The Consumer Financial Protection Bureau
The Consumer Finance Protection Bureau (CFPB) is responsible for consumer protection in the financial sector. CFPB’s jurisdiction includes credit unions, banks, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the United States.
NASCUS closely monitors CFPB developments and responds to request for comments on rules impacting the credit union system.
2021 Updates (see archives at bottom for previous years)
Updates to the small-entity compliance guide on the ability-to-repay/qualified mortgage (QM) rule were issued today by the bureau, reflecting amendments to last year’s final rules to extend the government-sponsored enterprise (GSE) patch, or what the bureau now calls the “temporary GSE QM rule.” The rule is used for loans that are eligible for purchase or guaranteed by Fannie Mae or Freddie Mac; creating a seasoned QM definition; and revising what is now called the general QM definition.
Revoking or revising the “seasoned” qualified mortgage (QM) final rule issued in December is under consideration by the bureau, according to a statement issued Feb. 23. The bureau, in that statement (circulated along with a notice of small-entity compliance guide updates), also said it was looking at whether to delay the July 1 mandatory compliance date for the December final rule on the general QM loan definition. Both rules, which created a “seasoned” QM loan definition and revised the existing QM loan definition – now called the general QM definition – are set to take effect March 1, with mandatory compliance generally set for July 1. The new seasoned QM and general QM definitions in those rules also replaced the debt-to-income ratio ceiling as a QM factor, instead using performance requirements and a pricing component, respectively.
Credit or consumer reporting remain the most complained-about products by consumers, making up more than half (54%) of all complaints received by the agency in the fiscal year that ended Sept. 30, 2020, according to the agency’s fall 2020 semiannual report issued Jan. 21. The credit or consumer reporting complaints also led all complaints in the previous year’s report – but in 2020 represented a bigger share of the total. In 2020, the credit/consumer reporting complaints accounted for 54%, compared to 43% in 2019. Rounding out the top five were: debt collection (17% of all complaints, compared to 22% in 2019); credit cards (7% in 2020, 8% in 2019); checking or savings (6% compared to 8%); and mortgages (6% compared to 8%).
A special edition of the bureau’s Supervisory Highlights that detailing prioritized assessment (PA) work in the area of COVID-19 has been published. The bureau said the PA observations are described in the areas of mortgage, auto and student loan servicing, credit card account management, consumer reporting-furnishing, debt collection, deposits, prepaid cards, and small business lending. The bureau said the PA supervisory work was conducted last year after the sudden onset of the COVID-19 pandemic and focused on assessing risks to consumers resulting from the pandemic.
A new rule codifying that supervisory guidance does not have the force of law, and that enforcement actions are not based on the guidance, was finalized Tuesday by the bureau; both the FDIC and the OCC also finalized the regulation. The rule codifies a 2018 interagency statement on the role of supervisory guidance that was intended to clarify the differences between regulations and guidance. The final rule also states that the statement is binding on the agency.
An exemption from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs) for smaller credit unions and banks and was issued as a final rule Tuesday by the bureau. It takes effect upon publication in the Federal Register. The rule exempts from the HPML escrow requirement any loan made by a bank or credit union and secured by a first lien on the principal dwelling of a consumer if: the institution has assets of $10 billion or less; the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and certain of the existing HPML escrow exemption criteria are met.
A summary of the October 2020 debt collection rule regarding communications between collectors and debtors is provided in a small entity compliance guide released by the federal consumer financial protection agency Friday. The debt collection rule takes effect Nov. 30, 2021, the guide notes. It applies to attempts to communicate, communications, and other conduct by debt collectors occurring on or after that date, regardless of when the underlying debt was incurred.
Credit unions and other financial institutions are encouraged to better serve consumers with limited English proficiency (LEP) and are being provided principles and guidelines to assist financial institutions seeking to better serve LEP consumers in non-English languages, the CFPB said today. The bureau said its “Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency” was also aimed at complying with the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), the Equal Credit Opportunity Act (ECOA) and other applicable laws. The statement presents general principles for financial institutions to consider in serving LEP consumers in languages other than English. It also provides guidelines institutions can use to help advance those principles and develop compliance solutions, including key considerations to inform those decisions and specific information about common components of a compliance management system (CMS).
The beta release of the Home Mortgage Disclosure Act (HMDA) platform for data collected in 2021 is available now for testing, the bureau said today. The platform may be used by credit unions and other financial institutions to determine whether their sample loan/application register (LAR) data comply with the reporting requirements outlined in the filing instructions guide (FIG) for HMDA data collected in 2021, the bureau said. To access the 2021 Beta Platform, financial institutions can use their login credentials from the 2020 filing period or, if they have not previously filed data, establish log-in credentials, and upload sample 2021 HMDA files to perform validation on their data, the bureau said. The bureau will continue to add functionality to the 2021 beta platform during the testing period, it said. It emphasized the beta platform is for testing purposes only and that no data submitted on it will be considered for HMDA data reporting compliance. (The filing instructions guide (FIG) can be found here.)
Applications for appointments to membership of one of the bureau’s four advisory committees that offer input from various sections of the financial industry, and for research projects by the agency, are now being taken, according to a notice published today in the Federal Register. Applications are due by Feb. 24; new members, selected through the application process, are expected to be announced in late summer, according to the agency. The bureau said it is taking applications for membership in its Consumer Advisory Board (CAB), Community Bank Advisory Council (CBAC), Credit Union Advisory Council (CUAC), and Academic Research Council (ARC), (collectively, advisory committees). According to the bureau, membership in the committees includes representatives of consumers, diverse communities, the financial services industry, academics, and economists. Appointments to the committees are generally for two years. “However, the Director may amend the respective committee charters from time to time during the charter terms, as the Director deems necessary to accomplish the purpose of the committees,” the agency said in its announcement.
Considering the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services (such as the regulation of FinTech companies engaged in money transmission) is among the 100 total recommendations from a CFPB taskforce on federal consumer financial law released Tuesday. The report was issued by the bureau’s Taskforce on Federal Consumer Financial Law after about a year of deliberations. Formed in January 2020, the group was charged with developing recommendations for ways to improve and strengthen consumer financial laws and regulations Other recommendations touching on states included: Continue to increase dialogue with state regulators to bridge knowledge gaps and streamline regulation; authorize CFPB to issue licenses to non-depository institutions that provide lending, money transmission, and payments services.