(Sept. 17, 2021) Existing laws and regulations provide credit unions, banks and other supervised entities regulatory flexibility to take certain actions that can benefit consumers in communities under stress from disasters or emergencies and hasten recovery, CFPB said in policy guidance issued this week.
In a “statement on supervisory practices regarding financial institutions and consumers affected by a major disaster or emergency,” the bureau said it would consider the impact of major disasters or emergencies on supervised entities themselves when conducting supervisory activities.
“Supervised entities can make use of existing regulatory flexibility where doing so would benefit consumers affected by a major disaster or emergency,” the bureau wrote in the statement.
The statement offers examples of flexibility under Regulations B (implementing the Equal Credit Opportunity Act, ECOA), X (Real Estate Settlement Procedures Act, RESPA), and Z (Truth in Lending Act, TILA).
On supervisory response, the CFPB said it recognizes that supervised entities “may themselves experience difficulties due to a major disaster or emergency.” The bureau said that, when conducting exams or other supervisory activities, it would consider the circumstances institutions may face following a major disaster or emergency “and will be sensitive to good-faith efforts to assist consumers.”
Separately this week, NCUA joined with the federal banking agencies in issuing an interagency statement on supervisory practices regarding credit unions and banks affected by Hurricane Ida. The statement, relatively routine for the agencies in the wake of a storm or other natural disaster, noted regulators “recognize the serious impact of Hurricane Ida on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.”
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(Sept. 10, 2021) Helping regulators and the public better understand the business lending market is the stated aim of a new rule unveiled Sept. 1 by CFPB, according to its acting director.
The proposed rule 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 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.
“As we saw all too recently in the original design and implementation of the Paycheck Protection Program (PPP, established to help businesses keep paying their workers during the coronavirus crisis), we need to know much more about the credit needs of small businesses if we are to support them adequately in times of crisis and day-to-day,” Uejio said. “Our rule, if finalized, will shed much-needed light on the credit needs of small businesses, and it will help unleash the true potential of our nation’s entrepreneurs.”
Under the proposal – issued with a 90-day comment period, with no extension anticipated, the agency stated – lenders would be required to collect and report data about credit applications from small businesses, including women-owned and minority-owned small businesses. The bureau said the proposed reporting requirements would apply to a wide range of credit products, including term loans, lines of credit, credit cards, and merchant cash advances.
The agency said it would publish “application-level” data collected under the rule, but would modify or withhold data from public disclosure “based on an assessment of the risks to privacy interests and the benefits of publication.”
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CFPB Proposes Rule to Shine New Light on Small Businesses’ Access to Credit
Remarks of Acting Director Dave Uejio at the Press Call on the Small Business Lending Proposed Rule
(Sept. 10, 2021) Payment provisions in a 2017 rule on payday loans were upheld by a federal court in Texas this week, essentially turning back a challenge to the four-year-old regulation.
The ruling means compliance with the rule will become mandatory in mid-2022.
In a statement, CFPB) Acting Director Dave Uejio said the decision issued in the U.S. District Court for the Western District of Texas reaffirms the agency’s ability to protect borrowers from unfair and abusive payment practices by payday lenders and others covered by the rule.
“Today’s ruling will provide relief to all those who could face these practices,” Uejio said. “The CFPB expects lenders to follow the requirements of the payment provisions, consistent with the court’s order.”
Under the ruling, the mandatory compliance date will be June 13, 2022.
Uejio asserted that the provisions of the rule would prohibit lenders from continuing to attempt to withdraw payment from borrowers’ accounts after two attempts have failed. He said that would protect borrowers from being subject to multiple fees for returned payments or insufficient funds and reduce the risk that consumers’ accounts will be closed.
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(Aug. 27, 2021) Two new summaries of recent CFPB rules – on clarifying the impact of the Juneteenth holiday, and Military Lending Act (MLA)-related exams – have been developed and posted by NASCUS. The summaries are available to members only.
In an interpretive rule issued in July, the bureau attempted to clarify when the new Juneteenth holiday (federally observed for the first time this past June) counts as a business day or federal holiday for purposes of mortgage rescissions and disclosures. According to the rule, that depends on when the relevant time period for the loan began. According to the bureau, if the relevant time period began on or before June 17, then June 19 was a business day. If the period began after June 17, then June 19 was a federal holiday. The timing effects rescission of closed-end mortgages and TILA-RESPA integrated disclosures, the bureau said.
