On December 16, the Consumer Financial Protection Bureau issued Compliance Bulletin 2015-07 to provide guidance to creditors, debt buyers, and third-party collectors about compliance with certain sections of the Dodd-Frank Act and the Fair Debt Collection Practices Act when collecting debts from consumers. Specifically, the bulletin notes that in-person debt collection visits to a consumer’s workplace or home may violate these statutes. In a recent enforcement action, the Bureau alleged that the disclosure or risk of disclosure of debts to third parties during in-person collection visits, as well as going to a consumer’s place of employment when the creditor knew or should have known that personal visitors were not permitted or that going to the consumer’s place of employment was inconvenient to the consumer, was unfair in violation of the Dodd-Frank Act. The Bureau has also found during recent examinations certain unfair acts or practices with respect to in-person collection visits at a consumer’s workplace. In addition, the Bureau notes in the bulletin that third-party debt collectors and others subject to the FDCPA who engage in in-person collection visits may violate a variety of FDCPA provisions. A copy of the bulletin can be found at: http://files. consumerfinance.gov/f/201512_cfpb_compliance-bulletin-inperson- collection-of-consumer-debt.pdf.
On December 9, the Federal Housing Administration announced new mortgage loan limits to take effect on January 1, 2016 and remain in effect for the 2016 calendar year. There is no change to the FHA national loan limit “ceiling,” which remains at $625,000, and the “floor,” which remains at $271,050. The maximum loan limits for forward mortgages increased in 188 counties, but there were no areas with a decrease in the maximum loan limits for forward mortgages. The mortgage loan limits for FHA-insured reverse mortgages will also remain unchanged. The Home Equity Conversion Mortgage product will continue to have a maximum claim amount of $625,500, with actual limits based on property value, borrower age, and current interest rates. A copy of the news release is available at: http://portal.hud.gov/hudportal/ HUD?src=/press/press_releases_media_advisories/2015/ HUDNo_15-156.
Section 75001 of the Fixing America’s Surface Transportation Act (the “FAST Act”) creates an exception to the Gramm-Leach-Bliley Act requirement that financial institutions deliver annual privacy notices to their customers spelling out how the institutions use and disclose their nonpublic personal information (“NPI”) and whether customers can limit the sharing of their NPI. Under the amendment, effective December 4, 2015, institutions will not have to send an annual privacy notice to their customers if: (1) the institution only shares NPI with nonaffiliated third parties in a way that does not require the institution to give customers the choice to opt out (i.e., information shared pursuant to the joint marketing exception or servicing exceptions); and (2) the institution has not changed its policies since its most recent annual privacy notice to consumers. If the institution changes its policies regarding the use and sharing of NPI in a way that requires it to offer customers the right to opt out, it must send the revised privacy notice to its customers before implementing the change. This change comes after a 2014 Consumer Financial Protection Bureau amendment to the GLB Privacy Rule allowing financial institutions to publish their annual privacy notices online rather than send them by mail, provided that they satisfy several requirements. A copy of the 2014 amendment is available at: https://www.gpo.gov/fdsys/ pkg/FR-2014-10-28/pdf/2014-25299.pdf.
On December 2, the Department of Justice announced an agreement with Franklin American Mortgage Company to resolve allegations that the lender violated the False Claims Act by originating and underwriting mortgage loans insured by the federal government that did not satisfy applicable requirements. Franklin American participated as a direct endorsement lender in the FHA insurance program and allegedly certified for FHA insurance mortgage loans that did not satisfy HUD underwriting requirements. The FHA allegedly suffered losses when it later paid insurance claims on those loans. Franklin American will pay $70 million to the government under the settlement agreement. For a copy of the news release and links to related documents, visit: http://www. justice.gov/opa/pr/franklin-american-mortgage-companyagrees- pay-70-million-resolve-alleged-false-claims-act.
In early December, the Consumer Financial Protection Bureau released a Small Entity Compliance Guide for Regulation C, which implements the Home Mortgage Disclosure Act. The HMDA requires certain financial institutions to collect, record, report, and disclose information about their mortgage lending activity. On October 15, 2015, the Bureau issued a final rule (2015 HMDA Rule) amending Regulation C. The compliance guide provides a summary of Regulation C, as amended by the 2015 HMDA Rule, and highlights information that financial institutions and those that work with them might find helpful when implementing the 2015 HMDA Rule. The Bureau notes that the compliance guide is not a substitute for the 2015 HMDA Rule or Regulation C. Regulation C, the 2015 HMDA Rule, and their official interpretations are the definitive sources of information regarding their requirements. Except when specifically needed to explain a provision of amended Regulation C, the compliance guide does not discuss other federal or state laws that may apply to mortgage lending. The guide also has examples to illustrate some portions of the 2015 HMDA Rule. The examples do not include all possible factual situations that could illustrate a particular provision, trigger a particular obligation, or satisfy a particular requirement. A copy of the guide is available at: http://files.consumerfinance. gov/f/201512_cfpb_hmda_small-entity-compliance-guide.pdf.
