CFPB  Enforcement

  • Debt collection: On July 14th, the CFPB filed a lawsuit in a federal district court in Georgia against Frederick J. Hanna & Associates and its three principal partners for allegedly violating the Fair Debt Collection Practices Act and the Dodd-Frank Act by intimidating consumers with deceptive court filings and introducing faulty or unsubstantiated evidence. The CFPB’s suit seeks restitution, a civil penalty, and an injunction against the company and its partners. The CFPB alleged in a press release that, “the firm operates like a factory, producing hundreds of thousands of debt collection lawsuits against consumers on behalf of its clients, which mainly include banks, debt buyers, and major credit card issuers.”  The CFPB added that the firm, “collected millions of dollars each year through [more than 350,000 debt collection lawsuits between 2009 and 2013], often from consumers who  may not actually have owed the debts.”

CFPB Operations

  • Mortgage brokers: On July 17th, the CFPB published in the Federal Register (79 FR 41671) policy guidance regarding the CFPB’s supervisory and enforcement considerations in mortgage transactions involving mortgage brokers transitioning to a “mini-correspondent” lender model. The guidance also identifies those who, regardless of business structure, must comply with broker compensation rules. In a press release, the CFPB stated that it, “is concerned that some mortgage brokers may be setting up arrangements with investors in which the broker claims to be a ‘mini-correspondent lender,’ when in fact the broker is still essentially just facilitating a transaction between a borrower and a lender. While some brokers may be setting up such arrangements because they intend to grow into full correspondent lenders, the [CFPB] is concerned that other brokers may simply be attempting to evade consumer protection rules.”
  • Inspector General: On July 7th, the Office of Inspector General (OIG) of the CFPB and the Federal Reserve published its semimonthly update to its Work Plan to include audits of the CFPB’s information technology programs, the CFPB’s human resources practices, and the CFPB’s use of money in its Civil Penalty Fund.

CFPB & Congress

  • Appropriations: On July 16th, the House of Representatives passed H.R. 5016, the “Financial Services and General Government Appropriations Act, 2015,” by a vote of 228- 195. The bill would subject the CFPB to the Congressional appropriations process as of October 1, 2015.  House Financial Services Committee Ranking Member Maxine Waters (D-CA) introduced H.Amdt.1066 to strike the bill’s provision modifying the CFPB’s source of funding, but Rep. Ander Crenshaw (R-FL), who introduced the underlying appropriations bill, objected that the amendment would inappropriately constitute legislation in an appropriations bill; the amendment failed.
  • Headquarters renovation: On July 10th, Bloomberg Businessweek published an article entitled, “Republican Attacks on a CFPB Office Renovation Don’t Add Up.” The article reviewed a number of comparable build outs and stated that, “the [General Services Administration] has said the costs are in line with other government renovation projects.” The article asserted that, because the funding will come from the Federal Reserve, the renovation will cost Congress, “precisely zero.” On July 15th, the staff of the House Financial Services Committee published a blog post outlining “the six biggest inaccuracies” in the Bloomberg report. The blog post concluded by emphasizing a line from the recent OIG report (previously reported) stating that, “a sound business case is not available to support the funding of the renovation.”

CFPB Outreach

  • Debt collection: On July 15th, the CFPB and the Federal Trade Commission announced that they will co-host a roundtable entitled, “Debt Collection & the Latino Community,” in Long Beach (CA) on October 23, 2014.
  • Consumer complaints: On July 16th, CFPB Director Richard Cordray delivered prepared remarks at the CFPB’s field hearing in El Paso (TX). Cordray announced that the CFPB is proposing to expand the Consumer Complaint Database to provide consumers the opportunity to share narrative stories publicly along with other information about the complaint.  Cordray referenced several examples of such stories to illustrate what the CFPB considers benefits of the proposal:
    • To provide context toward “the significance of the consumer’s complaint” beyond high-level categorical descriptions;
    • To provide additional information that would allow interested groups to identify patterns and trends; and
    • To allow other consumers to access the narratives as part of making decisions about purchasing goods and services.

Cordray stated that the CFPB would publish narratives on an opt-in basis, and would redact phone numbers, addresses, and other identifying information of the authors, who could later withdraw consent to publish the narrative. Companies would be provided an opportunity to respond, in writing, in a statement published concurrently with the consumer narrative. The CFPB provided further details in a Federal Register notice of the proposed policy and request for public comment.

  • Consumer response: On July 16th, the CFPB published a report entitled, “Consumer Response: A Snapshot of Complaints Received,” in which the CFPB analyzed the approximately 395,000 complaints it has received between July 21, 2011, and June 30, 2014.  The CFPB found that:
    • 34% of complaints related to mortgages, 20% to debt collection, 14% to credit cards, and 12% each to credit reporting and bank accounts and bank services;
    • Complaint volume increased 80% from 2012 to 2013;
    • Companies have responded to approximately 96% of complaints, and reported having closed 92% of complaints sent to companies; and
    • 69% of consumers did not dispute the company response.

In the report, the CFPB also provided an overview of its handling of consumer complaints.