Upcoming CFPB Comment Period Deadlines
- Small-Dollar Lending – October 7, 2016: Comments due in response to a proposed rule addressing payday, vehicle title, and other high-cost installment loans and establishing 12 CFR 1041. For Venable's prior discussion of this proposed rule, please see our Small-Dollar Loan Proposed Rule FAQs.
- TRID Amendments – October 18, 2016: Comments due in response to a proposed rule updating the CFPB's TILA-RESPA Integrated Disclosure (TRID) rule. Highlights of the proposed updates are discussed here.
- Confidential Information Disclosure – October 24, 2016: Comments due in response to a proposed rule revising the CFPB's requirements and restrictions regarding the disclosure of confidential information, including confidential supervisory information. Learn more about the CFPB's proposal.
CFPB Turns Up the Heat On Student Loan Servicing
Having created numerous requirements for mortgage servicers in recent years (including the new requirements discussed below), the CFPB is now also focusing heavily on servicing practices in the second largest class of U.S. consumer debt – student loans. In 2015, together with the Department of Education and the Department of the Treasury, the CFPB launched a public inquiry into student loan servicing practices, resulting in a lengthy September 2015 report detailing widespread servicing failures and recommendations for reform. In February this year, Director Richard Cordray stated that student loan servicing is one of the key areas where the where the CFPB intends to make substantial progress in the next two years. And in July 2016, the Department of Education, in consultation with the CFPB, announced a policy direction describing its expectations for federal student loan servicers (DOE Guidance).
Following quickly on these activities, the CFPB announced two significant actions in August: (1) the August 18, 2016 release of the CFPB's midyear report on student loan complaints, which highlighted borrower difficulties in applying for income-based repayment, and (2) the August 22, 2016 announcement of an enforcement action against Wells Fargo in connection with student loan servicing practices.
CFPB Hasn't Forgotten About Deceptive Credit Card Add-On Product Practices
Since its inception, the CFPB has maintained a continued focus on deceptive marketing and billing practices in connection with credit card add-on products. The CFPB's first-ever enforcement action in July 2012 dealt with such practices, and, in the four years since, the agency brought numerous cases related to similar activities. On August 25, the CFPB announced that it entered into a consent order with First National Bank of Omaha (First National) requiring the bank to pay a $4.5 million penalty and $27.75 million in relief to consumers harmed by the bank's deceptive marketing and billing of credit card add-on products.
Specifically, the CFPB alleged that First National engaged in deceptive practices in connection with debt cancellation and credit monitoring products. According to the agency, First National deceived consumers into listening to their debt cancellation sales pitches by implying that the consumer had to stay on the phone while their credit cards were being activated, even though the activation process was nearly instantaneous. In addition, First National and its marketers allegedly deceived consumers into enrolling in these programs without proper authorization or by implying that the program was free.
CFPB Proposes to Expand Information-Sharing Authority
The CFPB quietly proposed a rule on August 24 that would amend the regulations concerning confidential supervisory information (CSI) and confidential investigative information (CII), as well as the Freedom of Information Act (FOIA). The proposal expands the CFPB's discretion to share information with other agencies, including state attorneys general, in ways that could put a broader swath of industry information at risk of disclosure.
CSI includes the reports, communications, and other documents obtained through CFPB exams, inspections, and other forms of inquiry conducted under the CFPB's supervisory authority, among other items. In general, supervised financial institutions and others in possession of CSI may not disclose such information. CSI remains the property of the CFPB, and disclosure may impair the CFPB's supervisory goals. CII includes information received or prepared by the CFPB relating to enforcement activities, such as civil investigative demands (CIDs) or notice and opportunity to respond and advise (NORA) letters.
CFPB Finalizes Mortgage Servicing Rule Update
The CFPB has finalized updates to its mortgage servicing rules. While these updates provide guidance and clarification on the interpretation and application of several of the mortgage servicing rules, several new or expanded requirements could create compliance burdens as servicers update their policies and procedures to account for the new rules. Most of the new rules take effect one year after publication in the Federal Register. Requirements regarding periodic statements in the event of bankruptcy and successors in interest will take effect 18 months after publication.
CFPB Reports on Elder Financial Abuse
On August 23, 2016, the CFPB's Office for Older Americans released another report with recommendations regarding the fight against elder financial exploitation. Older Americans are vulnerable to financial attacks, and, according to the CFPB, roughly 17% report being victims of financial exploitation. The report estimates that, as a result, seniors have lost anywhere between $2.9 billion and $36.5 billion.
Margaret Kelly is a law clerk and is not yet admitted to practice law.