Agencies Announce Increases in Dollar Thresholds in Regulations Z and M For Exempt Consumer Credit and Lease Transactions

The FRB (Board) and the Consumer Financial Protection Bureau (CFPB) today announced  increases in the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. These increases are consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amendments to the Truth in Lending Act and the Consumer Leasing Act to adjust these thresholds annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers. Transactions at or below the thresholds are subject to the protections of the regulations. The adjustments to the thresholds reflect the annual percentage increase in the consumer price index as of June 1, 2012 and will take effect on January 1, 2013.

Based on the adjustments announced today, the protections of the Truth in Lending Act and the Consumer Leasing Act  generally will apply to consumer credit transactions and consumer leases of $53,000 or less in 2013. However, private education loans and loans secured by real property (such as mortgages) are subject to the Truth in Lending Act regardless of the amount of the loan.

Although the Dodd-Frank Act generally transferred rulemaking authority under the Truth in Lending Act and the Consumer Leasing Act to the CFPB, the Board retains authority to issue rules for certain motor vehicle dealers. Therefore, the agencies are issuing these adjustments jointly.

In addition, the CFPB is separately adjusting the dollar amount that triggers additional protections for certain home mortgages under the Home Ownership and Equity Protection Act of 1994 (HOEPA), as required by statute. Consistent with the increase in the consumer price index, the dollar amount of the HOEPA fee trigger will increase to $625 for 2013.

Federal Register – Regulation Z

Federal Register – Regulation Z

Federal Register – Regulation M

CFPB Extends Effective Date for new Mortgage Disclosures

On November 16, 2012 CFPB announced that disclosure requirements will be integrated into final mortgage disclosure forms instead of taking automatic effect on January 21, 2013.

This final rule disclosures extension will give the industry extra time to provide certain new disclosures required under the Dodd-Frank Wall Street Reform and Consumer Protection Act in order to allow a more seamless integration with other mortgage disclosures that have been proposed by the Bureau. Per today’s announcement, industry will not be required to provide those disclosures until after the Bureau’s previously proposed mortgage disclosure rules are finalized.

“Considering these disclosures on the same timeline will ensure that consumers receive clear, concise, and consistent information,” said CFPB Director Richard Cordray. “By seeking public comment and conducting consumer-testing for these disclosures together, we can avoid the duplication and inefficiency that existed in the past.”

The Dodd-Frank Act required that the CFPB integrate certain disclosures from the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). For decades, TILA and RESPA have required lenders and settlement agents to give borrowers different, but overlapping disclosure forms in connection with applying for and closing most mortgages loans. This duplication has long been recognized as inefficient and confusing for consumers and industry. In July, the CFPB proposed new Loan Estimate and Closing Disclosure forms after months of qualitative testing and the Bureau’s Know Before You Owe mortgage initiative.

In addition to requiring the integration of TILA-RESPA disclosures, the Dodd-Frank Act also establishes additional new mortgage disclosure requirements, which would automatically take effect on Jan. 21, 2013 unless other action was taken. These new requirements include disclosures on cancellation of escrow accounts, on a consumers’ liability for debt payment after foreclosure, and on the creditor’s policy for accepting partial payment. The CFPB integrated many of these new requirements into the Bureau’s proposed forms that were released in July 2012.

Though no deadline was mandated for finalizing the TILA-RESPA integrated proposal, the Bureau anticipates that the final rules will be published next year.

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.



Top Official Leaving the CFPB

Raj Date

Raj Date, the deputy director of the Consumer Financial Protection Bureau, will leave the agency he helped to establish on Jan. 31.

Date joined the agency in 2010 as an adviser to Elizabeth Warren, who is often recognized as having come up with the idea for the CFPB. He led the CFPB from shortly after its operational beginning in August 2011 until January 2012, after which time President Obama appointed Richard Cordray as director.

Before coming to the CFPB, Date worked for Deutsche Bank and Capital One. He founded the Cambridge Winter Institute, a think-tank organization that advocated financial reform, in 2009.

Date will stay on until “after the CFPB finalizes the slate of mortgage rules” mandated by the 2010 Dodd-Frank Act.  Including the Qualified Mortgage rule  The “qualified mortgage” rule is designed to protect American consumers from abusive lending practices that helped fuel the recent housing crisis. The rules are likely to become part of the agency’s signature projects, though if the regulations are written too strictly, stakeholders warn that the rules could cause the market for home loans to dry up.

Agency spokeswoman Jennifer Howard confirmed Date’s departure, but said he has not announced his future plans, “other than to spend more time with his family.” His departure is timed to coincide with the completion of the agency’s pending rules on mortgages. “Raj has spent more than two years building the agency at a breakneck pace, playing a number of key leadership roles,” CFPB spokeswoman Jen Howard stated

CFPB Publishes Supervisory Highlights, Appeals Process and update on Examination

On October 31, 2012 the Consumer Financial Protection Bureau (CFPB) released its first Supervisory Highlights fall 2012 report highlighting problems CFPB examiners discovered through the agency’s supervision process. The Bureau also released an appeals policy for supervised institutions as well as an updated version of the CFPB Supervision and Examination Manual, a field guide used by examiners.

