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On September 27, the CFPB released its annual report on residential mortgage lending activity and trends for 2022. Under the Home Mortgage Disclosure Act (HMDA), the CFPB requires financial institutions to collect and provide loan-level information on mortgage loan applications and originations. Not surprisingly given the dramatic rise in interest rates last year, the report found that overall affordability is declining, that borrowers spent more of their income on mortgage payments, that loan fees increased dramatically due primarily to many borrowers electing to buy down their interest rate by paying discount points, and that lenders more often denied applications for insufficient income.…

Continue Reading CFPB 2022 Loan Data: Decrease in Originations; Increase Loan Payments, Fees

Many residential mortgage lenders currently have loan compensation plans that provide for a payment to loan originators of one commission amount for loans funded by the lender, and a smaller commission amount for loans that are brokered out to other lenders. While the CFPB never directly endorsed this result, they did not reject it either. In its Loan Originator Compensation Rule Resource Guide, the Mortgage Bankers Association provided the following illustration and comment when discussing the Loan Originator Compensation Rule’s prohibition against compensation based on a proxy for a term of a transaction:…

Continue Reading CFPB Adjusts Long Time Position Relating to Loan Originator Compensation

On September 14, U.S. District Court for the Eastern District of Kentucky granted a motion brought by the Kentucky Bankers Association (KBA) and eight Kentucky-based banks (plaintiffs), seeking a preliminary injunction enjoining the CFPB from enforcing the Small Business Lending Rule (the Rule) against the plaintiffs and their members. In granting the motion, the court agreed to halt the rule until the Supreme Court rules on the CFPB’s funding structure in Consumer Financial Protection Bureau et al. v. Community Financial Services Association of America Ltd. The court also noted that the banks are incurring expenses related to “training programs, seminar fees, staff time, and new software” to comply with the ule, which they cannot recover due to the federal government’s sovereign immunity and “are likely unrecoverable, resulting in irreparable harm to plaintiffs.”…

Continue Reading Kentucky Court Grants Injunction on Small Business Lending Rule

On September 8, a Texas federal judge ruled that the CFPB exceeded its authority by adopting a sweeping anti-discrimination policy last year. The CFPB adopted the policy in March 2022, via an update to its exam manual, stating that discrimination in any financial product is an “unfair” practice that can trigger liability under the federal prohibition against “unfair, deceptive or abusive acts or practices” or UDAAPs (we discussed this policy in previous posts here and here). The CFPB offered examples of practices that may be unfair because they are discriminatory, including offering one set of products or services to a certain customer demographic and a greater set of products or services to another customer demographic, providing inferior terms to one customer demographic as compared to another customer demographic, and engaging in targeted marketing or advertising in a discriminatory manner.

Continue Reading Texas Court Strikes Down CFPB UDAAP Policy

On August 28, the CFPB announced a proposed settlement with Utah-based credit repair telemarketing company and its affiliates for allegedly committing deceptive acts and practices in violation of the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA) by collecting illegal “advance fees.” The CFPB alleged the defendants charged consumers a fee for telemarketed credit repair services when they signed up for the services, and then monthly thereafter, without (i) waiting for the timeframe in which they represented their services would be provided to expire; and (ii) demonstrating that the promised results have been achieved, in the form of a consumer report issued more than six months after those results were achieved, as required by the TSR. …

Continue Reading CFPB Reaches $2.6 Billion Settlement with Credit Repair Company

On August 22, the CFPB filed a lawsuit against an installment lending company and several of its subsidiaries in South Carolina federal court, alleging that the company engaged in illegal “loan-churning” practices that generated hundreds of millions of dollars in loan costs and fees. The CFPB’s complaint alleges that many of the installment lender’s “loan-churning” practices constituted unfair, deceptive, and abusive acts or practices (“UDAAPs”) in violation of the CFPA. Specifically, the CFPB alleges that the installment lender harmed consumers by:…

Continue Reading CFPB Sues Installment Lender for Alleged Loan Churning Operation

On August 2, the CFPB filed a lawsuit in Georgia federal court against an auto-loan servicer alleging that the company engaged in various illegal practices that harmed consumers with auto loans. The auto-loan servicer offered both Guaranteed Asset Protection (“GAP”) and collateral-protection insurance, which are products that consumers can buy when they buy or lease a car.…

Continue Reading CFPB Sues Auto-Loan Servicer for Allegedly Harming Consumers

On August 15, CFPB Director Rohit Chopra announced plans for new CFPB rules that would strictly limit the types of consumer data that can be sold by businesses and ensure that data brokers comply with the Fair Credit Reporting Act (“FCRA”). The announcement came during a White House roundtable event focused on protecting individuals’ data privacy and as part of a broader federal crackdown on third-party data brokers. Director Chopra highlighted two proposals in particular that the CFPB is considering.…

Continue Reading CFPB Forecasts New Rule Cracking Down on Consumer Data Sales

On July 31, the U.S. District Court for the Southern District of Texas enjoined the CFPB from implementing and enforcing the small business lending rule (Section 1071) requirements pending the Supreme Court’s decision in Community Financial Services Association of America Ltd. v. CFPB, a challenge to the constitutionality of the CFPB’s funding structure (we previously discussed Section 1071 rulemaking in prior blog posts here and here, and the Texas lawsuit here). In particular, the court enjoined the CFPB from implementing and enforcing the final rule against the plaintiffs and their members, but denied the plaintiffs’ request for a nationwide injunction. …

Continue Reading Texas Court Enjoins CFPB’s Enforcement of Small Business Lending Rule

On July 26, the CFPB released its Summer 2023 Supervisory Highlights reporting unfair, deceptive, and abusive acts or practices (UDAAPs) across a number of consumer financial products, including auto origination, auto servicing, consumer reporting, debt collection, deposits, fair lending, information technology, mortgage origination, mortgage servicing, payday and small dollar lending, and remittances, in violation of the CFPA. Below we focus on some key areas in particular.…

Continue Reading Latest CFPB Supervisory Highlights Detail UDAAPs Across Range of Areas

On July 7, the CFPB, HHS, and Treasury announced a joint inquiry into high-cost specialty financial products which are being offered to patients as alternate forms of payment for routine medical care. Traditionally, these financial products were used to pay for medical care not covered by traditional health insurance such as dental, vision, fertility services, and cosmetic surgery, but are now being offered to pay for a broader set of services. This inquiry is the next step in an ongoing effort to expand research into medical payment products and medical billing and collections procedures to finer tune actions aimed at relieving the burden these products and procedures place on consumers. To this end, the CFPB is seeking public input into the experiences of consumers, financial service providers, and health care providers alike. The CFPB press release noted the following as the primary concerns driving this inquiry:…

Continue Reading CFPB, other Federal Agencies Seek Public Comment about Medical Debt