Finance & Banking: CFPB Sets Sights on Loan Origination Fees, Mortgage Licensing Procedures, & More

The Consumer Financial Protection Bureau continues to press banks and financial institutions to implement changes mandated by the Dodd-Frank Act. Here’s a roundup of legal commentary on recent CFPB guidance and regulations on loan originator compensation, mortgage licensing procedures, and a range of other activities:

CFPB Issues Guidance On Loan Originator Compensation (BuckleySandler LLP)

“The Bulletin states that employers of loan originators may make contributions to employees’ qualified profit sharing, 401(k), and stock ownership plans (qualified plans) out of a profit pool derived from loan originations. The Federal Reserve Board previously had indicated that any compensation—even contributions to a qualified retirement plan—to a loan originator that derived from the profits of mortgage loan originations was ‘problematic’ and likely prohibited by Regulation Z.” Read the full update>>

CFPB Issues S.A.F.E. Act Examination Procedures (Jonathan Foxx)

“… the Consumer Financial Protection Bureau (CFPB) issued guidance regarding examination procedures pertaining to compliance with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act or SAFE) examination procedures. This issuance pertains to examinations relating to federally registered individuals and their employers. The guidance largely reconfirms information included in the final rule promulgated by the various federal banking regulatory agencies during 2010.” Read the full update>>

Consumer Financial Protection Bureau Gives important Guidance on Supervisory Jurisdiction (Davis Wright Tremaine LLP)

“… the Bureau of Consumer Financial Protection (the ‘Bureau’) published a proposed rule (the ‘Rule’) regarding “Defining Larger Participants in Certain Consumer Financial Product and Service Markets.” The Rule is authorized by Sec. 1024 of the Consumer Financial Protection Act of 2010 and the public comment period expires on April 17, 2012. The Rule is significant in that it provides an early insight into the Bureau’s view of the scope of its supervisory jurisdiction for non-banks.” Read the full update>>

CFPB: Treatment of Privileged Information (Jonathan Foxx)

“… the Bureau of Consumer Financial Protection (CFPB) announced proposed amendments to the confidential treatment of information obtained from persons in connection with its exercise of authorities under federal consumer financial law. The proposed amendments will add a new section to the rules which provide that the submission by any person of any information to the Bureau in the course of the Bureau’s supervisory or regulatory processes will not waive or otherwise affect any privilege such person may claim with respect to such information under federal or state law as to any other person or entity.” Read the full update>>

CFPB Privilege Waiver Proposal Raises Questions and Concerns (Reed Smith)

“… the Consumer Financial Protection Bureau (‘CFPB’) issued a proposed rule that would codify (by regulation) the doctrine of ‘selective waiver’ as applied to information provided by supervised entities to the CFPB. Under the selective waiver doctrine, the disclosure of otherwise privileged materials to a party outside the attorney-client relationship (in this case the government) would not act as a waiver of applicable privileges to other third parties.” Read the full update>>

CFPB Submits First Annual FDCPA Report to Congress (BuckleySandler LLP)

“… the CFPB submitted to Congress its first annual report on the administration and enforcement of the Fair Debt Collections Practices Act (FDCPA). The CFPB inherited the annual reporting function as part of the Dodd-Frank Act’s transfer to the CFPB of the primary regulatory responsibility for the FDCPA.” Read the full update>>

The Consumer Finance Protection Bureau: What Community Banks Need to Know (Spilman Thomas & Battle, PLLC)

“… although smaller financial institutions are not subject to the full supervision authority of the CFPB, the compliance manual makes clear that institutions’ boards of directors will be held to a high standard in assessing potential liability. Thus, with respect to compliance, the minutes and reports prepared by a board of directors must articulate clear expectations, statements about policies and training, compliance officer authority, and allocation of resources to compliance and audit commensurate with the institution’s size.” Read the full update>>

CFPB Files Amicus in TILA Rescission Case (BuckleySandler LLP)

“The CFPB announced today that it recently filed an amicus brief in the U.S. Court of Appeals for the Tenth Circuit in a case involving the Truth in Lending Act (TILA) right to rescind a transaction, Rosenfield v. HSBC Bank. The CFPB argued that borrowers who do not receive the material disclosures required by TILA can rescind the transaction as long as they notify the lender of the cancellation within three years of consummation, even if they do not file suit within the three-year period.” Read the full update>>

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