CFPB Updates Regulation P
The CFPB recently issued a final rule amending Regulation P, the regulation requiring financial institutions to disclose their privacy policies annually to their customers. The regulation had previously required financial institutions to mail the privacy notices to their customers. Responding to concerns that this requirement caused information overload to consumers and unnecessary financial burden to financial institutions, the CFPB amended the rule to allow online posting of privacy notices if certain conditions are met.
CFPB Defines “Larger Participants” of International Money Transfer Market
On September 23, 2014, the CFPB issued a final rule amending the Dodd-Frank regulation that defines larger participants of certain consumer financial product and service markets. The amendment identifies a market for international money transfers and defines “larger participants” of this market.
Under the final rule, a nonbank entity constitutes a “larger participant” of the international money transfer market if it performs at least one million aggregate international money transfers annually.
CFPB Amends CLA and TILA Regulations
On September 22, 2014, the CFPB issued a final rule amending the official interpretations and commentary for the Consumer Leasing Act (“CLA”) and Truth in Lending Act (“TILA”) implementing regulations.
Under the Dodd-Frank Act, the CLA’s dollar threshold for exempt consumer leases, and TILA’s dollar threshold for exempt consumer credit transactions, must be adjusted annually based upon increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers. Based on this year’s increase in the index, the amendments adjust these exemption thresholds to $54,600. The amendments become effective January 1, 2015.
CFPB Issues Final Rule on Electronic Fund Transfers
On September 18, 2014, the CFPB issued a final rule amending subpart B of Regulation E under the Electronic Fund Transfer Act. Under the original rule, an exception allowing insured institutions to estimate certain pricing disclosures would have expired on July 21, 2015. The revised rule extends this provision to July 21, 2020.
The final rule becomes effective November 17, 2014. To learn more, visit: https://www.federalregister.
CFPB and Federal Reserve Release Mortgage Rule Webinar
The CFPB and Federal Reserve recently made available a recording of a webinar on the merger of the TILA-RESPA mortgage disclosure rules. This is the third in a series of webinars aimed at helping financial institutions comply with the new rules.
CFPB Proposes Policy on No-Action Letters
The CFPB announced that it is considering a policy on No-Action Letters. Under the proposed policy, the agency would issue no-action letters to applicants who are launching beneficial consumer products or services, where the potential application of the Dodd-Frank regulatory framework to the new product or service is unclear.
An applicant would have to explain in detail why the product or service would provide substantial consumer benefit, why the application of the regulatory framework to the proposed product or service is unclear, what risks the product or service may pose, and how those risks could be mitigated.
While not binding on the agency, the no-action letters would indicate the CFPB’s present intent not to institute an enforcement action with respect to the product or service.
The CFPB is accepting public comment until December 15, 2014. To submit a comment, visit: https://www.federalregister.gov/ articles/2014/10/16/2014-24645/policy-on-no- action-letters
To learn more, visit:
CFPB Seeks Public Comment on Proposed Auto Finance Regulation
The CFPB is seeking public comment on a proposed regulation that would define “larger participants” of the auto finance market. The rule would cover auto finance companies with 10,000 or more originations annually.
The deadline for submitting comments is December
DOJ Releases FAQ on Bank Mergers
The Department of Justice recently released a frequently-asked-questions guide on how it evaluates the potential competitive effects of mergers and acquisitions under financial regulatory schemes such as the Bank Holding Company Act. The FAQs discuss the Federal Reserve’s application review process, the factors it considers, and the role of the Antitrust Division of the Department of Justice in the review process.
CFPB Updates Mortgage Rules Readiness Guide
The CFPB has updated its Mortgage Rules Readiness Guide to include coverage of the new TILA-RESPA integrated disclosures.
Federal Reserve Releases EFTA Report
The Federal Reserve recently released a report regarding debit card transactions in 2013, including data on volume, issuer costs, and fraud losses. As in previous years, issuer costs varied dramatically, with the median issuer having a cost of 14.9 cents per transaction and issuers in the 75th percentile having a cost of 42.2 cents per transaction. The agency estimated total fraud losses to be about $1.5 billion.
CFPB Updates Small Entity Compliance Guide
The CFPB recently updated its small entity compliance guide for the TILA-RESPA integrated disclosure rule.
CFPB Warns Credit Card Issuers About Deceptive Marketing Practices
The CFPB recently issued a bulletin cautioning credit card issuers to avoid potentially deceptive marketing practices with respect to interest rate promotions. Credit card plans often offer consumers a one-month grace period on new purchases, such that interest does not accrue during the first month after a purchase is made. Many card issuers, the agency noted, have been offering promotions that lower a consumer’s interest rate but weaken or eliminate the grace period feature. The agency further noted that these promotions have not adequately disclosed how accepting the promotion will alter the grace period feature on an account.
In the bulletin, the CFPB highlighted the Dodd- Frank Act’s prohibition on misleading practices, and urged issuers to ensure that their promotional materials adequately and accurately describe the effect of promotional offers on the grace period for new purchases.
OCC Releases “Heightened Expectations” for Large Banks
The OCC recently completed its “heightened expectations” guidelines for covered banks with more than $50 billion in assets. These guidelines set forth enforceable minimum standards for governance and oversight of large banks. The OCC developed these “heightened expectations” out of its supervisory experience during the financial crisis, when large bank risk management practices were weak.
OCC Updates Electronic Funds Transfers Handbook
The OCC recently released an updated version of its handbook on electronic funds transfers. This updated version replaces the 2011 version, and incorporates the CFPB’s new remittance transfers rules.
FHA Revises ARM Rule
On August 26, 2014, the FHA issued a final rule revising its single family ARM regulations. Intended to harmonize the FHA’s requirements with the CFPB’s regulations, the final rule provides for a 45- day look-back period and a 60-120 day notice period prior to interest rate adjustments.
FHA Revises Prepayment Rule
On August 26, 2014, the FHA issued a final rule revising its regulations on prepayment. Formerly, a mortgagee was permitted to charge interest through the end of a month, regardless of when payment was made. Under the revised rule, mortgagees may only charge interest through the date of payment.
CFPB Issues Bulletin on Mortgage Servicing Transfers
On August 19, 2014, the CFPB issued a bulletin to residential mortgage servicers and subservicers regarding transfers of servicing rights. In the bulletin, the CFPB reminded servicers of their obligations under the CFPB’s servicing rule, such as maintaining policies and procedures reasonably designed to facilitate information exchange during transfers.
The agency noted that such policies might include: servicing contracts requiring the transferor to provide all necessary information at transfer; pre- transfer testing protocol; and post-transfer quality control work.
CFPB Updates Dollar Thresholds
On August 15, 2014, the CFPB issued a final rule updating the 2015 dollar thresholds under the CARD Act, HOEPA, and the ability-to-repay and qualified mortgage rules.