Selected excerpts of key points follow:

Compliance Management Systems

  •  A critical component of a well-run financial institution is a robust and effective compliance management system (CMS), designed to ensure that the financial institution’s policies and practices are in full compliance with the requirements of Federal consumer financial law
  • The CFPB understands that compliance management will be handled differently by large, complex financial organizations at one end of the spectrum, and small entities that offer a narrow range of financial products and services at the other end. While the characteristics and manner of organization will vary from entity to entity, the CFPB expects compliance management activities to be a priority and to be appropriate for the nature, size, and complexity of the financial institution’s consumer business.
  • A financial institution’s CMS is inadequate where appropriate policies have been adopted, but management fails to take measures to ensure compliance with those policies
  • The CFPB has found one or more situations in which the financial institution had articulated many elements of an appropriate compliance policy, but the policy was not followed

Vendor Management

  • The CFPB has noted instances in which a financial institution has failed to establish a comprehensive service provider management program or failed to effectively manage service providers acting on its behalf to ensure compliance with Federal consumer financial law.
  • Programs typically include consistent, risk-based procedures governing the retention and monitoring of service provider relationships, as well as policies and procedures to monitor and test for compliance with Federal consumer financial law by service providers acting on behalf of the financial institution

Fair Lending Programs – Deficiencies found as follows:

  • An up-to-date fair lending policy statement;
  • Regular fair lending training for all employees involved with any aspect of the institution’s credit transactions, as well as all officers and Board members;
  • Ongoing monitoring for compliance with fair lending policies and procedures;
  • Ongoing monitoring for compliance with other policies and procedures that are intended to reduce fair lending risk (such as controls on loan originator discretion);
  • Review of lending policies for potential fair lending violations, including potential disparate impact;
  • Depending on the size and complexity of the financial institution, regular statistical analysis of loan data for potential disparities on a prohibited class basis in pricing, underwriting, or other aspects of the credit transaction, and including both mortgage and non-mortgage products, such as credit cards, auto lending, and student lending;
  • Regular assessment of the marketing of loan products; and
  • Meaningful oversight of fair lending compliance by management and where appropriate, the financial institution’s board of directors.

Mortgage Originator Violations

  • Violations under RESPA have included failures to make proper and complete disclosures to consumers of costs and other terms of a transaction due to inadequate or improper completion of the Good Faith Estimate and the HUD-1 settlement statement
  • Violations under TILA have included failures to provide accurate interest rate disclosures, and payment amounts and schedules, as well as disclosures regarding late payments, security interests, and assumption policies


  • HMDA plays a key role in the work of the CFPB’s examination teams and its Office of Fair Lending and Equal Opportunity, as well as other regulatory agencies
  • The CFPB expects financial institutions to have strong systems in place to ensure HMDA compliance.
  • The CFPB has also directed financial institutions to improve their HMDA data collection and reporting systems, for example, by modifying policies and procedures to provide proper guidance to employees who prepare and submit HMDA data.

Financial service providers under the CFPB’s jurisdiction may request a review of a less than satisfactory compliance rating or any underlying adverse finding set forth in the relevant examination report, or adverse findings conveyed in a supervisory letter. CFPB Appeals Process

In conjunction with the report and appeals policy, the Bureau published the second version of the 2012 CFPB Examination Manual v2. The updated manual incorporates procedures released for such markets as mortgage origination and servicing, payday lending, consumer reporting, and consumer debt collection. The manual has also been revised to reflect the renumbering republication in the Code of Federal Regulations of those regulations that fall under the Bureau’s rulemaking authority, among other updates.

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.

CFPB Now Taking Complaints on Credit Reporting

On October 22, 2012 CFPB announced that they have begun accepting consumer complaints about credit reporting, giving consumers individual-level complaint assistance for the first time at the federal level.

“Credit reporting companies exert great influence over the lives of consumers. They help determine eligibility for loans, housing, and sometimes jobs,” said CFPB Director Richard Cordray. “Consumers need an avenue of recourse when they feel they have been wronged.”

Consumer reporting agencies, which include what are popularly called credit bureaus or credit reporting companies, are private businesses that track a consumer’s credit history and other consumer transactions. The credit reports they generate – and the three-digit credit scores that are based on those reports – play an increasingly important role in the lives of American consumers.

The largest credit reporting companies issue more than 3 billion consumer reports a year and maintain files on more than 200 million Americans. The consequences of errors in a consumer report can be catastrophic for a consumer, shutting him or her out of credit markets, jeopardizing employment prospects, or significantly increasing the cost of housing.

A consumer can come to the CFPB if he or she, for example, has issues with:

  • Incorrect information on a credit report;
  • A consumer reporting agency’s investigation;
  • The improper use of a credit report;
  • Being unable to get a copy of a credit score or file; and
  • Problems with credit monitoring or identify protection services.

Today’s announcement extends the kinds of complaints the CFPB already handles. The CFPB began taking credit card complaints when it launched on July 21, 2011. Since then, it has expanded to take complaints on mortgages, bank accounts and services, consumer loans, and private student loans.

See related story on Credit Scores. CFPB also published a consumer advisory check-your-credit-score-every-year

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.