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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

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

Today, the CFPB has issued the small business lending final rule to implement changes to the Equal Credit Opportunity Act made by Section 1071 of the Dodd-Frank Act to require financial institutions to compile data regarding certain business credit applications and report that data to the CFPB (we previously discussed Section 1071 rulemaking in prior blog posts here and here). According to the CFPB, Section 1071’s purposes are “facilitating enforcement of fair lending laws and enabling the identification of business and community development needs and opportunities for women-owned, minority-owned, and small businesses.” While the final rule includes almost 900 pages of rulemaking, highlights include the following:…

Continue Reading CFPB Issues Small Business Lending Rule

On February 3, the U.S. District Court for the Northern District of Illinois issued an opinion and order dismissing with prejudice the CFPB’s complaint for violations of the ECOA against a mortgage lender and its owner violated for engaging in discriminatory marketing and applicant outreach practices. In particular, the CFPB alleged fair lending violations based on comments made by the company on a local radio station that the CFPB alleged discouraged prospective minority applicants from submitting mortgage loan applications to the lender. The Bureau’s allegations relied on the ECOA’s implementing regulation, Regulation B, which prohibits creditors from making any statements “to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.”…

Continue Reading District Court Dismisses CFPB Redlining Action Against Nonbank, Limits ECOA’s Reach

On January 27, the Federal Reserve Board (FRB) announced that it unanimously voted to deny a crypto firm’s application to become a member of the Federal Reserve System. This denial ends the crypto firm’s 27-month effort to obtain a “master account,” which allows companies to move money through the Federal Reserve System without having to use a federally insured bank.…

Continue Reading Fed Board Denies Crypto Firm’s Bid to Join Federal Reserve System

Recently, the CFPB filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit arguing that the court should reinstate a borrower’s putative class action claim against a national bank. The CFPB argued that the district court erred by improperly narrowing a provision in Regulation Z of the Truth in Lending Act (TILA) that prohibits lenders from withdrawing from deposit accounts to cover debts caused by credit card plans.…

Continue Reading CFPB Files Amicus Brief in TILA Suit, Impacts How Banks Collect on HELOCs

On October 19, in Community Financial Services Association of America, Limited v. Consumer Financial Protection Bureau, a three-judge panel in the Fifth Circuit unanimously found the CFPB’s funding structure to be unconstitutional, holding that it violates the U.S. Constitution’s Appropriations Clause. This decision followed a challenge by the CFSA to the CFPB’s “payday rule,” which prohibits lenders from withdrawing loan payments from consumer accounts after multiple failed attempts due to insufficient funds.
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Continue Reading Fifth Circuit Rules CFPB Funding Structure Unconstitutional in Next Turn of Litigation

Recently, the United States Court of Appeals for the 4th Circuit held that a mortgage servicer’s failure to provide a required disclosure informing borrowers of their three-day right to rescind the loan under the Truth in Lending Act (TILA) does not relieve borrowers of their obligation to return disbursed loan proceeds upon an effective rescission. The ruling reversed a West Virginia District Court’s ruling against the mortgage servicer in a purported class action.
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Continue Reading 4th Circuit: Borrower Must Return Loan Proceeds After Rescission Despite Lender’s Failure to Meet TILA Requirements

On June 30, the CFPB issued an order terminating an EWA provider’s Sandbox Approval Order relating to its earned wage access products. In December 2020, the CFPB provided the company special regulatory treatment, including a temporary safe harbor from liability under TILA/Reg. Z because, in part, the EWA program did not involve the offering or extension of “credit” as defined by Reg. Z. In its press release, the CFPB note that the “temporary safe harbor is for offering and providing certain earned wage access products, subject to good faith compliance with the terms of the approval order.”
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Continue Reading CFPB Rescinds Special Regulatory Treatment for EWA Company

In March, U.S. Department of Treasury issued its annual General Explanations of the Administration’s Revenue Proposals, commonly known as the “Green Book.”  Among other revenue proposals, the Treasury addressed the treatment of on-demand pay arrangements or earned wage access (EWA) programs, which have risen in popularity in recent years (previously discussed in our Labor and Employment Blog).  EWA programs generally allow employees to access accrued wages before the end of their regular pay cycle. …
Continue Reading Treasury Department Proposes Non-Loan Status for Earned Wage Access