Dodd-Frank News Center

CFPB Reminds Servicemembers and Families of Consumer Finance Tools

This story appeared in Bank Digest.

A Blog post celebrating Memorial Day noted that the CFPB’s Office of Servicemember Affairs seeks to educate and engage with the public about consumer finance as it impacts servicemembers and their families. At www.consumerfinance.gov, servicemembers and their families can find information on a host of initiatives, including ways in which the CFPB seeks to combat financial scams targeted at military consumers. Consumers can also find innovative tools, including the Financial Aid Comparison Shopper, complete with military benefits calculator, and student loan complaint system, equipped to field concerns from servicemembers, veterans, and their families.

Residential Mortgage-Backed Securities Working Group Announces Website, Coordination Team

This story appeared in Bank Digest.

The Residential Mortgage-Backed Securities (RMBS) Working Group has announced new resources in the ongoing effort to investigate misconduct, including the launch of a RMBS website to report fraud and the creation of a coordination team to facilitate the various investigations underway around the country. The RMBS Working Group’s co-chairs include Assistant Attorney General for the Criminal Division Lanny Breuer, Acting Assistant Attorney General for the Civil Division Stuart Delery, U.S. Attorney for the District of Colorado John Walsh, Director of Enforcement for the Securities and Exchange Commission Robert Khuzami, and New York State Attorney General Eric Schneiderman. The working group and its members are focused on investigating potential false or misleading statements, deception or other misconduct by market participants in the creation, packaging and sale of mortgage-backed securities.

CFPB, SIGTARP Warn of Modification Fraud Targeting Servicemembers

This story appeared in Bank Digest.

The Treasury Department, Consumer Financial Protection Bureau and Office of the Special Inspector General for the Troubled Asset Relief Program have issued a fraud alert addressing schemes targeted at homeowners seeking to apply for mortgage assistance through the Home Affordable Modification Program and other federal programs. Many of these fraudulent schemes are directed specifically at members of the military community. The alert provides information on how homeowners who are having difficulty making their mortgage payments can get free counseling and apply for modification assistance.

 

Mortgage Loan Servicing Enforcement Plans, Agreements Released

This story appeared in Bank Digest.

The Fed has released action plans for two financial institutions to correct deficiencies in residential mortgage loan servicing and foreclosure processing. It also released the engagement letter between a third company and the independent consultant it retained to review foreclosures that were in process in 2009 and 2010, as well as a supplemental agreement addressing that company's foreclosure review obligations following the decision by the company's mortgage servicing subsidiaries to seek bankruptcy protection. According to the Fed, the action plans are required under the terms of last year's formal enforcement actions, which require Fed-regulated mortgage loan servicers and parent holding companies of mortgage servicers to submit acceptable plans to improve their procedures, controls and oversight of foreclosure activities.

White Paper on GSE Conservatorship Costs Issued

This story appeared in Bank Digest.

The FHFA's investment in creating and sustaining the conservatorship of the government-sponsored housing entities “permitted Fannie Mae and Freddie Mac to avoid insolvency, which, given their dominant position in housing finance and the trillions of dollars of securities issued, could have caused the collapse of the U.S. housing finance system,” a new FHFA white paper has asserted. The white paper noted that while the GSE shareholders lost nearly all of their investments, bond holders and investors in the GSEs' mortgage-backed securities were protected, and housing market participants--including homeowners--also benefitted because the GSEs could continue to support the secondary market. However, the cost of the FHFA's support eventually could rise to as much as $33 billion.

Blog Entry Outlines CFPB Ethics Rules

This story appeared in Bank Digest.

The ethics regulations adopted by the CFPB are the subject of a recent CFPB blog entry. The blog said that existing laws and regulations were found to be inadequate to address all of the bureau's issues, although some of them were adopted. The CFPB's own regulations address issues such as outside employment, investments, credit arrangements and conflicts of interest. One difference noted between the bureau's rules and those of other agencies was that while the other agencies have prohibited classes of financial investments, the CFPB rules prohibit specific financial investments based on the businesses the bureau will regulate.

Proposal Would Establish Supervisory Authority over Nonbank Covered Persons

This story appeared in Bank Digest.

The CFPB has proposed a rule that would govern the process by which a nonbank covered person may become subject to the supervisory authority of the bureau. The proposal seeks to establish an efficient, expeditious and fair process under which the CFPB would provide a nonbank covered person a notice stating that there may be reasonable cause to determine that it is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services. The proposal establishes mechanisms to provide the nonbank covered person a reasonable opportunity to respond to the notice. In order to allow a respondent to inform the bureau of actions taken and progress made to reduce the risks to consumers after the issuance of an order, the respondent would be permitted, after two years and no more than annually thereafter, to petition the CFPB director for the termination of an order. The proposal makes clear that nothing in the rule affects the relief the bureau may seek in any civil action or administrative adjudication.

Field Hearing Discusses Prepaid Card Rule

This story appeared in Bank Digest.

Following publication of a prepaid card Advance Notice of Proposed Rulemaking, the CFPB held a field hearing in Durham, N.C. (webcast), to solicit public feedback. According to CFPB Director Richard Cordray, the bureau “is asking for input on how we can make the costs and risks of prepaid cards clearer and more accessible for consumers.” Cordray added, the bureau will use the input to determine how it “should go about regulating prepaid cards to better protect consumers and to provide clear rules for prepaid providers. 

Sen. Kay R. Hagan, D-N.C., applauded the bureau for hosting the hearing, stating that whether “applying for a mortgage, paying off student loans or choosing a credit card, American consumers need and deserve products and services that are safe and transparent.”

Bank Earnings At Highest Level Since 2007; Loan Balances Slip

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter and Bank Digest.

Federal Deposit Insurance Corporation-insured banks earned $35.3 billion in net income for the first quarter of 2012, the highest level seen since the second quarter of 2007, and the eleventh consecutive year-over-year quarterly improvement. Loan balances, however, fell for the first time in four quarters.

First quarter net income rose 22.9 percent from the year-earlier period, as the average return on assets rose above the one percent level for only the second time since the second quarter of 2007. Over two thirds of all banks reported an improvement in their quarterly earnings, with only 10.3 percent unprofitable in the first quarter.

CFPB Moves Toward Prepaid Card Rules

By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

The CFPB has issued an Advance Notice of Proposed Rulemaking as a first step in drafting regulations for general purpose reloadable cards, also referred to as prepaid cards. According to the bureau, the rules will be intended to ensure that consumers' funds are protected and that card fees and terms are clear. The ANPR applies to access methods beyond actual cards, such as cell phone applications, but not to payroll cards, non-reloadable cards, gift cards, cards linked to bank accounts or other similar access devices.