Regarding MLA, the agency said in an interpretive rule effective in June that examinations under the law will now resume, asserting that the prior administration’s reasoning for discontinuing the reviews were not found persuasive. The rule explains the basis for its authority to examine supervised financial institutions for risks to active duty servicemembers and dependents from conduct that violates the MLA. (The MLA, enacted in 2006, and implemented by the Department of Defense, applies to consumer credit offered to military service members and their dependents by, among other things, limiting the interest rates that may be charged on many types of consumer loans to no more than 36%.)
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(Aug. 27, 2021) Card issuers required to supply credit card agreement terms and other data to the CFPB must make all submissions via the agency’s Collect website (collect.consumerfinance.gov) beginning in January, according to a notice providing new technical specifications for submissions.
According to the bureau, the Collect website has been available since July 2018 for those participating in the semiannual Terms of Credit Card Plans (TCCP) Survey, and 83% of survey submissions early this year were made via Collect.
The bureau outlined the website in a notice published Monday in the Federal Register.
The credit card plan submissions are made by selected card issuers under requirements of the Truth in Lending Act (TILA) and the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). Submissions include the semiannual Terms of Credit Card Plan (TCCP) Survey; quarterly credit card agreements; and annual reports related to college credit card marketing agreements and data.
In an email late last week, the bureau said card issuers will be required to use the Collect website for the following submissions on the dates noted and after:
(1) TCCP Survey data (for the Feb. 14, 2022), deadline,
(2) quarterly credit card agreement submissions (for the Jan. 31, 2022, deadline), and
(3) annual reports related to college credit card marketing agreements and data (for the March 31, 2022, deadline).
Issuers have until Nov. 1 of this year to register for Collect; those that have registered before to submit their TCCP Survey data will not need to register again.
To register, the bureau said, fill out and email the Collect registration form to [email protected]. (Download he registration form here.) Once card issuers receive their login credentials, starting on Dec. 1, they will be able to review their current submissions and make the required submissions for the fourth quarter of calendar year 2021 using Collect, the CFPB said.
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(Aug. 20, 2021) Summaries of three recent issuances from NCUA – on capitalizing loans, the rollout of the new examination tool, and on mortgage servicing rules – were published by NASCUS this week.
All three are available to members only. The summaries cover issuances – two letters to credit unions and one regulatory alert – issued by the agency over the last three weeks or so.
Early this month, the agency issued letter to credit unions (LTCU) 21-CU-07, which outlined limits on capitalization of loans to members. In particular, the letter pointed out, the financing of fees and commissions continue to be prohibited for federally insured credit unions, despite adoption of the new rule earlier this year allowing capitalization of loan interest. In the letter, the agency said that maintaining the prohibition on capitalization of fees “is an important consumer protection feature of the rule for member borrowers.”
In June, the agency’s board voted unanimously to lift the prohibition of capitalization of interest in connection with loan workouts and modifications; the rule took effect July 30. The change was made, NCUA said, to give borrowers additional access to loan workouts, perhaps caused by the economic disruption caused by the coronavirus crisis.
The second letter (LTCU 21-CU-08) summarized listed the new applications (and their implementation) the agency is employing for assisting in exams and communicating to credit unions. The letter, issued just last week, noted that the agency would begin transitioning to its new Modern Examination and Risk Identification Tool (MERIT) exam tool and other applications meant to modernize and streamline the agency’s operations. The other tools include the Data Exchange Application (DEXA), the Administrative Portal, and the Consumer Access Process and Reporting Information System (CAPRIS) for federal credit unions.
The letter also offers insights about who at credit unions can use the new tools, and how the tools integrate with state supervisory authority (SSA) examination and supervision programs.
The third item summarized by NASCUS and published this week is of a regulatory alert (21-RA-08), which urges review of CFPB mortgage servicing rules. According to the alert, credit unions are urged to review the June 30 rule temporarily amending certain mortgage servicing requirements under the bureau’s Regulation X to assist borrowers affected by the COVID-19 emergency. The alert noted that the CFPB rule — which takes effect Aug. 31 — only applies to servicers that service mortgages secured by a borrower’s principal residence and does not apply to small servicers.
