2013 has been one of the busiest years ever for banks and their compliance staff. The approach of January 10, 2014 and the effective date of numerous proposed regulations, unfortunately, will not signal an end to all of this activity. If anything, recent announcements and further pending regulatory proposals will make 2014 seem much like a replay of 2013. A glance at recent CFPB announcements gives us a preview of what we can expect.

On August 21, 2013, the CFPB issued a report detailing many of the mortgage loan servicing problems it had found at banks and non-banks. Those problems included poor procedures for transferring mortgage loans and/or the servicing rights to those loans; poor payment processing procedures; and numerous mistakes made in the process of qualifying a delinquent customer for a loss mitigation program. In each instance detected, the CFPB notified the lender, specified the problem(s) and, where appropriate, entered into an enforcement action.

On September 4, 2013, the CFPB issued a Bulletin stressing the obligations of furnishers of credit information to consumer reporting companies, outlining their responsibility for investigating consumer disputes forwarded by those consumer reporting companies. The

Bulletin stressed the furnisher's obligation under the Fair Credit Reporting Act to review all relevant dispute information and to fulfill their legal obligations by:

  • Receiving information and investigating reports;
  • Providing investigation results to the consumer reporting company and modifying, deleting or blocking any inaccurate, incomplete or unverified information; and
  • Correcting erroneous or inaccurate information.

The CFPB concluded by reminding furnishers that appropriate enforcement actions would be taken as needed.

More recently on October 9, 2013, the CFPB announced two enforcement actions against a non-bank mortgage lender and a bank for reporting inaccurate HMDA data. The non-bank lender was assessed a civil money penalty of $425,000, and the bank received a $34,000 civil money penalty.

The CFPB listed the various factors that would trigger an enforcement action for HMDA violations: the size of the lending activity; prior history of HMDA violations; whether the institution self-identified its mistakes and self-corrected those errors.

The CFPB also announced the release of its HMDA Resubmission Schedule and Guidelines which list error thresholds that regulators would use to determine HMDA compliance. The set of Guidelines can be found at:

http://files.consumerfinance.gov/f/201310_cfbb_hmda_resubmission-guidelines_fair-lending.pdf.

The foregoing are by no means all of the targets that the CFPB has in its sights. Automobile dealer financing, credit reporting agencies, credit repair businesses, originators of student loans and other consumer-oriented lines of business are under review. The consumer complaint process that the CFPB actively supports may reveal other areas ripe for review.

And then there are the remaining issues under the Dodd-Frank Act that will be announced in 2014. Chief among these will be the issuance of regulations supporting the newly developed TILA/RESPA disclosures and revisions to HMDA reporting requirements. HMDA-like reporting requirements are also expected for small business loans, especially those made to female and minority loan applicants. This latter database will almost surely result in a new area of inquiry for Fair Lending purposes.

Couple all of the above with implementation of the Ability to Repay Rule, the Qualifying Mortgage Rule and the Mortgage Loan Servicing Rules that go into effect next January, and you can see that 2014 will be a year to rival, or perhaps even exceed, 2013. Lots to do!

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