(May 21, 2021) An extension to July 1 for the deadline to comment on how credit unions and banks use artificial intelligence (AI) in their activities was announced this week by NCUA and other federal financial institution regulators.
The original comment deadline was June 1, but regulators said they were extending that in response to concerns from commenters noting “the complex technical nature and significance of the topic.”
The invitation to comment was provided in a request for information (RFI) published in late March by NCUA, CFPB, FDIC, the Federal Reserve, and the OCC.
The five agencies are seeking information from the public on how financial institutions use AI in activities such as fraud prevention, personalization of customer services, credit underwriting, and other operations. Regulators said they are seeking to better understand the use of AI, including machine learning, by financial institutions; appropriate governance, risk management, and controls over AI; and challenges in developing, adopting, and managing AI.
LINK:
Agencies Extend Comment Period on Request for Information on Artificial Intelligence
(May 21, 2021) The CFPB’s final rule to delay the compliance date for its new “qualified mortgage” (QM) rule to Oct. 1, 2022 has been summarized by NASCUS and posted to the website.
The summary is available to members only.
In April, the bureau announced that compliance with its QM rule would be delayed to next year, asserting that the pause would allow lenders more time to offer the loans based on homeowners’ debt-to-income (DTI) ratios, and not only on certain pricing thresholds. The delay, which changes the mandatory compliance date from July 1 of this year to the Oct. 1 date of next year, is part of a final rule the CFPB is calling the “April 2021 Amendments to the ATR/QM Rule.” ATR stands for “ability to repay.”
Even though last month’s rule extends the compliance date to next year, the effective date of the QM rule remains March 1, 2021. However, the rule extending the compliance date becomes effective June 30.
According to an executive summary of the final rule published last month, for mortgage applications on the effective date (or after) – but before the new mandatory compliance date of Oct. 1, 2022 – lenders have the option of complying with either the revised, price-based general QM loan definition or the original, total monthly DTI-based general QM loan definition.
Only the revised, price-based general QM loan definition is available for applications received on or after the Oct. 1, 2022 mandatory compliance date, the summary states.
(May 21, 2021) Congratulations to the Ohio Department of Commerce/Division of Financial Institutions to be the first state supervisory authority to become accredited under all four accreditation programs: credit union (via the NASCUS Accreditation Program), bank (via CSBS), mortgage and money service business (MSB, also both via CSBS) … The OCC announced this week that it will reconsider last year’s revisions to its rules implementing the Community Reinvestment Act (CRA) and, in the meantime, suspend information collection under the new rule, which was adopted a little more than a year ago … CFPB issued updated TRID FAQs late last week, aimed at addressing housing assistance loans, including how the 2018 BUILD Act affects requirements for such loans. (BUILD stands for Better Utilization of Investments Leading to Development Act, legislation passed in 2018; it allows the participation of private sector capital and skills in the economic development of countries with low- or lower-middle-income economies to complement U.S. assistance and foreign policy objectives).
LINKS:
OCC Bulletin 2021-24
(May 7, 2021) Apartment landlords were put on notice this week by the CFPB that federal protections are in place to keep tenants from being evicted, at least for the short term, due to the financial impact of the coronavirus crisis.
However, the ruling of a federal court later in the week has placed the future of those protections in doubt without congressional action.
Monday, the bureau announced it – in concert with the Federal Trade Commission (FTC) — had sent letters to companies that the agencies said collectively own more than 2 million apartment units nationwide. “The letters remind these landlords of federal protections in place to keep tenants in their homes and stop the spread of COVID-19,” according to a release from CFPB. “The Centers for Disease Control and Prevention (CDC) has extended until June 30 a temporary moratorium on evictions for non-payment of rent, and the CFPB has issued an interim final rule, which takes effect today, establishing new notice requirements under the Fair Debt Collection Practices Act (FDCPA).”
According to the agencies, the letters ask landlords to examine their practices to ensure they comply with the CDC moratorium and the FTC Act and “remediate any harm to consumers stemming from any such law violations.” The letters also, they said, encourage landlords to notify FDCPA-covered debt collectors working on their behalf, which may include attorneys, of the CDC moratorium, applicable state or local moratoria, and those parties’ obligations under the FTC Act and FDCPA, including the CFPB’s interim final rule.
However, on Wednesday, a federal judge in Washington, D.C., said the CDC acted outside of its authority in extending the temporary eviction moratorium. Ruling in favor of a group of property managers and real estate trade associations, U.S. District Judge Dabney Friedrich vacated the CDC order.
“It is the role of the political branches, and not the courts, to assess the merits of policy measures designed to combat the spread of disease, even during a global pandemic,” the order states. “The question for the Court is a narrow one: Does the Public Health Service Act grant the CDC the legal authority to impose a nationwide eviction moratorium? It does not.”
