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CFPB Finalizes New Foreclosure Protections

 

On August 4, 2016, the Consumer Financial Protection Bureau (CFPB) issued updated servicing rules to expand foreclosure protections for homeowners and struggling borrowers. The new measures include expanding consumer protections to surviving family members, clarifying borrower protections in servicing transfers, providing periodic statements to borrowers in bankruptcy, and requiring servicers to provide certain foreclosure protections more than once over the life of the loan, among other protections. The majority of the provisions of the final rule will become effective 12 months after publication in the Federal Register. Press Release. Final Rule.

Consumer Financial Protection Bureau Considers Proposal to Overhaul Debt Collection Market

On July 28, 2016, the Consumer Financial Protection Bureau (“CFPB”) announced that it is considering a proposal that would significantly alter the debt collection industry “by capping collector contact attempts and by helping to ensure that companies collect the correct debt.”  Press Release.

Consumer Financial Protection Bureau Proposes Rule to End Payday Debt Traps

On June 2, 2016, the Consumer Financial Protection Board (the “CFPB”) announced a proposed rule that would substantially change the rules governing “payday loans, auto title loans, deposit advance products, and certain high-cost installment and open-end loans.”  The CFPB also indicated it would investigate whether additional products and protections should be covered. Press Release.

The stated purpose of the rulemaking is to protect consumers living paycheck to paycheck from the so-called “debt spiral” of serial borrowing and multiple loan origination and overdraft fees occasioned by chronic liquidity needs.  Given that the proposed rule spans 1,334 densely filled pages, it will take some time to digest the broad requirements and potential impact.  Thus far, however, opinions on whether the proposed rulemaking is likely to achieve its stated goals and the impact it may have on particular businesses or borrowers seem to depend on perspective.  For some, the proposed rule is an example of overreaching by the CFPB that threatens their business and really “miss[es] the mark,” as Richard Hunt, President and CEO of the Consumer Bankers Association, noted last week.  For others, the rulemaking would appear to have a marginal impact, if any.  And some FinTech companies view the proposed rule as an opportunity for market disruption and new entrants.

For a summary of the proposed rules and their potential impact on Current Providers of Short-Term Consumer Loans, Established Banking Institutions and New Market Entrants, and Consumers, please take a look at our analysis, The New CFPB Payday Lending Rules:  An Early Analysis.

U.S. Treasury Department Issues White Paper on Online Marketplace Lending Industry

On May 10, 2016, the Department of the Treasury issued a white paper on online marketplace lending that maps the current market landscape, reviews industry insights and offers policy proposals for the road ahead.  Based on approximately 100 responses from online marketplace lenders, financial institutions, investors and other key industry figures, the Treasury, in consultation with the CFPB, FDIC, Federal Reserve Board, FTC, OCC, SBA and SEC, made several notable recommendations and observations.

The white paper explores policies that would expand regulatory oversight, including standardized representations and warranties in securitizations, pricing methodology standards, the implementation of a registry for tracking data on transactions and the reporting of loan-level performance, among others.  In addition, the Treasury mentions potential cybersecurity threats, anti-money laundering, the uneven protections and regulations in place for small business borrowers and the growth of the mortgage and auto loan markets as some of the emerging trends to monitor.  The Treasury is also considering the role of federal agencies in regulating these areas, including the formation of an interagency working group for online market place lending.  Press ReleaseWhite Paper.

CFPB Proposes Prohibition on Mandatory Consumer Arbitration Clauses

On May 5, 2016, the Consumer Financial Protection Bureau (CFPB) issued and sought comment on proposed rules prohibiting mandatory arbitration clauses that deny groups of consumers their day in court.  Under the proposed rules, companies would be prohibited from putting mandatory arbitration clauses in new consumer contracts that would prevent consumers from bringing class actions.  Comments must be received on or before 90 days after publication in the Federal Register.  Press ReleaseProposed Rule.

The CFPB Releases Consumer Bulletin on Marketplace Lending and Announces It Is Accepting Consumer Complaints

On March 7, 2016, the Consumer Financial Protection Bureau (the “CFPB”) released a consumer bulletin with information and tips for consumers of marketplace lending. The bulletin provides consumers with an overview of the peer-to-peer lending platform, as well as tips and general steps that should be taken when shopping for a loan. In conjunction with the release, the CFPB also announced that it is accepting complaints from consumers taking out loans from online marketplace lenders. Complaints are anticipated to be addressed within 60 days. CFPB Guide. Press Release.

CFPB Study Finds Electronic Mortgage Closings Can Benefit Consumers

On August 4, the CFPB published a report on its “Know Before You Owe” eClosing project which found that borrowers can benefit from electronic closings when navigating the mortgage closing process.  Specifically, the results of the pilot indicate that those who closed their mortgage using an electronic platform are generally better off on measures of understanding, efficiency, and feeling empowered than borrowers who used just paper forms.  ReleaseReport.