CFPB & Congress
Data Collection: Recently, the CFPB submitted a 49-page response to questions posed by members of the House Financial Services Committee during CFPB Deputy Director Steven Antonakes’ appearance before the Committee on July 9th . The questions concerned the CFPB’s personally identifiable information (PII) collection efforts. In its response, the CFPB maintained that it “does not monitor the accounts of particular consumers and does not track the financial habits or activities of any individual consumer.” The CFPB response also stated that:
- The CFPB itself experienced a total of three data breach incidents involving PII about three consumers resulting, in each instance, “from a Bureau employee error,” in response to which the consumers received credit monitoring services for one year;
- The CFPB maintains contracts with 11 companies for purchasing, collecting, analyzing, and storing data;
- The CFPB’s whitepapers “are based on analytically rigorous and objective analysis of a robust data set” and “draw conclusions that are supported by the data,” in response to Rep. Luetkemeyer’s (R-MO) concern that recent whitepapers on payday loans and overdraft products (previously reported) are not empirically based;
- The CFPB, as Director Richard Cordray testified on September 12th, has recently issued “a number” of orders pursuant to Section 1022 of the Dodd-Frank Act to seek “standard form consumer credit agreements from a number of covered persons”; and
- Loan-level data that the CFPB obtains through supervisory activities is exempt from public disclosure pursuant to Exemption 8 of the Freedom of Information Act (FOIA) and any data that contains trade secrets or confidential commercial information is exempt pursuant to Exemption 4 of the FOIA.
Student Loans: On October 16th, the CFPB published its second “Annual Report of the CFPB Student Loan Ombudsman.” Separately, CFPB Student Loan Ombudsman Rohit Chopra published a consumer advisory on the CFPB blog entitled, “Stop Getting Sidetracked by Your Student Loan Servicer.”
In the annual report, the CFPB analyzes the approximately 3,800 student loan complaints it received between October 1, 2012, and September 30, 2013, and noted several “themes” in the data, including:
- Significant problems persisting in loan modification programs;
- Poor communication about policies related to payment applications and processing;
- Borrower misunderstandings when paying either in excess of the minimum payment or below the minimum payment;
- Difficulty obtaining accurate payoff information;
- Problems from servicing transfers; and
- A decreasing prevalence of improper treatment of military borrowers. In the report, Chopra recommends that Congress and federal regulators “determine whether efforts to improve the servicing of mortgage and credit card obligations might also be applicable to the student loan market.”
- In the consumer advisory, Chopra encourages student loan borrowers to instruct servicers in how to apply any payments exceeding the minimum amount in order to receive the most favorable application. The advisory includes a sample letter to servicers.
- In the annual report, the CFPB analyzes the approximately 3,800 student loan complaints it received between October 1, 2012, and September 30, 2013, and noted several “themes” in the data, including:
- Constitutionality: On October 17th, a federal district court in Washington, D.C. granted the CFPB’s motion to dismiss in a case challenging the constitutionality of the CFPB (Morgan Drexen v. CFPB). The court ruled that the plaintiff lacked standing to raise its constitutional challenge. The court indicated that Morgan Drexen may be able to seek relief in another pending suit in a federal district court in California, where the company is a defendant in a CFPB action, and a Morgan Drexen representative stated that “we intend to do so.” The CFPB filed suit in the California court in August, alleging that Morgan Drexen violated both the Telemarketing Sales Rule and Dodd-Frank Act prohibitions against deceptive acts and practices (previously reported).
- Freedom of Information Act: On September 30th, a federal district court in Washington, D.C. ruled in a FOIA case (Judicial Watch v. CFPB) seeking documents relating to Director Cordray’s recess appointment. The court upheld the three privileges that the CFPB invoked for withholding certain records—the deliberative process privilege, the attorney client/attorney work product privilege, and the presidential communications privilege—with the exception of one e-mail sent by a White House staffer whom the court found the CFPB did not demonstrate worked in a position covered by the privilege. The court ordered the CFPB to demonstrate that the worker’s position is covered or to release the e-mail.
CFPB Overview: On October 14th, Director Cordray delivered remarks at Capital University Law School (OH) to provide an overview of the CFPB. Cordray stated that the agency serves two principal purposes: to reduce the complexity of the financial system and to enhance the public’s financial literacy. Toward those purposes, the CFPB is empowered with six tools: enforcement, supervision, regulation, reports to Congress, responses to consumer complaints, and consumer education initiatives. Cordray also stated that the CFPB:
- Is preparing to address prepaid debit cards through the CFPB’s regulatory function (previously reported);
- May seek to develop a function to rate financial services providers based on the database of complaints it receives;
- Is encouraging employers to include financial literacy programs in employee benefits packages; and
- Will continue to operate successfully under a future presidential administration.
Mortgages: On October 15th, the CFPB released an interim final rule and request for public comment, as well as a bulletin, to clarify the mortgage servicing rules that will go into effect on January 10th.
The interim final rule amends the 2013 Mortgage Servicing Final Rules by:
- Clarifying that the CFPB and the Dodd-Frank Act require servicers to provide certain notices and communications to delinquent borrowers, even if the borrowers have requested not to be contacted pursuant to provisions of the Fair Debt Collection Practices Act (FDCPA);
- Clarifying which federally-required disclosures servicers must provide in counseling borrowers regarding a closed-end loan under the Home Ownership and Equity Protection Act. Public comments are being accepted until 30 days following the interim final rule’s publication in the Federal Register.
The bulletin provides guidance addressing:
- Servicers’ responsibilities to maintain policies and procedures to identify and communicate with a deceased borrower’s successor in interest;
- Servicers’ responsibilities “to make good faith efforts to establish live contact” with a delinquent borrower within 36 days of an unpaid payment and to, if appropriate, inform the borrower of loss mitigation options; and
- Servicers’ responsibilities toward borrowers who are either in bankruptcy or have submitted a cease communication request under the FDCPA.
- The interim final rule amends the 2013 Mortgage Servicing Final Rules by: