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The Consumer Financial Protection Bureau has survived many constitutional challenges since it was created by the Consumer Financial Protection Act, 12 U.S.C. §§ 5481, et seq. (the “Act”), in 2011.[1]  But on October 19, 2022, the CFPB suffered a setback in the wake of the Fifth Circuit’s decision in Community Financial Services Association of America, Ltd. v. CFPB, No. 21-50826, (5th Cir. 2022).

In a unanimous decision, the Fifth Circuit held that “Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers.”…

Continue Reading CFPB Files Petition for Writ of Certiorari Seeking Expedited Review of Fifth Circuit Decision Finding Funding Structure Unconstitutional

On December 8th, the Consumer Financial Protection Bureau (CFPB) issued the 25th edition of its Supervisory Highlights report, which covers examinations completed in the first half of 2021. The CFPB reported on violations that occurred in the areas of credit card account management, debt collection, deposits, fair lending, mortgage servicing, payday lending, prepaid accounts, and remittance transfers.

The report signals that the CFPB will continue to enhance enforcement actions against mortgage servicers. Since March 2020, the CFPB has prioritized mortgage servicing supervision due to the increase in borrowers applying for and receiving mortgage forbearance under the CARES Act as a result of the COVID-19 pandemic. CFPB examiners found that mortgage servicers unlawfully charged borrowers late fees and default-related fees. Examiners found that mortgage servicers failed to refund some of the fees until almost a year later. The CFPB vowed to continue its work to ensure that all mortgage servicers meet their homeowner protection objections under applicable consumer protection laws.
Continue Reading Consumer Financial Protection Bureau Issues 25th Supervisory Highlights

Through a series of recent public comments, top leadership from the Consumer Financial Protection Board (CFPB) is warning that the agency is poised to play an increasingly affirmative role in the oversight of new payments systems, including the technologies and technology companies involved.

Read the full post on Perkins Coie’s White Collar Briefly blog.

While the COVID-19 pandemic affected nearly every industry last year, the consumer finance industry faced unique challenges in the wake of economic changes and government response. In this report Perkins Coie offers an analysis of the past year’s most noteworthy regulatory developments and litigation outcomes in the mortgage lending and servicing industry. We review the…

The Consumer Financial Protection Bureau (CFPB) recently issued a proposed rule to create a new category of Seasoned Qualified Mortgages (QMs). The proposal seeks to “encourage safe and responsible innovation in the mortgage origination market” by allowing an alternative pathway to the qualified mortgage safe harbor.

By way of background, the Dodd-Frank Act amended the Truth in Lending Act (TILA) to establish ability-to-repay (ATR) requirements for most residential mortgage loans. TILA specifies the factors a creditor must consider in making a reasonable and good-faith assessment of a consumer’s ATR. TILA also defines qualified mortgages as a category of loans that are presumed to comply with the ATR requirements. Regulation Z, TILA’s implementing regulation, requires creditors to make a reasonable good-faith determination of a consumer’s ability to repay any residential mortgage loan, and loans that meet Regulation Z’s requirements for QMs must obtain certain protections from liability.
Continue Reading The CFPB Proposes to Create a New Category of Seasoned Qualified Mortgages

The Consumer Financial Protection Bureau (CFPB) recently proposed certain amendments to the General Qualified Mortgage (QM) definition in Regulation Z and issued a filing rule extending the expiration of the Government-Sponsored Enterprise (GSE) Patch as a “temporary qualified mortgage” until the mandatory compliance date of the final amendments to the General QM loan definition.

By way of background, the Dodd-Frank Act amended the Truth in Lending Act (TILA) to establish ability-to-repay (ATR) requirements for most residential mortgage loans. TILA specifies the factors a creditor must consider in making a reasonable and good-faith assessment of a consumer’s ATR. TILA also defines qualified mortgages as a category of loans that are presumed to comply with the ATR requirements. Regulation Z, TILA’s implementing regulation, requires creditors to make a reasonable good-faith determination of a consumer’s ability to repay any residential mortgage loan, and loans that meet Regulation Z’s requirements for QMs must obtain certain protections from liability.
Continue Reading The CFPB Proposes Amendments to the Qualified Mortgage Definition in Regulation Z and Extends the GSE Patch

The Conference of State Bank Supervisors (CSBS) recently requested public comment on proposed regulatory prudential standards for nonbank mortgage servicers. The proposal seeks to address concerns about rapid market share growth, nonbank institution size, and nonbank mortgage servicers’ financial stability and governance. The goals of the proposal are to:

  • Provide better protection for borrowers, investors, and other stakeholders in the occurrence of a stress event, in which adverse circumstances affecting one or a series of companies—or alternatively, a wider market dislocation—could result in harm;
  • Enhance effective regulatory oversight and market discipline over these entities; and
  • Improve transparency, accountability, risk management, and corporate governance standards.

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Continue Reading The Conference of State Bank Supervisors Proposes Regulatory Prudential Standards for Nonbank Mortgage Servicers

In this episode of White Collar Briefly, Perkins Coie’s David Biderman, firmwide chair of the Consumer Products & Services Litigation group, sits down with Craig Lackey, general counsel of Rushmore Loan Management Services, a major servicer of residential mortgages nationwide. Their discussion covers topics such as the COVID-19-related downturn on the economy and mortgage servicer…