These rules will be published in the Federal Register in the near future and will be effective immediately upon publication.

The versions linked in this post contain the text as the CFPB submitted them.

Rule Relating to Investigations

Rule of Practice for Adjudication Proceedings

State Official Notification Rule

EAJA Implementation Rule