CFPB Enforcement

  • Foreclosures: On July 23rd, the CFPB announced a “sweep” against foreclosure relief service providers through enforcement actions conducted in cooperation with the Federal Trade Commission and 15 states.  The CFPB filed three lawsuits against companies and individuals that allegedly violated Regulation O, formerly known as the Mortgage Assistance Relief Services (MARS) Rule, and also (regarding some of the defendants)allegedly violated the Dodd-Frank Act’s prohibitions against deceptive practices.  The CFPB alleged that the defendants collected advance fees before obtaining a loan modification, misrepresented the probability of obtaining such a modification, made other false promises about loan modifications, and “duped” consumers into believing that they would receive legal representation.  The suits seek victim compensation, civil fines, and injunctions against the defendants.  Separately, the FTC filed 6 related lawsuits and the 15 states have taken or will take 32 related actions.  In conjunction with the announcement, the CFPB published a model third party authorization form for mortgage servicers, as well as materials to assist consumers in recognizing illegal foreclosure practices.

CFPB Operations

  • Debt collection: On July 23rd, the CFPB published a notice in the Federal Register (79 FR 42765) to extend through August 22, 2014, the public comment period for its proposed consumer survey of interactions with the debt collection industry.  The CFPB had originally published its survey proposal on March 7, 2014, and solicited public comments through May 6, 2014 (previously reported).  The recent notice did not provide an explanation for the extension.
  • Financial literacy: On July 17th, the CFPB submitted to the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee, pursuant to the Dodd-Frank Act, its annual report on financial literacy.  In an introductory message, CFPB Director Richard Cordray stated that, “The CFPB is uniquely positioned to help bridge the gap between people’s actual financial capability and the complex financial decisions they have to make.”  In the report, the CFPB reviewed its financial literacy strategy, financial education initiatives, research efforts to develop effective tools and initiatives, and consumer outreach.
  • Consumer complaints: On July 21st, the American Bankers Association, Financial Services Roundtable, Consumer Bankers Association, U.S. Chamber of Commerce, and The Clearing House sent a letter to the CFPB requesting an extension of at least 90 days to the CFPB’s existing 30-day public comment period for its proposed policy to publish narrative Published by Bob Belair, Consumer Regulatory Team Leader | Washington, DC Office       July 28, 20142descriptions of complaints in its consumer complaint database.  Director Cordray proposed the policy in prepared remarks at the CFPB’s July 16thfield hearing in El Paso (TX), and the CFPB published a corresponding notice in the Federal Register (79 FR 42765) on July 23rd.  The signatories request additional time to analyze and respond to the proposal’s, “many serious legal and practical issues.”  Further, the signatories argue that a longer comment period, “is consistent with the standards that other federal agencies must follow.”  They also argue that the CFPB has yet to finalize, “two vital operational elements of its proposal,” without which the signatories argue that the public cannot appropriately comment.  The CFPB stated in its Federal Register notice that it offered a 30-day comment period even though the proposed policy statement is, “exempt from notice and public comment pursuant to [the Administrative Procedure Act].”
  • Information security: On July 17th, the Office of the Inspector General (OIG) of the Federal Reserve and the CFPB published an audit report entitled, “Security Control Review of the CFPB’s Cloud Computing-Based General Support System,” pursuant to the Federal Information Security Management Act of 2002 (FISMA).  The OIG reported that, “the CFPB has taken a number of steps to secure its cloud computing-based [general support system] in accordance with FISMA requirements” but that, “we found that improvements are needed to ensure that FISMA processes and controls are effectively and consistently implemented across all information security areas.”  The OIG stated that it provided undisclosed recommendations for certain information security areas that it will address in future audit reports.

CFPB Outreach

  • Consumer complaints: On July 21st, the CFPB announced that it is expanding the issue areas for which it accepts consumer complaints to include prepaid cards, benefit cards, and general purpose reloadable cards, as well as debt settlement services, credit repair services, and pawn and title loans.  Director Cordray stated, “By accepting consumer complaints about prepaid products and certain other services, we will be giving people a greater voice in these markets and a place to turn to when they encounter problems.”
  • Third anniversary: On July 21st, the CFPB marked its third anniversary through a blog post highlighting its operations to: 
    • Handle consumer complains;
    • Educate and inform consumers; 
    • Engage consumers through town hall meetings and field hearings; 
    • “Root out…dead ends, deception, debt traps, and discrimination”; and
    • Provide consumer relief and refunds.

CFPB & Congress

  • Headquarters renovation: On July 18th, House Financial Services Committee Chairman Jeb Hensarling (R-TX) sent a letter to Director Cordray requesting by July 31st, “full, unredacted copies” of documents related to the CFPB’s headquarters renovation, including but not limited to certain e-mail communications and decision memoranda, the CFPB’s “businesscase” for the renovation, and, “the identity of the individual who made the decision to 3renovate the building.”  Separately, Judicial Watch, representing The Washington Examiner, has filed a FOIA suit, pending in the U.S. District Court for the District of Columbia, to obtain similar documents.
  • Dodd-Frank Act anniversary: On July 23rd, the House Financial Services Committee held a hearing entitled, “Assessing the Impact of the Dodd-Frank Act Four Years Later.”  The Committee heard testimony from:
    • Former Committee Chairman Barney Frank;
    • Dale Wilson, President and CEO of First State Bank;
    • Anthony Carfang, Partner at Treasury Strategies, Inc.;
    • Thomas Deas, Vice President and Treasurer at FMC Corporation, on behalf of the 
    • Coalition for Derivatives End-Users; and
    • Paul Kupiec, Resident Scholar at the American Enterprise Institute.

The hearing was intended, “to examine the effect of the Dodd-Frank Act on the financial services industry, consumers, and American competitiveness over the course of the past four years since its enactment.”

CFPB Rulemaking

  • Small creditors: On July 15th, the Independent Community Bankers of America and 45 state and regional banking associations in, “areas traditionally underserved by large lenders” sent a letter to Director Cordray requesting that the CFPB, “revise the current ability-torepay/qualified mortgage (QM) rules and escrow requirements for higher-priced mortgage loans to allow [certain] community bank loans…to receive automatic QM safe harbor status and an exemption from the escrow requirements if the loans are higher priced.”