(Nov. 24, 2021) Covering everything from the 2015 rule through last year’s revisions, a voluntary assessment of the CFPB’s Home Mortgage Disclosure Act (HMDA) rule is underway, according to the Federal Registernotice published this week by the bureau.
Public comment is being taken on the effort until Jan. 21, according to the notice.
Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), the bureau is required to assess any significant rule or order and report on it within five years of its effective date. Public comment on recommendations must also be invited for modifying, expanding, or eliminating the rule or order before publishing a report on the assessment.
CFPB said the assessment is voluntary since the bureau determined that the HMDA rule does not meet the definition of a “significant” rule for purposes of the Dodd-Frank Act, but the bureau will conduct the review in accordance with the statute’s provisions for required assessments.
That said, it noted that this assessment will address the 2015 HMDA final rule and the subsequent HMDA rules issued in 2017, 2018, 2019, and 2020. Given the difficulty in isolating the different effects of the 2015 rule and subsequent rules, the bureau said it has decided that considering all of them together “will facilitate a more meaningful assessment” of the rule.
To assess the effectiveness of the HMDA rule, CFPB said it intends to evaluate: Institutional coverage and transactional coverage; data points; benefits of the new data and disclosure requirements; and operational and compliance costs. The bureau said it is incorporating into the assessment all rules that implicate calendar-year HMDA data beginning with data collected in 2018 through data collected in 2021.
LINK:
Federal Register notice: Request for Information Regarding the HMDA Rule Assessment
(Nov. 19, 2021) The threshold adjusts to 200 open-end lines of credit for reporting mortgage disclosure data at the start of the new year, CFPB reminded late last week.
In a publicly released letter, bureau stated that in April 2020, the agency issued a final rule amending its Regulation C (implementing the Home Mortgage Disclosure Act, HMDA) to permanently set the reporting threshold for open-end lines of credit at 200, effective Jan. 1, 2022. That threshold replaces the temporary reporting threshold of 500 open-end lines of credit.
The agency noted that, at the start of the year, an institution that originated at least 200 open-end lines of credit in each of the two preceding calendar years, and meets all other Regulation C institutional coverage criteria, will be required to collect, record, and report data about its open-end lines of credit.
For example, an institution that originated at least 200 open-end lines of credit in both calendar years 2020 and 2021, and meets all other Regulation C institutional coverage criteria, will be required to collect, record, and report data about its open-end lines of credit for calendar year 2022 to be submitted by March 1, 2023,” CFPB wrote.
LINK:
CFPB frequently asked questions (FAQs) on institutional and transactional coverage
(Nov. 5, 2021) A consumer reporting agency that uses “name-only” matching procedures is not using reasonable procedures mandated under federal consumer protection laws, the CFPB said this week.
In an “advisory opinion,” the bureau said that matching information to a particular consumer who is the subject of a consumer report based solely on whether the consumer’s first and last names are identical or similar to the names associated with the information falls outside of the Fair Credit Reporting Act (FCRA). The agency termed the practice as “inadequate matching procedures to match information to consumers.”
CFPB said it issued the advisory opinion to remind consumer reporting agencies that their matching practices must comply with their FCRA obligation to ”follow reasonable procedures to assure maximum possible accuracy.”
The advisory opinion notes that consumer complaints CFPB has received – particularly about “incorrect information on your report” – reflect “significant consumer concern” about inaccuracies in consumer reports. Last year, the bureau said, companies provided responses to more than 191,000 such complaints, which represents approximately 68% of credit or consumer reporting complaints responded to by companies that year.14
“Name-only matching,” the bureau asserted, is particularly likely to lead to inaccuracies in consumer reports. “Name-only matching occurs when a consumer reporting agency uses only first and last name to determine whether a particular item of information relates to a particular consumer, without using other personally identifying information such as address, date of birth, or Social Security number,” CFPB said.
The opinion asserts that matching information to a consumer who is the subject of a consumer report by name alone creates “significant accuracy concerns” because most names are shared with other consumers and, in some cases, with thousands of other consumers. “In preparing consumer reports, it is not a reasonable procedure to assure maximum possible accuracy to use insufficient identifiers to match information to the consumer who is the subject of the report,” the agency opined.
LINK:
Fair Credit Reporting; Name-Only Matching Procedures
(Oct. 29, 2021) Stimulating greater competition in consumer financial markets, sharpening focus on repeat offenders, and restoring “relationship banking” make up the “path forward” for CFPB, its director told a House committee this week.
Appearing before the House Financial Services Committee, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra outlined the focus for the agency during his term. He was sworn in Oct. 12 for a five-year term (after Senate confirmation Sept. 30), subject to the will of the president. (Chopra appeared before the Senate Banking Committee this week also, repeating the goals he outlined before the House panel.)
“The CFPB intends to faithfully and fairly administer the consumer financial laws entrusted to the agency by Congress,” Chopra said. “We must use our tools to promote an equitable and inclusive recovery,” he added, referring to the economic condition of the country.
In stimulating “greater competitive intensity,” Chopra asserted that there are many places where greater competition would benefit households and businesses. “For example, I am concerned that there is a dearth of competition in the mortgage refinance market for families with lower balance mortgages,” Chopra said. “The lack of refinancing may disproportionately affect communities of color and others that are historically disadvantaged.”
Regarding credit card and savings interest rates, the CFPB director hinted the bureau would be looking at those areas. “There is also evidence to suggest that many Americans could be paying lower interest rates on their credit cards or earning higher interest rates on their savings,” he said.
He also said the agency would keep “a close eye on practices that might impede competition.” Chopra said the bureau would listen to local financial institutions and “nascent competitors” on the obstacles they face when challenging more dominant players, “including in big tech.”
In sharpening focus on repeat offenders – especially those that violate agency for federal court orders – Chopra said those who violate orders and cause “ongoing harm to families and low-abiding businesses” must be stopped. He said his agency intended to work closely with state regulators and other federal banking agencies (such as the OCC) to “fashion appropriate remedies for repeat offenders.”
In restoring relationship banking, Chopra indicated that automation and algorithms more and more define the consumer financial services market. He charged that results in less transparency into how credit decisions are made. In some cases, he added, those “big data” practices “can unwittingly reinforce biases and discrimination, undermining racial equity.”
He also tied credit reporting, and other industries, to his call for restoring relationship banking, charging that consumers are often not the customer and lack leverage to get problems fixed. “The inability to cut through red tape and get help in one’s financial life can be a major obstacle when seeking a job or when applying for credit,” he said. “Preserving relationship banking is critical to our nation’s resilience and recovery, particularly in these times of stress.”
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(Oct. 29, 2021) Credit unions, banks and other lenders should use census tract information provided in the 2020 Census for mortgage-related data collected beginning next year, CFPB said this week. In a “HMDA Reminder,” the bureau noted that Regulation C (which implements the Home Mortgage Disclosure Act, or HMDA) requires financial institutions to provide census tract information for certain purposes.
“To determine what to report for this data point, a covered financial institution must look to the ‘most recent decennial census conducted by the U.S. Census Bureau’ and ‘use the boundaries and codes in effect on Jan. 1 of the calendar year covered by the loan/application register that it is reporting,’” the bureau said.
Census tract data provided by the 2020 census must be applied to data collected beginning Jan. 1, 2022, the bureau added.
Additionally, according to the agency, the FFIEC’s “Geocoder” will use census tract information from the 2020 census also beginning with the new year. (Geocoder is a web-based tool designed to help financial institutions meet the legal requirement to report information on mortgage, business, and farm loans.)
LINK:
(Oct. 22, 2021) “FedNow” – the Federal Reserve’s much-anticipated (and delayed) round the clock payment system – will be ready “sooner rather than later,” Federal Reserve Bank President Esther George (the “executive sponsor” of the Fed initiative) told a bankers’ group Tuesday, reiterating that a 2023 debut is on track. Her comments confirmed an announcement by the Fed made in February, also targeting 2023 as the debut for the system. Originally, the Fed had set the system’s debut for as late as 2024 … Likely in response to strong political pressure brought by both the credit union and banking industries, the Treasury this week raised the proposed threshold to $10,000 for reporting of balances at accounts held at credit unions and banks to the IRS. The banking industry immediately rejected the amended proposal (as it had the previous threshold of $600 or more). Under the proposal, meant to find and track account holders who are not paying their taxes, credit unions and banks would have to provide data on accounts with total annual deposits or withdrawals worth more than $10,000, not including payroll and beneficiary deposits … Large technology companies operating U.S. payments systems were ordered this week by the CFPB to provide information on their business practices, which CFPB said would help it better understand how the firms use personal payments data and manage data access to users in order to ensure adequate consumer protection. CFPB said the initial orders were sent to Amazon, Apple, Facebook, Google, PayPal, and Square. CFPB said it will also be studying the payment system practices of Chinese tech giants, including Alipay and WeChat Pay.
LINKS:
Statement by Secretary of the Treasury Janet L. Yellen on Congressional Tax Compliance Proposals
CFPB Orders Tech Giants to Turn Over Information on their Payment System Plans
(Oct. 22, 2021) Actions credit unions, banks and nonbanks alike should consider taking to ensure safe-and-sound practices during the transition away from the LIBOR reference rate were outlined in joint guidance this week by NCUA, the federal bank regulators, state credit union and bank regulators and the CFPB.