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NASCUS summary: LTCU 21-CU-07, Capitalization of Unpaid Interest (members only)
NASCUS summary: LTCU 21-CU-08, Implementation of Modernized Systems (members only)
NASCUS summary: 21-RA-07 Equal Credit Opportunity Act (Regulation B) (members only)
(Aug. 13, 2021) Just a reminder that state credit union examiners from around the country can participate in Monday’s (Aug. 16) Kentucky Examiner School, developed to help examiners build skill sets and enhance their knowledge around a core area of topics. The program starts 9 a.m. and runs until 4 p.m., ET; cost is $200 for NASCUS member examiners. See link below for registration information … Credit card account limits declined overall during the COVID pandemic – the largest declines being for high-credit-score borrowers – though a spike in account closures early in the pandemic began a decline after May 2020 that continued through at least May 2021, the CFPB said this week. According to the bureau, credit limits for prime and near prime borrowers broke with their previous upward trend and largely flattened out beginning in March 2020; they began to grow more quickly beginning in February 2021. At the other end of the credit spectrum, the bureau reported, credit card limits for subprime and deep subprime borrowers changed little during the pandemic.
LINKS:
Agenda, registration, KY Examiner School Virtual Event
Credit card limits are rising for most groups after stagnating during the pandemic
(Aug. 6, 2021) After finding that an effective date extension of two final rules under fair debt collection laws is unnecessary, the CFPB late last week said the rules would take effect, as originally planned, on Nov. 30.
In a release, the bureau said an extension to Jan. 29 of two rules under the Fair Debt Collection Practices Act (FDCPA), as proposed in April, was not necessarily supported by commenters. The agency said it had proposed the extension to allow stakeholders affected by the COVID-19 pandemic additional time to review and implement the rules. Most commenters said that they were ready to comply by the Nov. 30 date, and did not, CFPB said, focus on whether more time was needed to put the rules into effect).
(However, the agency noted, some commenters recommended, in the alternative to an extension, that the rules be reconsidered. The bureau rejected that view, noting that approach “was beyond the scope of the NPRM and could raise concerns under the Administrative Procedure Act.” There is some wiggle room, apparently: the agency said “nothing in this decision precludes the CFPB from reconsidering the debt collection rules at a later date.”)
The two rules now set to take effect Nov. 30 are:
- One adopted in October of last year that focuses on debt collection communications and clarifies the FDCPA’s prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
- One adopted in December 2020 that aims to clarify disclosures debt collectors must provide to consumers at the beginning of collection communications. It also prohibits, the agency pointed out, debt collectors from suing or threatening to sue consumers on time-barred debt. The second rule also requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency, CFPB stated.
“The CFPB will consider additional guidance for debt collectors, including those that service mortgage loans, as necessary,” the agency noted, adding that it “recognizes that mortgage servicers are expected to receive a potentially historically high number of loss mitigation inquiries in the fall as large numbers of borrowers exit forbearance and that, as a result, mortgage servicers in particular may face capacity constraints.”
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CFPB Confirms Effective Date for Debt Collection Final Rules
(Aug. 6, 2021) Whether the new Juneteenth federal holiday (federally observed for the first time this past June) counts as a business day or federal holiday for purposes of mortgage rescissions and disclosures depends on when the relevant time period for the loan began, CFPB said in an interpretive rule issued Thursday.
According to the bureau, if the relevant time period began on or before June 17, then June 19 was a business day. If the period began after June 17, then June 19 was a federal holiday. The timing effects rescission of closed-end mortgages and TILA-RESPA integrated disclosures, the bureau said.
CFPB also said its interpretive rule explains that creditors are not prohibited from providing longer time periods than required.
For example, CFPB said, if a time period began on or before June 17, creditors could still consider June 19 a federal holiday. “Friday, June 18, the day of federal observance for the 2021 Juneteenth holiday, was considered a business day because when a federal holiday falls on a Saturday, the day of federal observance is considered a business day for these time-sensitive consumer protections,” the agency stated.
The federal holiday was officially observed June 18 (since June 19 was a Saturday). The holiday became law June 17, the day it was enacted by President Joe Biden’s (D) signature. The holiday went into effect the following day, June 18.
