A successful man is one who
makes more money than his wife can spend.
A successful woman is one who can find such a man.
A successful woman is one who can find such a man.
(Yes, I know this is sexist.
I'll try to make up for it tomorrow.)
Happy 6th year-old-birthday
to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Or is it the
CFPB's 5th "birthday"? For those new to the business, the
passage of Dodd-Frank in July 2010 put in place the Consumer Finance Protection
Bureau in July of 2011. Lots more below on what it has been up to lately.
Critics, which may or may not
include my cat Myrtle, say that the CFPB has made an art of governing and
regulating by consent orders and press releases rather than actually
establishing rules and regulations. Is it less expensive for the CFPB that way?
Consumers are better protected; certainly the large banks are trying to work
with the CFPB but some suggest that non-banks, who have taken a large market
share from banks, are not working closely with the CFPB. And there are even
some that think Richard Cordray wants to be the governor of Ohio or even a
candidate for vice president.
You gotta love the CFPB.
"The Consumer Financial Protection Bureau announced that its supervisory
actions in the first four months of the year uncovered illegal activities in
auto finance and payments that led to approximately $24.5 million in
restitution to more than 257,000 consumers. The report also highlights issues
CFPB examiners found through the agency's examination of businesses in auto
loan origination, debt collection, mortgage origination, and small-dollar
lending." Being a capital markets guy, I am no math whiz, but I think that
this works out to about $95 per head - a sum critics say buys dinner for 4 at
Applebee's or less than half of one month's car loan payment.
There have been setbacks
for the regulator. The Consumer Financial Protection Bureau doesn't have the legal authority to adopt a rule banning
arbitration clauses that mention broker-dealers, even if the sole purpose is to
exempt broker-dealers from the rule, SIFMA said. The bureau should defer
regulation arbitration by entities regulated by the Securities and Exchange
Commission to the agency.
Of particular interest to
lenders is the news last week regarding HMDA. At this point most, if not all,
lenders are collecting the data that will be required. But they are all slicing
and dicing the data to see what regulators will find, prior to the regulators
finding it. Yes, beginning with data collected in 2017, financial institutions
will file their HMDA data with the Consumer Financial Protection Bureau rather
than the Federal Reserve Board. The FFIEC and HUD published the following
documents on Resources
for HMDA Filers to help financial institutions report Home Mortgage
Disclosure Act (HMDA) data collected in or after 2017. These materials are also
accessible from the FFIEC
website: filing instructions guide for HMDA data collected in 2017, filing
instructions guide for HMDA data collected in 2018, technology preview, and the
endless frequently asked questions. (Appendix A to Regulation C provides
instructions for completing the loan/application register for HMDA data
collected in 2017 and submitted in 2018, but not for HMDA data collected in
2018 and submitted in 2019.)
For its part the CFPB
released a YouTube video on the final rule of HMDA. Yes,
the video is an hour, about 57 minutes longer than the typical YouTube video,
but one should at least listen to the introduction.
Of course the CFPB is not
focused solely on mortgages. At the end of this month the CFPB is expected to
release a proposal to regulate debt collection practices. The proposal is
expected to expand the definition of debt collector and tighten up activities.
The U.S. subsidiary of
Spanish bank Santander was fined $10 million by the CFPB over
allegations of deceptive overdraft practices. The bank used a
telemarketing vendor to enroll customers in its overdraft service, but the
vendor reportedly did so without customer consent.
The industry is certainly
watching the CFPB's chess moves regarding arbitration. "Lewis Wiener,
Kymberly Kochis and Frank Nolan of Sutherland Asbill & Brennan write: On
May 5, 2016, the CFPB released its proposed regulation on restricting the use
of class action waivers and arbitration provisions in consumer contracts. The
proposal, if effectuated, would essentially overturn years of U.S. Supreme Court precedent."
A bipartisan group of 70
U.S. Senators has petitioned CFPB Director Richard Cordray to exclude credit unions from complete CFPB regulatory
oversight. "Congress and federal regulators have long taken the
approach that credit unions and community banks should be treated differently
from the largest financial institutions and non-bank lenders," the
Senators wrote. "It is our hope that the CFPB also takes this approach and
considers the impact of its rulemaking on smaller financial institutions and
consumers." In the letter, the Senators urged the Bureau to tailor its
financial rules to match the role of community banks and credit unions around
the country.