NCUA covered the joint statement in letter to credit unions (LTCU) 21-CU-10, Interagency Statement on LIBOR Transition. In the letter, NCUA noted that the regulators are emphasizing the expectation that credit unions and other supervised institutions with exposure to LIBOR (the London Interbank Offered Rate) will continue to progress toward an orderly transition away from LIBOR toward an alternative reference rate.
“The NCUA encourages all federally insured credit unions to transition away from using U.S. dollar LIBOR as a reference rate as soon as possible, but no later than Dec. 31, 2021, and to ensure existing contracts have robust fallback language that includes a clearly defined alternative reference rate,” the NCUA letter states.
LIBOR will be discontinued for new contracts after Dec. 31; existing contracts using LIBOR after that date must transition to an alternative by June 30, 2023.
CFPB said it joined the letter to highlight the consumer risks posed by the discontinuation of LIBOR, and urged credit unions, banks and nonbanks alike to continue their efforts to transition to alternative reference rates to mitigate consumer protection.
“The financial services industry uses LIBOR as a reference interest rate for many consumer financial products including mortgage loans, reverse mortgages, home equity lines of credit, credit cards, and student loans,” CFPB said in a press release. “The approaching discontinuation of most LIBOR tenors in June 2023 presents financial, legal, operational, and consumer protection risks. Additionally, consumers may not know when the transition from LIBOR will occur or how institutions will calculate their interest rates if they do not issue required disclosures to consumers.”
The regulators’ joint statement, among other things, urges financial institutions to ensure that no new contracts utilizing a LIBOR index reference rate are entered into after Dec. 31 – the day LIBOR becomes defunct. NCUA and the other regulators outlined supervisory considerations for financial institutions in transitioning away from LIBOR. Among them: clarification on the meaning of new LIBOR contracts, which stated that contracts entered into on or before Dec. 31 should either use a reference rate other than LIBOR or have fallback language that provides for use of a “strong and clearly defined alternative reference rate after LIBOR’s discontinuation.”
The statement also outlines considerations when assessing the appropriateness of alternative reference rates, expectations for fallback language and more.
Also this week, the OCC released an updated self-assessment tool to aid banks in their LIBOR transition. According to the agency, the tool is aimed at evaluating bank preparedness to deal with the end of the rate, particularly by helping banks evaluate their management processes for identifying and mitigating LIBOR transition risks.
LINKS:
NCUA LTCU 21-CU-10: Interagency Statement on LIBOR Transition
Joint Statement on Managing the LIBOR Transition
CFPB Joins Other Financial Regulatory Agencies in Issuing Statement on Discontinuation of LIBOR
LIBOR Transition: Updated Self-Assessment Tool for Banks
(Oct. 15, 2021) The CFPB has a new, permanent director (for a five-year term, at least – or until the president decides to make a change), who this week also installed a new, senior staff full of former bureau workers.
Rohit Chopra was sworn in Tuesday as the latest leader of the bureau, becoming the fifth permanent or acting director since the agency’s creation in 2011. He was confirmed by the Senate Sept. 30 for the job. In a letter to all agency employees (as well as the boards of the Federal Reserve and FDIC (on whose board he sits as CFPB director)), Chopra said the agency and its workers must use their tools to promote competition and shift market power toward consumers and law-abiding businesses.
“We must strive for a marketplace where families are treated fairly and can seek help when they’re in trouble,” Chopra wrote. “And most importantly, we must anticipate emerging risks so we can act before a crisis, rather than acting after it is too late.”
The next day, Chopra announced he was naming four individuals to serve in senior posts — deputy director, associate director for consumer education and external affairs, chief of staff, and chief technologist – three of whom previously served at the agency. They (and their latest positions) are: Zixta Q. Martinez, as deputy director; Jan Singelmann as chief of staff; and Erie Meyer as chief technologist.
Karen Andre, who most recently was President Biden’s special assistant for economic agency personnel, was named associate director for consumer education and external affairs.
LINK:
Chopra letter: The CFPB is looking out for families, workers, and communities
CFPB Names Key Senior Positions
(Oct. 8, 2021) A summary of a proposal by the CFPB to collect business loan data from lenders has been published and posted by NASCUS. Comments on the proposal are due on or before Jan. 6.
The summary is available to members only.
The proposal was issued early last month (Sept. 1) and is aimed, according to the bureau, at “helping regulators and the public better understand the business lending market.”
The proposal would require lenders to disclose information about their lending to small businesses. According to the bureau, lenders would be required to report the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered.
