On August 29, the CFPB issued a consent order against a non-bank direct mortgage lender for misrepresenting the cost of its cash-out refinance loans, which are guaranteed under the VA home loan program, to active-duty servicemembers and veterans.Continue Reading CFPB Penalizes VA Lender for Misrepresenting Cost of Cash-Out Refinance Loans
On August 21, a group of trade organizations filed an amicus brief in support of a motion to dismiss filed by a subprime auto lender that is the target of a joint enforcement action brought by the CFPB and the New York State Office of the Attorney General in the Southern District of New York. The underlying complaint alleges that the auto lender misrepresented costs in loan agreements and tricked customers into high-cost loans on used cars in violation of the CFPA and New York usury limits (see previous blog post here). In particular, the complaint alleges that: (1) the auto lender’s business model allegedly incentivizes vehicle dealers to inflate vehicle prices so that the true finance charges in the retail installment contracts that dealers originate are hidden from consumers; and (2) the lender fails to assess consumers’ ability to pay prior to extending credit. Continue Reading Amicus Brief Argues CFPB Overreached in Enforcement Action Against Auto Lender
On August 21, the CFPB entered into a consent order with a nonbank mortgage servicer for mortgage servicing violations and for violating an earlier 2017 CFPB consent order for deficient foreclosure practices. Continue Reading CFPB Hits Executive Compensation in Action Against National Mortgage Servicer for Illegal Foreclosure Practices
On August 26, the United States District Court for the Southern District of Texas issued a decision upholding the legality of the CFPB Small Business Lending Rule (the “Rule”) (designed to implement section 1071 of the Dodd-Frank Act) in a lawsuit filed by plaintiff trade associations challenging the CFPB’s authority in promulgating the Rule (previously discussed here and here).Continue Reading Federal Court Upholds CFPB’s Small Business Lending Rule
On August 13, the CFPB announced an advisory opinion on the applicability of the Truth in Lending Act (TILA) and Regulation Z to “contracts for deed.” A contract for deed is an arrangement in which a consumer purchases a home from a seller subject to the purchaser paying for the home over time. The purchaser moves into the home and assumes responsibility for taxes, insurance, home maintenance and repairs, but does not take title to the home until all payments due are made to the seller. The arrangement is also known by other names, such as “land sales contract,” “land installment contract,” and “agreement for deed.” The arrangement is very similar in many respects to an installment sales contract for the purchase of goods. Continue Reading CFPB Announces Advisory Opinion on Applicability of TILA and Regulation Z To Contracts for Deed
On August 12, the National Consumer Law Center (NCLC), a prominent consumer advocacy group, petitioned the CFPB to open rulemaking under the Equal Credit Opportunity Act (ECOA) to expand the definition of “credit” to include housing and apartment rental leases, and “creditors” to include landlords. While acknowledging that landlords are already banned from discriminating against prospective tenants under the federal Fair Housing Act, the petition aims to secure two additional protections. Continue Reading Advocacy Group Petitions CFPB to Categorize Housing Rental Leases as “Credit”
On August 8, the CFPB filed a proposed order to resolve its 2021 lawsuit (previously discussed here) against a California-based software company and its CEO for their role in helping credit repair businesses charge illegal advance fees to customers in violation of the Telemarketing Sales Rule and the Consumer Financial Protection Act.Continue Reading CFPB Settles Action against Third-Party Service Provider Supporting Credit Repair Industry
On August 2, members of U.S. House of Representatives introduced H.J. Res. 195, a joint resolution providing for congressional disapproval under the Congressional Review Act (CRA) of recent CFPB guidance (previously discussed here) on buy now pay later (BNPL) lending. The Bureau’s guidance applied TILA protections previously reserved for credit card issuers, to BNPL lenders. Continue Reading Congressional Measure Aims to Undo Recent CFPB Buy Now Pay Later Guidance
The CFPB recently released a report on payment processing companies that manage school lunch payments for school districts. The companies, the report argues, cater to a captive market and often impose transaction fees that disproportionately affect low-income families. According to the Bureau, the report is intended to assist school districts in avoiding contracts with firms that charge families allegedly excessive fees to process their school lunch payments.Continue Reading CFPB Report Spotlights Hidden Fees in School Lunch Payments
On July 24, 2024, the CFPB issued a circular detailing how companies may be breaking the law by requiring employees to sign broad nondisclosure agreements that could deter whistleblowing.
Under Section 1057(a) of the Dodd-Frank Act, covered persons are prohibited from terminating or otherwise discriminating against covered employees for engaging in whistleblowing activity. The term “discriminate against” encompasses a variety of adverse actions that a covered person may take against employees.Continue Reading CFPB Issues Circular, Warning Against Whistleblower Intimidation