ATS Secured's new white
paper is out, written by former CFPB regulator Ben Olson: Achieve Vendor Management & Mortgage Closing Success in
a Post-TRID World. "Get guidance from a former CFPB
regulator on safely navigating the full impact of 3rd party risk. Gain valuable
insight on; liability, responsibility for disclosures, the true definition
of 'service provider,' the most important CFPB and TILA-RESPA rule
expectations, risk assessment & planning, accuracy of disclosures and
permissible changes."
The CFPB has announced that it plans to host its
second research conference on consumer finance on December 15-16,
2016. The announcement contains a call for complete papers or detailed
abstracts that include preliminary results to be submitted by August
26. The CFPB is encouraging the submission of a variety of research
including, but not limited to, work on "the ways consumers and households
make decisions about borrowing, saving, and financial risk-taking; how various
forms of credit (mortgage, student loans, credit cards, installment loans,
etc.) affect household well-being; the structure and functioning of consumer
financial markets; distinct and underserved populations; and relevant
innovations in modeling or data." A particular area of CFPB interest
is the dynamics of households' balance sheets.
BuckleySandler is
offering up a free webinar today from 2-3PM EDT titled, "The CFPB in
Privacy & Data Security: Examining the Agency's Role, Authority, and
Direction." "Under the Dodd-Frank Act, the CFPB inherited
authority over the privacy provisions, including privacy notices, of the
Gramm-Leach-Bliley Act and the Fair Credit Reporting Act. The Dwolla enforcement action announced earlier this year
showed that the CFPB also intends to be involved in data security issues and
financial institutions of all types should take note. Join our panel of CFPB,
privacy, and data security specialists as they discuss the authority of
the CFPB in the areas of privacy and data security, the actions the CFPB has
taken to date in privacy and security, implications of the Dwolla action, and
what CFPB actions in other areas may tell us about where the agency could go in
privacy and data security." One must register at https://attendee.gotowebinar.com/register/8355454217426982403.
(Registration is required. Please, no outside law firms, government agency
personnel, consulting firms, or media. After registering and being approved,
you will receive a confirmation email containing instructions for joining the
webinar.)
Lenders,
of course, continue to be impacted and to make changes based on CFPB rules. For
example...
The industry continues to
wait for word on the PHH/CFPB case. PHH's share price has fallen sharply
in 2016 driven both by poor performance and regulatory concerns (reflecting the
ongoing issues with the CFPB, FHA, New York State Department of Financial
Services, and other state regulators). Analysts point out that PHH's shares are
now trading below 50% of book value, and there is upside as the board pursues
strategic actions, including potentially the sale or the liquidation of the
company.
Pacific Union has
developed a new Change of Circumstance (COC) Form that will better track
requirements under TRID and no longer contains references to pre-TRID
disclosure requirements.
Be advised, while Sun
West accepts initial loan application and applicable disclosures executed
prior to closing using electronic signature ("e-signature"),
documents must be in compliance with the requirements of the Federal E-Sign
Act. Utilization of a Signature Vendor from Sun West's list of Authorized
E-Signature Vendors available in the HELP section of sunsoft is required. At the time of loan submission, an
Audit Trail (such as a Certificate of Completion from an Authorized E-Signature
Vendor) must be submitted.
Fortunately, throughout
all of this rates are minding their own business. (As if rates could do that,
right?) Yesterday U.S. Treasuries, and to some extent agency MBS prices, ended
the session with moderate losses (worse about .125 but mortgages were only off
a few ticks). Why? No good reason, so I won't waste your time. Suffice it to
say the usual entities were selling (lenders & agencies, primarily) and the
usual entities were buying (the Fed, money managers, insurance companies,
pension funds). But for folks who like to try to predict the future, according
to Fed fund futures, the FOMC is virtually guaranteed to hold rates steady when
it meets next Tuesday and Wednesday, but the probability of a September hike is
up to 25%.
On the subject of central
banks, the European Central Bank released its rate decision today and no one
thought the ECB would move rates, which is exactly what happened. Here in the
US we've had this morning's Initial Jobless Claims for the week ending 7/16
(-1k to 253k) and the second-tier Philadelphia Fed survey for July (-2.9).
Coming up, for those who are riveted to data from two months ago, is the May
FHFA Housing Price Index. And we'll also have June's Existing Home Sales report
at 10AM EDT and Leading Economic Indicators. Oh, and at 1PM EDT the Treasury
will auction $13 billion in new 10-year TIPS - get out your checkbooks.
As the folks in New York
headed for the subway Wednesday we closed the 10-year at a yield of 1.58%. This
morning it is wallowing around 1.60% and agency MBS prices are worse nearly
.125 versus last night.
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