On November 30, the Department of Justice filed a proposed consent order with Sage Bank resolving claims that the bank violated the Fair Housing Act and the Equal Credit Opportunity Act by instituting a mortgage loan pricing policy that resulted in African-American and Hispanic borrowers being charged higher prices for mortgage loans than similarly situated white borrowers for reasons unrelated to their creditworthiness. In addition to the requirement that Sage Bank establish a new mortgage loan pricing policy and a new loan officer compensation policy, the proposed consent order requires the bank to conduct fair lending training, establish a monitoring program, and pay $1,175,000 into a settlement fund to compensate affected consumers. For more information, go to: http://www.justice.gov/opa/pr/justicedepartment- reaches-settlement-sage-bank-resolve-allegationsmortgage- lending.
On November 25, the Consumer Financial Protection Bureau, Federal Reserve Board, and Office of the Comptroller of the Currency announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2016 will remain at $25,500, the same threshold that applied in 2015. The Dodd-Frank Act amended the Truth in Lending Act to require creditors to obtain a written appraisal based on a physical visit of the home’s interior before making a higher-priced mortgage loan. The rules implementing this requirement contain an exemption for loans of $25,000 or less and also provide that the exemption threshold must be adjusted annually based on the annual percentage increasein the consumer price index. Because there was an annual percentage decrease in the consumer price index as of June 1,2015, there will be no adjustment for 2016. For further details, visit: http://www.consumerfinance.gov/newsroom/agenciesannounce- threshold-for-smaller-loan-exemption-from-appraisalrequirements- for-higher-priced-mortgage-loans/.
On November 25, the Consumer Financial Protection Bureau and the Federal Reserve Board announced that they are not adjusting the dollar thresholds in Regulation Z (Truth in Lending Act) and Regulation M (Consumer Leasing Act) for exempt consumer credit and lease transactions. The Dodd-Frank Act provides that the dollar amount thresholds for TILA and the CLA must be adjusted annually by any annual percentage increase in the consumer price index. Because there was an annual percentage decrease in the consumer price index as of June 1, 2015, there will be no adjustment for 2016. Therefore, the protections of TILA and the CLA generally will apply to consumer credit transactions and consumer leases of $54,600 or less in 2016 - the same thresholds that applied in 2015. However, private education loans and loans secured by real property (such as mortgages) are subject to TILA regardless of the loan amount. A copy of the news release and links to related documents can be found at: http://www. consumerfinance.gov/newsroom/agencies-announce-dollarthresholds- in-regulations-z-and-m-for-exempt-consumer-creditand- lease-transactions/.
On November 23, the Consumer Financial Protection Bureau issued Compliance Bulletin 2015-06 to remind covered entities of the requirements applicable to consumer authorizations for preauthorized electronic fund transfers from a consumer’s account. The Bureau notes that some entities may not fully comply with the requirements imposed by the Electronic Fund Transfer Act, Regulation E, and the Electronic Signatures in Global and National Commerce Act. The bulletin provides guidance concerning the receipt of a consumer’s authorization for preauthorized EFTs over the telephone. The bulletin also reminds entities that they must provide the consumer with a copy of the terms of the preauthorized EFT, including the amount and timing of the payments and the recurring nature of the payments. When practical, the Bureau encourages entities to provide a copy of the authorization to the consumer before the first preauthorized EFT is initiated. In addition to the bulletin, the Bureau is publishing four sample letters consumers may use to revoke a company’s authorization to automatically debit an account. For a copy of the bulletin, go to: http://files.consumerfinance. gov/f/201511_cfpb_compliance-bulletin-2015-06-requirementsfor- consumer-authorizations-for-preauthorized-electronic-fundtransfers.pdf.
On November 20, the Consumer Financial Protection Bureau released its semiannual update of its rulemaking agenda. The agenda includes current initiatives as well as potential initiatives beyond November 2016, such as rulemakings addressing issues related to credit reporting and student loan servicing. For further details, visit: http://www.consumerfinance.gov/blog/fall-2015-rulemaking-agenda/.
On November 17, the Department of Housing and Urban Development announced a conciliation agreement with Mortgage One, Inc., a Michigan-based lender, resolving allegations that the lender discriminated against a loan applicant who derived income from a disability insurance program, in violation of the Fair Housing Act. The loan applicant alleged that Mortgage One requested that he provide verification from his doctor that his disability was permanent and/or a letter from the Social Security Administration stating that he would remain on disability for at least three years. A copy of the news release and a link to the agreement can be found at: http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2015/HUDNo_15-147.
On November 16, the Federal Trade Commission and the Federal Communications Commission announced that they signed a Memorandum of Understanding to continue their existing cooperation concerning consumer protection issues. The MOU outlines methods by which the agencies will coordinate joint enforcement actions - when appropriate and consistent with their respective jurisdictions- and share information regarding consumer complaints to the extent feasible. The MOU also recognizes the two agencies’ complementary authorities with regard to practices by common carriers. Further details are available at: https://www.ftc.gov/news-events/press-releases/2015/11/ftc-fcc-sign-memorandumunderstanding- continued-cooperation.