The agency noted that Regulation Z of its mortgage rules establishes timing requirements, calculated in business days, for when borrowers must receive certain disclosures and when borrowers have the right to cancel some mortgages. “Because the Juneteenth National Independence Day Act was signed into law two days before the newly created holiday on June 19, many participants in the mortgage industry reported being unsure of how to treat the day for purposes of regulatory compliance.
“The mortgage industry can refer to today’s interpretive rule when determining how to treat June 19, 2021,” CFPB added.
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(July 30, 2021) Slightly more Americans were not concerned about qualifying for a mortgage during the application process in 2019 (compared to the year before) before the COVID-19 pandemic began, according to updated mortgage loan-level data published this week by the CFPB and the Federal Home Financing Administration (FHFA).
In a joint release, the agencies said the data is aimed at providing insights into borrowers’ experiences in obtaining resident home loans. The data is collected, the agencies said, through quarterly surveys sent to borrowers who had recently obtained mortgages.
This latest data was collected before the financial impact of the coronavirus crisis became apparent in 2020, when economic conditions changed abruptly, and the process for applying for mortgages largely shifted to on-line. Thursday’s release adds two additional years of new mortgage data through 2019, the agencies aid.
Regarding the data point about concern among borrowers qualifying for a mortgage loan, those borrowers not concerned about qualifying during the application process increased somewhat from 2018 to 2019 (from 48% to 51% for home purchase mortgages and 57% to 66% for refinances).
Other points revealed by the data, the agencies said, included:
- The percent of survey respondents who applied directly through a credit union or bank decreased from 2018 to 2019 (from 54% to 49% for home purchase mortgages and 67% to 61% for refinances).
- The percent of survey respondents who reported applying for a mortgage through a mortgage broker increased from 2018 to 2019 (from 42% to 46% for home purchase mortgages and from 30% to 38% for refinances).
- The percent of survey respondents who reported a paperless online mortgage process being important in choosing the mortgage lender/broker remained relatively high and unchanged from 2018 to 2019 (40% for home purchase mortgages and 44% for refinances).
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CFPB and FHFA Release Updated Data from the National Survey of Mortgage Originations for Public Use
(July 30, 2021) Credit unions should review a June 30 rule temporarily amending certain mortgage servicing requirements under the Consumer Financial Protection Bureau’s (CFPB) Regulation X to assist borrowers affected by the COVID-19 emergency, NCUA said this week in a “regulatory alert.”
The agency’s alert noted that the CFPB rule only applies to servicers that service mortgages secured by a borrower’s principal residence. The rule – which takes effect Aug. 31 — does not apply to small servicers, the agency said.
Key provisions of the rule, NCUA said, are that it:
- Defines a COVID-19 related hardship as “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic” declared March 13, 2020 (beginning on March 1, 2020) and continued Feb 24 of this year.
- Modifies early intervention requirements of live-contact messages and reasonable diligence obligations to “help ensure that borrowers experiencing a COVID-19 related hardship have timely and accurate information about their loss mitigation options.” That includes that servicers must take additional actions, until Oct. 1, 2022, during live contacts related to a COVID hardship.
- Permits servicers to offer loan modifications to borrowers facing a COVID-19 related hardship based on an evaluation of an incomplete application if specified criteria are met.
- Sets up temporary COVID loss mitigation procedural safeguards to ensure a borrower has a “meaningful opportunity to pursue loss mitigation options.” NCUA said that, from Aug. 31 through Dec. 31 – unless an exception applies – a servicer must meet at least one of the specified safeguards before initiating any judicial or non-judicial foreclosure process where a borrower became more than 120 days delinquent on or after March 1, 2020, and the applicable state statute of limitations regarding foreclosures expires on or after Jan. 1, 2022.
NASCUS will prepare and post a summary of the alert (available to members only).
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(July 16, 2021) A focus on consumer financial protections for military servicemembers and their families is the target of a webinar slated July 28 by NCUA, CFPB and the Federal Trade Commission (FTC). The webinar is being held as part of Military Consumer Month. In its announcement this week, NCUA said staff from all three agencies will highlight federal resources that help servicemembers, veterans, and their families manage their finances and shield themselves against frauds and scams. The 45-minute webinar begins at 2 p.m. Registration is open now.
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Registration for NCUA, CFPB, FTC miltary consumer financial protections webinar