That information would allow it to learn, the agency said, how small enterprises fare when trying to access financing, and what barriers are holding them back from further prosperity.
CFPB noted the rule was mandated by the legislation which created the bureau, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
In comments to the press Sept. 1, CFPB then-Acting Director Dave Uejio said the bureau and the public don’t know enough about whether small businesses have fair access to the capital they need to generate new jobs and grow the economy.
LINKS:
NASCUS Summary: CFPB September 2021 Proposal Regarding Small Business Lending Data Collection
CFPB Proposes Rule to Shine New Light on Small Businesses’ Access to Credit
(Oct. 1, 2021) Rohit Chopra is now the permanent director of the CFPB, with a five-year term, thanks to a 50-48 vote by the Senate on Thursday. He took a big step toward that vote earlier in the day when the Senate voted 51-50 – with Vice President Kamala Harris casting the tie-breaking vote – to cut off debate and proceed to the final vote on confirmation. Chopra replaces acting director Dave Uejio – who himself has been nominated to be assistant secretary for fair housing and equal opportunity at the Department of Housing and Urban Development (HUD) … NASCUS President and CEO Lucy Ito will be on the panel discussing “How to Increase Gender Diversity in the C-Suite” Nov. 3 (at 2:15 p.m.) as part of NCUA’s Nov. 2-4 Diversity, Equity and Inclusion (DEI) Summit. The panel – made up of all female credit union executives – will discuss successes and setbacks on their paths to leadership, according to NCUA. They will also discuss how to increase gender diversity in the upper ranks of financial institutions. Other panelists include CEOs of NASCUS-members Orange County’s CU and Navy Federal CU – Shruti Miyashiro and Mary McDuffie, respectively.
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(Oct. 1, 2021) Credit unions may begin submitting data on credit card agreements with their members, and applying data submission requirements, to the CFPB’s website for collecting credit card information, NCUA said this week.
In a “regulatory alert,” the agency said credit unions may begin submitting data to the bureau’s “Collect” website using submission deadline dates of:
- Feb. 14, 2022, for terms of credit card plans (TCCP) survey data;
- Jan. 31, 2022, for quarterly credit card agreement submissions;
- March 31, 2022, for annual reports related to college credit card marketing agreements and data.
On Aug. 20, the consumer bureau issued new technical specifications for complying with credit card agreement and data submission requirements under the Truth in Lending Act (TILA) and the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. In the specifications, the bureau said all submissions would be made via the agency’s Collect website beginning in January.
The Collect website has been available since July 2018 for those participating in the semiannual TCCP Survey. According to the bureau, 83% of survey submissions early this year were made via Collect.
NCUA, in the letter, reminded that credit unions selected to participate in the TCCP Survey or are required to submit an annual report of college student credit card agreements can register now. Any credit union with 10,000 or more credit card accounts as of any quarter-end is required to make quarterly credit card submissions to the CFPB, the credit union regulator said, and must register for Collect by Nov. 1, 2021.
“Once a credit union receives its login credentials, it will be able to review its current submissions and make the required submissions for the fourth quarter of calendar year 2021 starting on Dec. 1, 2021,” NCUA said.
LINKS:
(Sept. 24, 2021) Four representatives of state-chartered credit unions are joining four representatives of federal credit unions as members of the CFPB’s Credit Union Advisory Council (CUAC), according to an updated roster of the panel released this week by the agency.
The CUAC is one of four advisory councils sponsored by the bureau (as mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) of 2010). The other three are the Consumer Advisory Board (CAB, the largest with 14 members), the Community Bank Advisory Council (CBAC, eight members), and the Academic Research Council (ARC, five members).
The groups are advisory, providing advice and input to the bureau on issues related to their interest areas; they meet at least twice a year. Members serve two-year terms.
The CUAC roster is now:
- Jose Iregui (Chair), Vice-President of Consumer Lending, Langley Federal Credit Union (Newport News, VA)
- Michael Daugherty, President, Community Plus Federal Credit Union (Rantoul, IL)
- Monica Davis, Senior Vice President Risk Management, Union Square Credit Union (Wichita Falls, TX)
- Michelle Dwyer, President/CEO, Franklin First Federal Credit Union (Greenfield, MA)
- Jeff Ivey, President/CEO, River City Federal Credit Union (San Antonio, TX)
- Jeremiah Kossen, President/CEO, Town and Country Credit Union (Minot, SD)
- Michael Levy, General Counsel, Travis Credit Union (Vacaville, CA)
- Deborah Wreden, EVP, Product & Delivery Strategy, Virginia Credit Union (Richmond, VA)
LINK:
Consumer Financial Protection Bureau Announces New Advisory Committee Members