The status of CFPB’s new rule is now unclear. The Justice Department, however, has indicated it will appeal the judge’s ruling and may ask for a stay in the meantime.
(April 30, 2021) The proposed delayed compliance dates for two debt collection rules from CFPB issued under the Fair Debt Collection Practices Act (FDCPA) has been summarized by NASCUS and is now posted on the association’s website.
This latest summary, like all of those developed and published by NASCUS, is available to members only.
Under the proposal, the two debt collection rules (which had been slated to take effect Nov. 30) will now have a delayed compliance deadline of Jan. 29, 2022. The bureau, when it issued the proposal, said the delay is intended to give those affected more implementation time amid the ongoing challenges of the COVID-19 pandemic.
Late last year, the bureau issued two final (in October and December) under the FDCPA. The October final rule focused on the use of communications related to debt collection and clarified prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt. The December rule clarified disclosures debt collectors must provide to consumers at the beginning of collection communications. It also prohibited debt collectors from making threats to sue, or from suing, consumers on time-barred debt; and 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.
But the bureau, earlier this month, determined that the COVID-19 pandemic had caused “widespread societal disruption, with effects extending into 2021.” In light of that disruption, the agency said, providing additional time for review – and implementation – of the new rules “may be warranted.”
The rules adopted last year permit debt collectors to choose to comply with the rules’ requirements and prohibitions ahead of their effective date. However, the CFPB noted, in proposing the delay, said that the FDCPA and other applicable law would continue to govern debt collectors’ conduct, with safe harbors and presumptions implemented only as of the rules’ effective date.
Comments are due May 19.
(April 30, 2021) More complaints – particularly about credit or consumer reporting — were received in 2019 and 2020, on a per capita basis, from consumers living in predominantly minority counties than from consumers in predominantly white, non-Hispanic counties, the CFPB said this week in its April 2021 Complaint Bulletin.
Additionally, the bureau said, those consumers living in counties with the highest minority percentages submitted complaints at more than four times the rate compared to counties with the lowest percentage of minority populations.
Credit or consumer reporting appears to cause significantly more issues for consumers in predominantly minority counties, the bureau said, and added that consumers living in predominantly minority counties submitted more complaints on a per capita basis in nearly every one of the 11 product categories about which the agency accepts complaints.
The agency also gave some insights to future reporting: it said it will soon expand its demographic collection to include household size and income. That will include, CFPB said, enhancing the agency complaint form to give consumers the option to provide household size and household income when submitting a complaint.
Any additional information the bureau may need to help better understand the experiences of diverse communities that submit complaints will also be explored in the future, CFPB said.
LINK:
CFPB April 2021 Complaint Bulletin
(April 30, 2021) Compliance with a final rule on “qualified mortgages” (QM) is delayed to Oct. 1, 2022, the CFPB said this week, asserting that the pause would allow lenders more time to offer the loans based on homeowners’ debt-to-income (DTI) ratios, and not only on certain pricing thresholds.
The delay, which changes the mandatory compliance date from July 1 of this year to the Oct. 1 date of next year, is part of a final rule the CFPB is calling the “April 2021 Amendments to the ATR/QM Rule.” ATR stands for “ability to repay.”
In a release, the bureau said the action was taken to “help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.”
“As the mortgage market navigates an uncertain and challenging time, extending the date by which lenders must comply with the CFPB’s new General QM definition will help provide options and flexibility for both lenders and borrowers,” CFPB Acting Director Dave Uejio said in a statement.
The bureau also asserted that delaying the QM compliance date by more than a year would give lenders more time to use the Government-Sponsored Enterprise (GSE) Patch, which has also been extended to Oct. 1 of next year – or until the date that the applicable GSE exits conservatorship, whichever comes first. The agency said the GSE patch provides QM status to loans that are eligible for sale to GSE mortgage companies Fannie Mae or Freddie Mac. “The availability of the GSE Patch after July 1, 2021 may be limited by recent revisions to the Preferred Stock Purchase Agreements entered into by the Department of the Treasury and the Federal Housing Finance Agency,” the bureau noted.
According to an executive summary of its final rule issued Tuesday, the CFPB said that while the April 2021 final rule extends the general QM final rule’s mandatory compliance date, the effective date of the QM rule remains March 1, 2021.
The summary notes that for mortgage applications on the effective date (or after) – but before the new mandatory compliance date of Oct. 1, 2022 – lenders have the option of complying with either the revised, price-based general QM loan definition or the original, total monthly DTI-based general QM loan definition.
Only the revised, price-based general QM loan definition is available for applications received on or after the Oct. 1, 2022 mandatory compliance date, the summary states.
