CFPB Operations

  • Mortgage lending: On August 4th, the Federal Reserve published its quarterly “Senior Loan Officer Opinion Survey on Bank Lending Practices,” which suggested that banks are making fewer loans as a result of the CFPB’s Ability-to-Repay/Qualified Mortgages (ATR/QM) rule, which came into effect in January 2014. The survey found that, “Only a small fraction of large banks indicated…that the new rule has affected their approval rates for prime conforming mortgages, while a more substantial share of the other respondents reported that the rules were lowering their approval rates on such loans.” “In addition,” the report continued, “among the banks reporting that the rules had no effect on their approval rates, about half indicated that lending policies would have been tighter without the safe harbor for mortgages that pass [government-sponsored enterprises’] automated underwriting models.”
  • Consumer complaints: On August 6th, The Washington Examiner reported that CFPB Assistant Director for the Office of Consumer Response Scott Pluta, “tried to prevent public release of bank responses to consumer complaints.”  The report, based on information obtained by Cause of Action, states that, “Pluta appeared to be responding to fears expressed by bankers that their discussions with [the] CFPB about consumer complaints would be releasable under [the Freedom of Information Act].”  The report also notes that Pluta is the official that CFPB employee management whistleblower Angela Martin claimed had demoted her and given her a critical performance review following her complaints of discrimination. A CFPB spokesperson responded to the Examiner by stating, “This was a pre-decisional, internal discussion among CFPB employees regarding disclosure of confidential materials collected as part of our consumer complaint and investigation process. The CFPB determined that these materials are exempted from disclosure as law enforcement information and confidential commercial information.”
  • On-campus marketing: On August 6th, the CFPB published a blog post entitled, “Alerting Colleges About Secret Banking Contracts,” in which the CFPB reviewed the transparency of contracts between each of the 14 Big Ten schools and the banks and credit unions that market financial products to their students.  In the post, CFPB Student Loan Ombudsman Rohit Chopra referenced CFPB Director Richard Cordray’s request in December 2013 (previously reported) that financial institutions voluntarily make public their agreements  with colleges and universities regarding marketing of financial products to students.  Of the 14 Big Ten schools, the CFPB reported that 9 schools’ financial partners do not disclose the contract on the respective financial institution’s website, that three partially disclose the contract online, and that 1 does not appear to have a financial partner for such purposes.Chopra stated that the CFPB is sending alerts to those schools whose financial partners have not yet, “committed to transparency when it comes to student financial products.”

CFPB & Congress

  • Research transparency: On August 4th, the Congressional Budget Office (CBO) published a cost estimate for H.R. 4539, the “[CFPB] Research Transparency Act,” which Rep. Michael Fitzpatrick (R-PA) introduced on May 1st  (previously reported).  The bill would require that the CFPB provide, in publishing a research paper, “all studies, data, and other analyses on which the paper was based.”  The CBO states that the bill would increase direct spending by approximately $1 million annually and cover, “an estimated 10 research papers and other research products that would be published each year.”  The bill is pending before the House Financial Services Committee.

CFPB  Rulemaking

  • Mortgage servicing: On July 29th, the American Bankers Association (ABA) sent a letter to CFPB Assistant Director for Regulations Kelly Cochran seeking clarifications to the CFPB’s mortgage servicing rules. Specifically, the ABA requested clarification regarding the application of the “120-day rule” to “rolling delinquencies” and also regarding the requirement to provide periodic statements to borrowers of charged-off loans. Finally, the ABA requested that the CFPB finalize its interim final rule, as published (78 FR 62993), to provide limited exemptions from the servicing rules in situations in which a borrower filed for bankruptcy.