CFPB Compensation Rule Allows Cash Bonus to Loan Officers
By Brian Collins

Mortgage companies can pay their loan officers quarterly and annual cash bonuses under the final LO compensation rule issued by the Consumer Financial Protection Bureau.

Read More....Click Here.

NYAMB Contends With Storm, More
By Brad Finkelstein

Hurricane Sandy and the reelection of Pres. Obama were big topics at the roundtable with NYAMB officers.

Read MoreClick Here

CFPB Issues Rules to Strengthen Protections for High-Cost Mortgages

The CFPB issued final rules to strengthen consumer protections for high-cost mortgages and to provide consumers with information about homeownership counseling. The Bureau also finalized a rule that requires escrow accounts be established for a minimum of five years for certain higher-priced mortgage loans.
Read more... 

CFPB Issues Rule to Protect Consumers from Irresponsible Mortgage Lending

The CFPB has adopted a new rule that will protect consumers from irresponsible mortgage lending by requiring lenders to ensure that prospective buyers have the ability to repay their mortgages.
Learn more... 

From: Barton.Shapiro@cfpb.gov [mailto:Barton.Shapiro@cfpb.gov]
Sent: Friday, November 16, 2012 1:23 PM
To: Barton.Shapiro@cfpb.gov

Dear Colleagues,

 

The Consumer Financial Protection Bureau (CFPB) announced that it will give industry extra time to provide certain new disclosures required under the Dodd-Frank Wall Street Reform and Consumer Protection Act in order to allow a more seamless integration with other mortgage disclosures that have been proposed by the Bureau. Per today’s announcement, industry will not be required to provide those disclosures until after the Bureau’s previously proposed mortgage disclosure rules are finalized.   Please read below for more information.

Regards,

Bart

CONSUMER FINANCIAL PROTECTION BUREAU EXTENDS EFFECTIVE DATE FOR NEW MORTGAGE DISCLOSURES

Disclosure Requirements Will Be Integrated into CFPB’s Final Mortgage Disclosure Forms Instead of Taking Automatic Effect in January

 

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (CFPB) announced that it will give industry extra time to provide certain new disclosures required under the Dodd-Frank Wall Street Reform and Consumer Protection Act in order to allow a more seamless integration with other mortgage disclosures that have been proposed by the Bureau. Per today’s announcement, industry will not be required to provide those disclosures until after the Bureau’s previously proposed mortgage disclosure rules are finalized.

 

“Considering these disclosures on the same timeline will ensure that consumers receive clear, concise, and consistent information,” said CFPB Director Richard Cordray.  “By seeking public comment and conducting consumer-testing for these disclosures together, we can avoid the duplication and inefficiency that existed in the past.”

 

The Dodd-Frank Act required that the CFPB integrate certain disclosures from the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). For decades, TILA and RESPA have required lenders and settlement agents to give borrowers different but overlapping disclosure forms in connection with applying for and closing most mortgages loans. This duplication has long been recognized as inefficient and confusing for consumers and industry. In July, the CFPB proposed new Loan Estimate and Closing Disclosure forms after months of qualitative testing and the Bureau’s Know Before You Owe mortgage initiative.

 

In addition to requiring the integration of TILA-RESPA disclosures, the Dodd-Frank Act also establishes additional new mortgage disclosure requirements, which would automatically take effect on Jan. 21, 2013 unless other action was taken. These new requirements include disclosures on cancellation of escrow accounts, on a consumers’ liability for debt payment after foreclosure, and on the creditor’s policy for accepting partial payment. The CFPB integrated many of these new requirements into the Bureau’s proposed forms that were released in July 2012.

 

The Bureau’s July TILA-RESPA integration proposal requested comment on granting more time for companies to provide many of the additional disclosures so that the entire TILA-RESPA disclosure regime could take effect together. Commenters overwhelmingly supported providing this extra time so that all of the disclosures take effect together.

Through a final rule issued today, the Bureau is allowing more time to provide the new disclosures by giving a temporary exemption from the requirements, so that the entire TILA-RESPA disclosure integration regime can go into effect at once. Without this extra time, industry would have to implement these new disclosures twiceundefinedonce on January 21, 2013, and once again when the Bureau finalizes the integrated TILA-RESPA disclosure regime. Consumers will benefit from a comprehensive disclosure rule because the Bureau plans to use consumer-tested, easily understood language in all disclosures.

Though no deadline was mandated for finalizing the TILA-RESPA integrated proposal, the Bureau anticipates that the final rules will be published next year.  

 

The final rule providing this temporary exemption for certain Dodd-Frank disclosures can be found at: http://files.consumerfinance.gov/f/201211_cfpb_final-rule_title-XIV-disclosures-extension.pdf

###

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov.

Orignation News 10/19/12

 

Low downpayment loans could be in danger depending on how the qualified mortgage rule plays out.

