Consumer Financial Protection Bureau

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

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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 Release.  White Paper.

CFPB Proposes Prohibition on Mandatory Consumer Arbitration Clauses

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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 Release.  Proposed Rule.

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

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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.

Bureau of Consumer Financial Protection Issues Policy on No-Action Letters

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On February 18, the Consumer Financial Protection Bureau issued a new policy statement on No-Action Letters.

Under the Policy, Bureau staff, in its discretion, would issue no-action letters (NALs) to specific applicants in instances involving “innovative financial products or services that promise substantial consumer benefit where there is substantial uncertainty whether or how specific provisions of statutes implemented or regulations issued by the Bureau would be applied.”

A NAL would advise the recipient that, subject to its stated limitations, the staff has no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter. However, NALs would be subject to modification or revocation at any time at the discretion of the staff, and may be conditioned on particular undertakings by the applicant with respect to product or service usage and data-sharing with the Bureau. Also, NALs would be nonbinding on the Bureau, and would not bind courts or other actors who might challenge a NAL recipient’s product or service, such as other regulators or parties in litigation.

CFPB Launches Public Inquiry to Inform Agency Review of the Credit Card Market

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On March 17, the Consumer Financial Protection Bureau (CFPB) announced it is seeking public comment on how the credit card market is functioning and the impact of credit card protections on consumers and issuers. This public inquiry will focus on issues including credit card terms, the use of consumer disclosures, credit card debt collection practices, and rewards programs, among others.  Release.

CFPB Issues Proposal To Facilitate Access To Credit In Rural And Underserved Areas

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On January 29, the Consumer Financial Protection Bureau (CFPB) proposed several changes to its mortgage rules to facilitate lending in rural and underserved areas.  The proposed rule would increase the number of financial institutions able to offer certain types of mortgages in rural and underserved areas. The proposed rule will be open for public comment until March 30, 2015.  Release.  Proposed Rule.

Regulators Release Guidance on Private Student Loans With Graduated Repayment Terms at Origination

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On January 29, the federal financial regulatory agencies (the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency), in partnership with the State Liaison Committee (SLC) of the Federal Financial Institutions Examination Council, issued guidance for financial institutions on private student loans with graduated repayment terms at origination.

This guidance provides principles that financial institutions should consider in their policies and procedures for originating private student loans with graduated repayment terms which are structured to provide for lower initial monthly payments that gradually increase.  The Agencies issued this guidance because they recognize that the competitive job market, traditionally low entry-level salaries, and higher student debt loads can contribute to some borrowers preferring greater flexibility with their payments as they transition into the labor market.  Press Release.  Published Guidance.

FDIC Releases Technical Assistance Video on CFPB Mortgage Rules

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November 19, the FDIC announced the release of the first in a series of three new technical assistance videos developed to assist bank employees in meeting regulatory requirements.  The new videos will address compliance with certain mortgage rules issued by the Consumer Financial Protection Bureau.  Release.  Video Series.

Joint Task Force on HAMP Mortgage Modification Scams

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On December 1, SIGTARP, the Consumer Financial Protection Bureau, and Treasury created a joint task force to deal with scams targeted at homeowners seeking HAMP modifications. The joint task force issued a fraud alert which will be provided directly to homeowners eligible for HAMP. Treasury Release. Consumer Fraud Alert.