(April 23, 2021) The set of proposed rules proposed earlier this month by the CFPB aimed at preventing “avoidable foreclosures” as the emergency federal foreclosure protections expire is the focus of a recent summary from NASCUS.
As are all NASCUS summaries, it is available to members only.
CFPB said, on April 9 when it issued the proposals, that is seeks to “ensure that both servicers and borrowers have the tools and time they need to work together to prevent avoidable foreclosures, recognizing that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain.”
The NASCUS summary outlines the key provisions of the proposal, which include:
- A special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after Dec. 31, 2021.
- A provision permitting servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application.
- Temporary changes to certain required servicer communications to ensure that borrowers receive key information about their options at the appropriate time during the pandemic.
Comments on the proposals are due May 10.
(April 23, 2021) In a follow-up to its action last week essentially freezing foreclosures until year’s end, the CFPB this week issued an interim final rule stating that tenants can hold debt collectors (including lawyers) accountable for illegal evictions in the face of a moratorium on such actions outlined by federal health authorities.
Based on the Fair Debt Collection Practices Act (FDCPA), the rule requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium issued by the federal Centers for Disease Control (CDC). The bureau said the rule also prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the Centers for Disease Control (CDC) moratorium.
Under the rule, CFPB said debt collectors, including attorneys, seeking to evict tenants for non-payment of rent must provide tenants who may have rights under the CDC order with clear and conspicuous written notice of those rights. The notice must be provided on the same date as the eviction notice, or, if no eviction notice is required by law, on the date that the eviction action is filed, the bureau said.
Phone calls or electronic notices such as text messages or emails are not sufficient; the notice must be in writing. Sample language to satisfy the rule’s disclosure requirements is included in the rule, the CFPB said.
The bureau added that its rule does not preempt more protective state laws, which some states (and localities) have adopted to enforce their own eviction moratoria. Debt collectors may also be required to provide notice of these moratoria, the bureau noted.
The rule takes effect May 3 (which the bureau said “will give debt collectors time to come into full compliance.” Debt collectors may begin complying with the rule before the compliance date, the bureau added.
It’s a short comment period for the rule: it ends May 19.
LINK:
CFPB Rule Clarifies Tenants Can Hold Debt Collectors Accountable for Illegal Evictions
(April 16, 2021) A request for information (RFI) about how credit unions and banks use artificial intelligence (AI) in their activities, including fraud prevention, personalization of customer services, credit underwriting, and more is summarized by NASCUS and posted on the website this week.
The summary is available to members only.
On March 29, the CFPB – along with NCUA and federal banking agencies – issued the RFI seeking information from a broad audience that includes credit unions and other financial institutions, but also trade associations, consumer groups, and other stakeholders. The agencies said they want to better understand financial institutions’ use of AI, including machine learning; appropriate governance, risk management, and controls over AI; challenges in developing, adopting, and managing AI; and whether clarifications are needed.
Regarding those clarifications, CFPB and the other agencies said they want to learn whether any are necessary from the agencies that would be helpful for financial institutions’ use of AI “in a safe and sound manner and in compliance with applicable laws and regulations, including those related to consumer protection.”
Comments are due June 1.
(April 16, 2021) In another summary prepared this week, NASCUS outlines a bulletin issued by the bureau April 6 detailing its expectations for mortgage servicers’ engagement with borrowers in the closing months of forbearance programs created to help them deal with the financial impact of the coronavirus crisis.
Like all NASCUS summaries, it is a benefit of membership.
The bulletin issued last week follows the bureau’s proposed rules (issued April 5) aimed at preventing “avoidable foreclosures.” The proposed rules, the agency said, seek to “ensure that both servicers and borrowers have the tools and time they need to work together to prevent avoidable foreclosures, recognizing that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain.”
The follow-up bulletin (Bulletin 2021-02, “Supervision and Enforcement Priorities Regarding Housing Insecurity”), issued the following day, explains the CFPB’s intention to monitor servicers’ engagement with borrowers “at all stages in the process” in coming months and to prioritize mortgage servicing oversight work in carrying out its enforcement and supervision in the coming year.
LINK:
NASCUS Summary: CFPB Bulletin 2021-02, Supervision and Enforcement Priorities Regarding Housing Insecurity (members only)
(April 9, 2021) Every time CFPB issues a new proposal, rule, clarification, report to Congress, report on consumer attitudes and actions – and more – NASCUS makes note of it and posts it on NASCUS.org, typically the same day the bureau issues something. In addition, for all proposed and final rules, among things, NASCUS prepares summaries (available to members only) outlining the action, noting important dates, including for compliance and when the rules become effective. Keep up to date with NASCUS on all of the latest from CFPB by clicking on the link below.
LINK:
NASCUS CFPB pages (updates, rules and summaries, resources and bulletins)