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In This Issue:
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Credit Score RFI – November 4, 2016: Comments due in response to the CFPB's notice regarding options to produce a public list of companies offering existing customers free access to a credit score.
Payday Loan RFI – November 7, 2016: Comments due in response to request for information on payday loans, vehicle title loans, installment loans, and open-end lines of credit.
For an index of documents published by the CFPB in the Federal Register, click here.
November 9, 2016: Insurance Companies' Acquisition or Chartering of Banks – Is It Time? (a Bloomberg BNA webinar) – Ronald R. Glancz and John B. Beaty
November 11, 2016: Enhancing a CMS in the Real World (at the 2016 ACA International Fall Forum & Expo) – Jonathan L. Pompan and Alexandra Megaris
November 30, 2016: The Latest RESPA and TILA Developments: CFPB Final Rule Changes That Are Impacting Regs X and Z, Implementation Challenges, Claims Trends and Best Practices for Compliance in Early Intervention, Loss Mitigation, Periodic Statements and Beyond (at the ACI's 6th Annual Bank and Non-Bank Forum on Mortgage Servicing Compliance)
February 7, 2017: Navigating Debt Buying in a 'Regulatory by Enforcement' Environment During a Rulemaking (at the 2017 DBA International Annual Conference) – Jonathan L. Pompan and Alexandra Megaris
MLA Examination Procedures Manual Revised
The Bureau issued revised Military Lending Act (MLA) Exam Procedures at the end of September. The examination procedures highlight compliance management systems and "overall efforts to come into compliance" with the new MLA rule. The revised exam procedures work alongside the Department of Defense's recently updated MLA regulations. Creditors have been required to comply with the amended regulation as of Oct. 3, 2016 for most types of covered credit; credit card providers must comply with the new rule beginning Oct. 3, 2017. In addition to the CFPB, the FFIEC and FDIC have released updated MLA examination procedures (available here and here). For more information on the DoD's MLA rule, please see Venable's discussion of the rule's changes.
CFPB Updates Service Provider Guidance
The CFPB updated is guidance regarding financial institutions' service providers through its October 26 Compliance Bulletin and Policy Guidance 2016-02. The updated guidance (previously CFPB Bulletin 2012-03) provides financial institutions with greater flexibility in developing their risk management systems, stating that "risk management programs[s] for service providers may vary depending upon the service being performed – its size, scope, complexity, importance and potential for consumer harm . . . ." The updated guidance, while still non-binding, indicates that due diligence, while not a "shield against liability . . . could help reduce risk . . . ."
Mortgage Servicing Rule Effective October 19, 2017
Updated Mortgage Servicing Rule amendments were published in the Federal Register on October 19, 2016, starting the clock for the effective date of the amended provisions. Most of the provisions are effective on October 19, 2017. The provisions related to successors in interest and periodic statements for borrowers in bankruptcy are effective on April 19, 2018. For more information on the CFPB's Servicing Rule changes, please see Venable's discussion of the amendments.
ECOA Protects Against LGBT Discrimination According to CFPB
Earlier this year, Services & Advocacy for GLBT Elders (SAGE), a nonprofit organization, asked the CFPB whether the term "sex" as used in the Equal Credit and Opportunity Act (ECOA) includes discrimination based on gender identity or sexual orientation. The CFPB responded, in a letter to SAGE, and confirmed that under the Bureau's interpretation of ECOA and Regulation B, creditors may not discriminate against applicants on the bases of gender identity or sexual orientation. Accordingly, the guidance has important implications for anyone engaged in the credit lending process, and creditors should ensure that their policies reflect the updated guidance on ECOA enforcement.
D.C. Circuit Addresses CFPB's Constitutionality, RESPA Interpretation, and Statute of Limitations Issues in PHH Decision
The United States Court of Appeals for the D.C. Circuit recently held that (1) the CFPB's structure as a single-director independent agency is unconstitutional; (2) Section 8 of the Real Estate Settlement Procedures Act (RESPA) allows captive mortgage reinsurance arrangements, as long as the amount paid for the reinsurance does not exceed reasonable market value; (3) the CFPB violated PHH's due process rights by retroactively applying a new RESPA interpretation without fair notice; and (4) the CFPA incorporates the statutes of limitations of underlying statues enforced by the CFPB – write Venable attorneys Allyson B. Baker, Andrew T. Hernacki, and Peter S. Frechette. Click here to learn more.
CFPB Supervision and Enforcement: Thinking About Overlap – Webinar Materials Available
How a company prepares for and manages a CFPB exam can make the difference between a passing grade and an enforcement action. Venable attorneys and co-authors of How to Prepare for and Survive a CFPB Exam, Jonathan L. Pompan, Andrew E. Bigart, and Alexandra Megaris, were joined by former CFPB Chief of Staff Garry Reeder, for a webinar focused on the interplay between the CFPB's supervision and enforcement work and what that means for companies that are subject to examination. Click here for a copy of their presentation and the live recording.
Prepaid Cards Face Sweeping New Federal Regulations
The long-awaited final rule for prepaid accounts under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z) was released earlier this month. The rule, which checks in at nearly 1700 pages, establishes sweeping consumer protections that impact all aspects of the prepaid industry, write Venable attorneys Allyson B. Baker, Jonathan L. Pompan, Andrew E. Bigart, in a recent client alert.
There Is No On-Ramp – Lessons for FinTech from the CFPB
"But we're just a software company!" Although multiple federal regulators have discussed developing "safe spaces" for financial innovation, there is no on-ramp, beta testing, or grace period permitted for compliance with consumer financial protection laws, write Venable attorneys Allyson B. Baker, Jonathan L. Pompan, and Samuel D. Boro. As demonstrated in recent enforcement actions, the CFPB not only expects full compliance on day one, but is also specifically targeting statements by FinTech companies that may be aspirational and not accurate. Click here to learn more.
NY DFS Proposes Cybersecurity Regulations for Financial Institutions
Proposed cybersecurity regulations from the New York State Department of Financial Services (DFS) are now open for comment, write Venable's Managing Director of Cybersecurity Services Ari Schwartz and Venable attorneys Ariel S. Wolf and Sejal C. Shah in a recent alert. The proposal includes a broad set of regulations for banks, insurers, and other financial institutions, and highlights the focus that financial services regulators have placed on cybersecurity. Click here to learn more.
FTC and NY DFS Staff Share Views on Lead Gen Legal Responsibility
Using lead generation advertising to connect with consumers? Jonathan L. Pompan recently moderated a panel discussion on "Lead Gen Legal Responsibility and Accountability" at the 2016 LeadsCon New York Conference. Panelists included staff from the FTC's Division of Financial Practices, and the New York State Department of Financial Services. Click here to view the YouTube video.