Tag:CFPB
CFPB Proposed New Rules to Expedite Mortgage Assistance
Earlier this year, the Consumer Financial Protection Bureau (CFPB) announced proposed rule changes to provide additional relief for homeowners struggling to make mortgage payments. The changes aim to amend the 2013 regulations governing mortgage servicing, ensuring that borrowers can more easily access mortgage assistance and therefore reduce the risk of unnecessary foreclosures. This comes at a time when economic uncertainties and evolving market conditions make it critical for homeowners to have quick access to resources to avoid foreclosures. The new proposal, if finalized, is designed to simplify the process for borrowers seeking mortgage assistance, improve communication between borrowers and servicers, and add safeguards to protect homeowners.
CFPB Takes Aim at Credit Card Late Fees in Latest Rule to Eliminate ‘Junk Fees’
In January 2022, the Consumer Financial Protection Bureau (CFPB) set out to increase transparency in the pricing of financial services products by implementing rules to eliminate ‘junk fees’ that often obscure the true price of financial products. Through this initiative, the CFPB analyzed the impact of numerous types of fees across banking while simultaneously attracting the scrutiny of banking advocacy organizations such as the American Banking Association (ABA) and the US Chamber of Commerce. These advocacy organizations have challenged the constitutionality of the CFPB funding structure. The CFPB examines all categories of financial products in the search for ‘junk fees’, including recently uncovering paper bank statement fees for statements that were never printed or mailed, add-on products being charged to paid-off auto loan accounts, undisclosed fees imposed on international money transfers, and bank operating systems double-dipping on non-sufficient funds fees. While litigation has recently settled in the Supreme Court to determine that the CFPB is constitutionally funded under the Appropriations Clause, the most recent rule by the CFPB to limit ‘junk fees’ imposed on credit card accounts remains on hold following a decision to grant a Preliminary Injunction by the US District Court for the Northern District of Texas.
College Tuition Payment Plans Are Putting Student Borrowers at Risk
Doria Keys Associate Editor Loyola University Chicago School of Law, JD 2025 College is typically the first instance in which many Americans encounter debt collection, lending, and credit reporting. The most common way that students borrow is by acquiring student loans, either from the U.S. Department of Education or from private financial institutions. A less …
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Proposal to Change TULA Late Fee Maximum on Credit Cards: Is it Beneficial or Burdensome?
Megan Aldworth Associate Editor Loyola University Chicago School of Law, JD 2023 The Truth in Lending Act (TILA), established 1968, is aimed to protect consumers against unfair credit practices and billing by lenders. Under TILA, lenders must provide consumers (borrowers) with information that allows them to compare loan terms given by various lending institutions. …
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No Payday for the CFPB: A Recent 5th Circuit Decision Jeopardizes the CFPB and its Funding
A decision filed October 19, 2022 by the Fifth Circuit Court of Appeals has vacated a payday lending rule put in place by the Consumer Financial Protection Bureau (CFPB). The rule was put in place to prevent predatory lending practices and unfair practices in their collection. The court decision was not based on the rule being unconstitutional but rather based in how the bureau is funded. The decision has overreaching implications on the future enforcement of CFPB rules.
The Financial Services Industry and Its Regulatory Landscape: 2021
Every year, hundreds of financial advisors and brokers across the country are convicted of a host of bad acts, which include conducting Ponzi schemes, misappropriating client funds and forging customer signatures. 2021 was no exception. Here are ten recent examples of how the legal system as well as regulators in the financial services industry, respond to allegations of fraud, misappropriation, improper hiring practices, and criminal activity.
Uh Oh Venmo…The CFPB is Cracking Down under the Biden Administration
Chandler Wright Associate Editor Loyola University Chicago School of Law, JD 2022 “Can I Venmo you?” is a phrase that many of us find ourselves saying on a weekly basis. Venmo has become not just a money-transfer application, but also a verb. In some ways, Venmo has also become a social media platform among friend …
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Section 1071: Hold for Commentary or Lost During a Trump Administration?
As a part of the large and cumbersome Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”), Section 1071 was enacted to amend the Equal Credit Opportunity Act (15 U.S.C. 1691 et. seq.) to impose data collecting requirements on financial institutions. Pursuant to Section 1071 (the “Rule”), financial institutions are required to compile, maintain, and submit to the Consumer Financial Protection Bureau (“CFPB”) certain information concerning credit applications by women-owned, minority-owned, and small businesses. The Rule was not slated to go into effect until the CFPB issues necessary implementing regulations. Unfortunately, nearly 8.5 years later, there is still no guidance. Consumers and financial institutions alike are at a sort of standstill, unclear on the contours of its reporting requirements. In November of 2019, the CFPB published a letter to financial institutions promising to develop rules “expeditiously;” the CFPB later hosted an information-gathering symposium on the Rule, yet there is still no clear guidance.
The Tumultuous Regulation and Deregulation of Payday Loans
Each year, approximately twelve million Americans resort to payday loans for quick money to pay off bills and cover emergency expenses. The small, short-term unsecured loans give borrowers a quick way to get money with little consideration of their creditworthiness. Borrowers are plagued with extremely high annual percentage rates to offset the seemingly substantial risk to the lender. However, many studies have shown that payday loans carry no more long-term risk to the lender than other forms of credit. Lenders are able to gain from the high interest rates that burden borrowers while simultaneously benefitting from the relatively low-stakes gamble of the nature of the loan. This illuminates a harrowing truth: the real victims of exploitative and predatory “cash advances” are the borrowers themselves who continue taking on more and more of these high-interest loans in a vicious cycle to repay small debts.
Unprecedented Federal Reserve Decision Foreshadows New Compliance Expectations for U.S. Banks
Following the 2016 Wells Fargo scandal in which the bank opened millions of unauthorized bank and credit card accounts to collect fees, federal regulators have worked to address and respond to the corporation’s illegal conduct. On February 2nd, 2018, the U.S. Federal Reserve imposed unprecedented restrictions against Wells Fargo & Co. when it capped the bank’s growth for 2018 such that it could not exceed the total assets owned at the end of 2017. This restriction marks a substantial departure from previous penalties issued for improper compliance. Changes in policies and procedures and this novel punishment reflect a notable shift in the national bank’s expectations of corporate directors.