 

click here to read more

Origination News Post 10/12/12

 

FOR PLANNING PURPOSES
Friday, October 12, 2012
TODAY: Congressman Barney Frank to Debate the Future of Housing Policy
Congressman Barney Frank today will take part in a moderated discussion on the future of housing policy in the United States.  As the former Chairman of the House Financial Services Committee, Frank was a leader in the passage of the 2010 Wall Street Reform and Consumer Protection Act.  Frank will engage in what is likely to be a spirited discussion with Keith Hennessy, former Assistant to President George W. Bush for Economic Policy, and former Director of the National Economic Council. WHEN:         Friday, October 12, 2012 -- 10:30 am CST, 11:30 am EST WHAT:            Opening remarks: Leo Melamed, CME Group Chairman Emeritus                    Moderator: Terry Savage, Chicago Sun-Times Financial Columnist                    Panelists: •·        Barney Frank, United States Representative of the 4th Congressional District of Massachusetts •·        Keith Hennessey, National Economic Council Former Director                        The forum will be webcast at:  www.cmegroup.com/msri2012        WHERE:         W Chicago - City Center 172 West Adams Street Chicago, IL                    CONTACT       For media access to Congressman Frank, please contact Harry Gural by phone at (202) 225-9400.                    For media access at the CME Group, please contact Michael Shore at (312) 930-2363

Dear Colleagues,

 

Today, the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) announced a joint public enforcement action with an order requiring Discover Bank to refund approximately $200 million to more than 3.5 million consumers and pay a $14 million civil money penalty. 

Please see the joint press release below.

 

Regards,

Bart

FEDERAL DEPOSIT INSURANCE CORPORATION AND CONSUMER FINANCIAL PROTECTION BUREAU ORDER DISCOVER TO PAY $200 MILLION CONSUMER REFUND FOR DECEPTIVE MARKETING

Discover Pays Additional $14 Million Penalty for Deceptive Marketing of Credit Card ‘Add-On Products’

WASHINGTON, D.C. – Today, the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) announced a joint public enforcement action with an order requiring Discover Bank to refund approximately $200 million to more than 3.5 million consumers and pay a $14 million civil money penalty.  This action results from an investigation started by the FDIC, which the CFPB joined last year.  The joint investigation concerned deceptive telemarketing and sales tactics used by Discover to mislead consumers into paying for various credit card “add-on products” – payment protection, credit score tracking, identity theft protection, and wallet protection.

The agencies jointly determined that Discover engaged in deceptive telemarketing tactics to sell the company’s credit card add-on products.  Payment Protection was marketed as a product that allows consumers to put their payments on hold for up to two years in the event of unemployment, hospitalization, or other qualifying life events.  Discover also sold its Credit Score Tracker, designed to allow a customer unlimited access to his or her credit reports and credit score.  The third product was Identity Theft Protection, which was marketed as providing daily credit monitoring.  Lastly, Discover’s Wallet Protection product was sold as a service to help a consumer cancel credit cards in the event that his or her wallet is stolen.

Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product.  Discover’s telemarketers also often downplayed key terms and spoke quickly during the part of the call in which the prices and terms of the add-on products were disclosed.  Because of the misleading language in the scripts and the actions of Discover’s telemarketers, consumers were:

•·        Misled about the fact that there was a charge for the products: Discover’s telemarketing scripts often used language implying that the products were additional free “benefits,” rather than products for which a fee would be applied to their accounts. 

•·        Misled about whether they had purchased the products:  The telemarketing scripts frequently suggested that consumers would not be charged for the products until after having a chance to review printed materials from Discover.  Discover, however, did not provide consumers with the information until after Discover had already initiated the consumer’s purchase of a product.

•·        Enrolled without their consent: Discover representatives processed the add-on product purchases without some consumers’ consent.  These consumers were then charged for the product on their Discover card.

•·        Withheld material information about eligibility requirements for certain benefits: Discover’s telemarketers typically did not disclose critical eligibility requirements for certain payment protection benefits, such as exclusions for pre-existing medical conditions and certain limitations concerning employment.

Enforcement Action

Under the order, Discover has agreed to:

•·        Stop deceptive marketing: Discover is required to institute certain changes to its telemarketing of these products that are designed to ensure that these unlawful acts do not occur again.  Discover has also agreed to submit a compliance plan to the FDIC and the CFPB for approval, and to take specific corrective actions related to the products. 

•·        Pay restitution to consumers who purchased the products: Discover will pay approximately $200 million in restitution to more than 3.5 million consumers who were charged for one or more of the products between December 1, 2007 and August 31, 2011.  Generally, all consumers affected by Discover’s deceptive practices regarding these products, except those who affirmatively made use of Payment Protection, will receive restitution, with amounts varying depending on when they purchased, and how long they held, the add-on products.  All consumers will receive at least 90 days’ worth of fees paid (minus any refunds they have already received), with approximately 2 million consumers receiving full restitution of all of the fees they paid (minus any refunds they have already received).

•·        Provide refunds or credits without any further action by consumers: Consumers are not required to take any action to receive their credit or check. If an affected consumer is still a Discover customer, he or she will receive a credit to his or her account.  If an affected consumer is no longer a Discover credit card holder, the consumer will receive a check in the mail or have any outstanding balance reduced by the amount of the refund. 

•·        Submit to an independent audit: Compliance with the restitution terms of the order will be assured through the work of an independent auditor, who will report to the FDIC and the CFPB on Discover’s compliance with the joint FDIC-CFPB Consent Order.

•·        Pay a $14 million penalty: The FDIC and the CFPB imposed civil money penalties of $14 million.  Discover will pay $7 million of that penalty to the U.S. Treasury and $7 million to the CFPB’s Civil Penalty Fund. 

The full text of the Joint FDIC-CFPB Consent Order with Discover is available at: http://files.consumerfinance.gov/f/201209_cfpb_consent_order_0005.pdf

A factsheet on the Consent Order is available at: http://consumerfinance.gov/f/201209_cfpb_factsheet_settlement-with-discover-bank.pdf

###

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,246 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov.