Mortgage Banking Update - March 7, 2019
We recently learned that several clients have received letters from the CFPB's Office of Minority and Women Inclusion (OMWI) indicating that the Bureau will be inviting them to submit a self-assessment of their diversity and inclusion (D&I) policies and practices and requesting contact information for the individuals leading their D&I efforts.
The letters reference the D&I standards issued in June 2015 by the CFPB's OMWI and the OMWIs of the other federal financial regulatory agencies to implement Section 342 of the Dodd-Frank Act. Those standards contemplated that a regulated entity would, on a voluntary basis, conduct an annual "self-assessment" of its D&I policies and practices and submit the assessment to the Director of the OMWI of its primary federal financial regulator. The standards also indicated that the agencies would not use their examination or supervisory processes in connection with the standards but instead envisioned that the agencies would use the information submitted to them to monitor progress and trends in the financial services industry with regard to D&I in employment and contracting activities, identify and highlight policies and practices that have been successful, and potentially publish best practices based on information provided to them.
Nothing in the CFPB's letters appears to be inconsistent with the standards (e.g. they note that a D&I self-assessment is voluntary, is outside of the supervisory process, and will be used to inform the industry and develop best practices). However, by sending these letters and noting in them that Director Kraninger supports the work of the CFPB's OMWI, the CFPB is sending a strong signal to industry that D&I policies and practices will be a Bureau focus under Director Kraninger's leadership. In addition, as we recently reported, one of the first actions taken by Democratic Congresswoman Maxine Waters upon becoming Chairwoman of the House Financial Services Committee was to announce the creation of a new D&I subcommittee. The CFPB's letters and the creation of the subcommittee signal that financial institutions are likely to find their D&I policies the subject of greater attention and scrutiny in the coming months.
A financial institution should consult legal counsel in determining whether to undertake a self-assessment, publicly disclose information regarding an assessment, or submit an assessment to its regulator. Ballard Spahr's D&I counseling team advises financial institutions on the development, enhancement, and implementation of their D&I programs. As attorneys, we offer a perspective that blends D&I consulting and development with a sensitivity to important legal issues—including regulatory compliance, the interplay of equal employment opportunity and affirmative action laws, reverse discrimination risks, and the role of D&I in potential discrimination litigation. Our D&I team performs assessments, develops D&I strategic plans, advises on existing programs, develops policies and communications materials, conducts training, and assists with the implementation of D&I programs.- Dee Spagnuolo
One of the first actions taken by Democratic Congresswoman Maxine Waters upon becoming Chairwoman of the House Financial Services Committee was to announce the creation of a new Subcommittee on Diversity and Inclusion (D&I).
According to Politico, the new subcommittee held its inaugural hearing earlier this week at which the focus was a review of diversity trends in the finance industry, specifically a GAO report that found the representation of African Americans and women in management roles had lagged in recent years. Democratic Subcommittee Chairwoman Joyce Beatty is reported to have indicated that she plans to analyze diversity trends and data, exercise oversight of businesses and regulators, and consider legislation to "change the culture in government and industry." Republican Congresswoman Ann Wagner, who serves as the new subcommittee's ranking member, is reported to have sent letters to regulatory agencies inquiring about their D&I efforts.
Chairwoman Waters was among the chief architects of Section 342 of the Dodd-Frank Act, which created Offices of Minority and Women Inclusion (OMWI) at all federal financial regulatory agencies, including at the CFPB. OMWIs are responsible for developing standards to assess the D&I policies and practices relating to employment and third-party contracting of their own agencies and of the financial entities they regulate. In June 2015, the CFPB and the other federal financial regulatory agencies jointly issued a final policy statement establishing such standards (Final Standards). The Final Standards became effective in June 2015 and envision that an entity will conduct an annual "self-assessment" of its D&I policies and practices and submit them to the Director of the OMWI of their primary federal financial regulator.
With the creation of the new D&I Subcommittee, financial institutions are likely to find their D&I policies the subject of greater attention and scrutiny. Ballard Spahr's D&I counseling team advises financial institutions on the development, enhancement, and implementation of their D&I programs. As attorneys, we offer a perspective that blends D&I consulting and development with a sensitivity to important legal issues—including regulatory compliance, the interplay of equal employment opportunity and affirmative action laws, reverse discrimination risks, and the role of D&I in potential discrimination litigation. Our D&I team performs assessments, develops D&I strategic plans, advises on existing programs, develops policies and communications materials, conducts training, and assists with the implementation of D&I programs.- Dee Spagnuolo & Brian D. Pedrow
The U.S. Supreme Court has agreed to resolve a circuit court split over whether the one-year statute of limitations (SOL) in the Fair Debt Collection Practices Act (FDCPA) runs from the date of the alleged violation or starts upon a consumer's discovery of the violation.
The FDCPA provides that "[a]n action to enforce any liability created by this subchapter may be brought in any appropriate United States District Court…within one year from the date on which the violation occurs." In Rotkiske v. Klemm, the plaintiff alleged that the defendant violated the FDCPA by obtaining a default judgment against him based on service of a complaint at an address the defendant knew or should have known was incorrect.
An en banc U.S. Court of Appeals for the Third Circuit rejected the plaintiff's argument that the FDCPA’s one-year SOL did not begin to run until he discovered the default judgment upon applying for a mortgage loan approximately five years after service of the complaint. Instead, based on the statutory text, the Third Circuit held that the SOL runs from the date of the violation. It appears the Supreme Court granted the petition for a writ of certiorari in Rotkiske to resolve the circuit split: unlike the Third Circuit, the U.S. Courts of Appeals for the Fourth and Ninth Circuits have held that the discovery rule does apply to the FDCPA's one-year SOL.
The Third Circuit's reading is the one most consistent with the statutory text. As the Third Circuit wrote, "the [FDCPA] says what it means and means what it says." A decision by the Supreme Court that adopts the Third Circuit's view would further constrict the time frame for plaintiffs' attorneys to bring claims, whereas a decision that adopts the view of the Fourth and Ninth Circuits could lead to more FDCPA litigation. In any event, a Supreme Court ruling will provide consistency, something that is sorely needed in FDCPA litigation.Attorneys in Ballard Spahr's Consumer Financial Services Group regularly advise clients on compliance with the FDCPA and state debt collection laws and defend clients in FDCPA lawsuits and enforcement matters. The Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance.
The CFPB recently issued its Fall 2018 Semi-Annual Report to Congress covering the period April 1, 2018, through September 30, 2018.
The report represents the CFPB's first semi-annual report under the leadership of Director Kraninger. At 43 pages, the new report is only two pages longer than the last semi-annual report issued under the leadership of former Acting Director Mick Mulvaney and continues what appeared to be the goal under Mr. Mulvaney's leadership of issuing semi-annual reports that were substantially shorter than those issued under the leadership of former Director Cordray. Also like the semi-annual reports issued under Mr. Mulvaney's leadership, and also in contrast to those issued under Mr. Cordray's leadership, the new report does not contain any aggregate numbers for how much consumers obtained in consumer relief and how much was assessed in civil money penalties in supervisory and enforcement actions during the period covered by the report.
The new report indicates that the Bureau had 1,510 employees as of September 30, 2018, representing a decrease of 161 employees from the number of employees as of March 31, 2018, (which was 1,671 employees).
In addition to discussing ongoing or past developments that we have covered in previous blog posts, the report includes the following noteworthy information:
- During the period October 1, 2017, through September 30, 2018, the Bureau received approximately 329,000 complaints. The prior semi-annual report indicated that the number of complaints received during the period April 1, 2017, through March 31, 2018, was approximately 326,200. This suggests there has been no spike in the number of complaints since former Director Cordray left the Bureau at the end of November 2017.
- It appears that any pending federal court actions were filed under Mr. Cordray's leadership, with no new enforcement actions having been filed by the Bureau in federal court since Mr. Cordray's departure.
- During the period covered by the report, the CFPB initiated a "higher number of fair lending supervisory events," and issued a greater number of matters requiring attention or memoranda of understanding than in the prior period. The Bureau also found that entities satisfied (i.e. resolved) a lower number of MRAs or MOU items from past supervisory events than in the prior period.
- Over the past year (presumably from October 1, 2017, through September 30, 2018), the Bureau did not initiate any fair lending public enforcement actions and did not refer any matters to the DOJ with regard to discrimination.
The Conference of State Bank Supervisors (CSBS) announced last week that it has agreed to implement 14 recommendations made by its Fintech Industry Advisory Panel (Advisory Panel).
The Advisory Panel was formed in 2017 to identify actionable steps for improving state licensing, regulation, and non-depository supervision and for supporting innovation in financial services. It has 33 Fintech company members that engage with the CSBS Emerging Payments and Innovation Task Force and other state regulators. The Advisory Panel has a subgroup focused on lending and another focused on payments. Both subgroups submitted reports that formed the basis of the recommendations CSBS has agreed to implement.
Those recommendations primarily address creating uniform definitions and practices, increasing transparency, and expanding the use of common technology among all state regulators. Among the actions CSBS has agreed to take to implement the recommendations are:
- Developing a 50-state model law to license money services businesses
- Creating a standardized call report for consumer finance businesses
- Building an online database of state licensing and Fintech guidance, while encouraging a common standard
- Developing a new technology offering, a State Examination System, to simplify examinations of nonbanks operating in more than one state
- Expanding the use of the Nationwide Multistate Licensing System (NMLS) among all state regulators and to all nonbank industries supervised at the state level
At the annual NMLS conference in Orlando, CSBS and the Advisory Panel's payments subgroup reported that in connection with efforts to harmonize state licensing regimes and ultimately to draft a model state law for licensing money services businesses, CSBS is conducting state surveys relating to existing state definitions and exemptions from licensure and will publish such surveys when complete.
The CSBS initiative is undoubtedly in part a reaction to the OCC's decision to grant special purpose national bank charters to Fintech companies. Such charters would eliminate the need for Fintech companies to obtain multi-state licenses. In October 2018, CSBS filed a second lawsuit in D.C. federal district court to stop the OCC from issuing such charters.- John D. Socknat & Stacey L. Valerio
The U.S. Supreme Court ruled in Timbs v. Indiana that the prohibition on excessive fines in the Eighth Amendment of the U.S. Constitution is incorporated against the States by the Fourteenth Amendment. Although it involved a civil asset forfeiture of a vehicle arising from the petitioner’s criminal conviction, the decision could provide a new weapon for consumer financial services providers facing fines and penalties sought by State attorneys general and regulators.
The Eighth Amendment provides: "Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." In its decision, the Supreme Court cited language from its 1998 decision which held that in rem forfeitures are fines for purposes of the Eighth Amendment. In that decision, the Court wrote that the phrase "nor excessive fines imposed" in the Eighth Amendment prohibition "limits the government's power to extract payments, whether in cash or in kind, 'as punishment for some offense.'"
Since the Supreme Court did not reach the question of whether the forfeiture resulted in an excessive fine that violated the Eighth Amendment, the decision does not discuss the standards for determining whether a particular fine is unconstitutionally excessive. It should be noted, as the Supreme Court did in its opinion, that "all 50 states have a constitutional provision prohibiting the imposition of excessive fines either directly or by requiring proportionality." While such state provisions would be available to a consumer financial services provider, they might not be interpreted in a manner that is as protective as the Eighth Amendment prohibition. (Perhaps that is the reason that the petitioner in Timbs did not challenge the forfeiture under the Indiana Constitution.) Accordingly, the Supreme Court's decision now gives providers a potential second line of attack when facing fines and penalties sought by State attorneys general and regulators.- Alan S. Kaplinsky
The FTC has sent its annual letter to the CFPB reporting on the FTC's activities related to compliance with the Equal Credit Opportunity Act and Regulation B.
The FTC has authority to enforce the ECOA and Reg. B as to nonbank providers within its jurisdiction. However, like several of the FTC's prior letters on its ECOA activities, the letter on 2018 activities does not describe any 2018 FTC ECOA enforcement activity and only contains information about the FTC's research and policy development efforts and educational initiatives. (In December 2018, a group of Democratic Senators sent a letter to the FTC calling on it "to improve its enforcement actions and aggressively police predatory practices at car dealerships.")
With respect to research and policy development, the letter discusses the following initiatives:
- Hearings on algorithms, artificial intelligence, and predictive analytics. In 2018, the FTC began a series of public hearings called "FTC Hearings on Competition and Consumer Protection in the 21st Century." One of the hearings looked at competition and consumer protection issues associated with the use of algorithms, AI, and predictive analytics in business decisions and conduct. The FTC notes that panelists discussed how issues of fairness, bias, and discrimination could impact the use of such technologies and whether current legal protections such as the ECOA were adequate to address those issues.
- Auto buyer study. In 2018, the FTC continued work on a qualitative study of consumers' experiences in buying and selling automobiles at dealerships. The FTC believes the results of the study will provide meaningful information about consumers' experiences and help focus FTC initiatives, including consumer education about the purchase and financing process and business education to foster compliance with laws enforced by the FTC, such as the FTC Act and ECOA.
- ECOA in the military. In 2018, the FTC's Military Task Force continued to work on military consumer protection issues. Other FTC initiatives to assist military consumers included a training program for servicemembers and their families that included a discussion of ECOA/Reg. B protections.
- Interagency fair lending task force. The FTC continues to be a member of the Interagency Task Force on Fair Lending along with the CFPB, DOJ, HUD, and the federal banking agencies.
With regard to the FTC's consumer and business educational initiatives, the FTC states that in 2018, it "engaged in efforts to provide education on important issues, including those related to credit transactions to which Regulation B applies or relates." By way of example, the FTC references a blog post about the need to provide financial education to servicemembers.- John L. Culhane, Jr.
New proposed legislation in California, backed by state Attorney General (AG) Xavier Becerra, would amend the new California Consumer Privacy Act (CCPA) to make it easier for private plaintiffs and public officials to sue for violations while further increasing regulatory uncertainty and compliance costs for businesses. Specifically, SB 561 would expand the CCPA's private right of action, remove the Act's public enforcement "cure" provision, and eliminate the ability of affected companies to seek compliance guidance from the AG.
The CCPA is a sweeping new privacy law which goes into effect in January 2020. It gives California residents substantial control over personal data held by certain California businesses, requiring disclosure of what personal information the business collects, how that information is used or sold, and allowing consumers to control or delete that information upon request. It currently allows private plaintiffs to seek statutory damages of up to $750 per violation for certain violations, and it allows the AG to seek civil penalties of up to $2,500 for most violations, and up to $7,500 for violations found to be intentional.
SB 561 would make three key changes to the Act:
- Expanding the private right of action—As written, the Act appears to provide a private right of action only when a consumer's personal information was subject to an avoidable data breach. However, some speculated that allegedly ambiguous language in the statute could support a private right of action for any violation. SB 561 would resolve this ambiguity by expressly providing a broad private right of action to any consumer "whose rights under this title are violated."
- Removal of the public enforcement cure period—Currently, the Act provides that the AG may only bring an action after a business fails to cure an alleged violation within thirty days after being notified of alleged noncompliance. SB 561 removes this notification requirement, allowing the AG to bring enforcement actions immediately.
- Elimination of AG compliance opinions—As of now, the Act provides a mechanism to seek a legal opinion from the Attorney General about compliance with the Act. SB 561 does away with this right, and instead provides that the AG may publish materials giving businesses and others general guidance on how to comply with the Act.
In announcing his support of SB 561, Attorney General Becerra said that the amendments are needed to eliminate the requirement that his office provide compliance advice to businesses "at taxpayers' expense," and to nullify a "free pass" for businesses to cure violations before enforcement could occur. This statement suggests that the AG is likely to be active in enforcing the CCPA once it goes into effect next year.
Businesses should continue to monitor legislative activity and rulemaking concerning the CCPA, as further amendments and the final implementing regulations are likely forthcoming soon. Given the approaching effective date and the possibility that it will not be extended by further amendments or the implementing regulations, there may not be a great deal of time in which to comply with revised requirements.
On March 20, 2019, from 12 p.m. to 1 p.m. ET, Ballard Spahr attorneys will hold a webinar, "The California Consumer Privacy Act: What Comes Next?" The webinar registration form is available here.- Taylor R. Steinbacher
The CFPB has published notices in the Federal Register announcing that its Consumer Advisory Board, Credit Union Advisory Council, and Community Bank Advisory Council will hold meetings in Washington, D.C., on March 14, 2019.
All of the meetings are scheduled to take place at the same time, thus suggesting that the groups will hold a combined meeting. The notices indicate that each of the groups "will discuss policy issues related to financial technology and other trends and themes in consumer finance."- Barbara S. Mishkin
In September 2018, in Marks v. San Diego Crunch, a unanimous U.S. Court of Appeals for the Ninth Circuit three-judge panel held that the TCPA's definition of an automatic dialing system (ATDS) includes telephone equipment that can automatically dial phone numbers stored in a list, rather than just phone numbers that the equipment randomly or sequentially generates. This decision departed sharply from the post-ACA International decisions by the U.S. Courts of Appeal for the Second and Third Circuits, which had narrowed the definition of an ATDS. Although the defendant in the case filed a petition for certiorari with the U.S. Supreme Court in January 2019, the parties have since settled, thereby leaving Marks as precedential law in the Ninth Circuit.
In response to Marks, the FCC asked for comments on what constitutes an ATDS under the TCPA and is believed to be considering rulemaking on the ATDS definition. Even if the FCC adopts a rule rejecting Marks, courts in the Ninth Circuit and elsewhere will have to decide whether to defer to the FCC's rule.
The issue of what deference courts must give FCC rulings on TCPA issues is currently before the U.S. Supreme Court in PDR Network v. Carlton & Harris Chiropractic. The case involves the definition of an "unsolicited advertisement" for purposes of the TCPA ban on unsolicited fax advertisements. Applying step one of a Chevron deference analysis, the district court found that the TCPA's definition of "unsolicited advertisement" was unambiguous, and therefore it was not required to defer to the FCC's interpretation and granted the defendant's motion to dismiss. The U.S. Court of Appeals for the Fourth Circuit reversed, ruling that the Hobbs Act precluded the district court from "even reaching the step-one question [of Chevron]" and required it to defer to the FCC rule.
The Supreme Court granted certiorari to decide whether the Hobbs Act required the district court to accept the FCC's TCPA interpretation. The Hobbs Act provides a mechanism for judicial review of certain agency orders, including all FCC final orders under the TCPA. An aggrieved party can challenge such an order by filing a petition in the court of appeals for the judicial circuit where the petitioner resides or has its principal office or in the U.S. Court of Appeals for the District of Columbia Circuit. Under the Hobbs Act, such courts have "exclusive jurisdiction" to "enjoin, set aside, suspend (in whole or in part), or to determine the validity of" the orders to which the Act applies, including the FCC's TCPA interpretations. Oral argument is scheduled to be held in the Supreme Court on March 25.
Even if the Supreme Court were to reverse the Fourth Circuit in PDR Network and rule that a district court can apply a Chevron analysis to FCC rulings, a Chevron analysis should weigh in favor of deference to a new FCC ruling on the ATDS definition assuming, in step one of such analysis, the court agreed with the Ninth Circuit's view in Marks that the statutory definition is ambiguous. Under Chevron step two, a court would be required to defer to the FCC's ruling unless it found the ruling not to be permissible or reasonable.
In Marks, after concluding that the statutory definition of an ATDS was ambiguous, the Ninth Circuit based its broad interpretation of the ATDS definition on the "context and structure of the [TCPA's] statutory scheme." Thus, if the Supreme Court were to rule that FCC rulings are subject to a Chevron analysis, there would continue to be a risk that in conducting Chevron's step two analysis, a court might be unwilling to defer to an FCC rule rejecting Marks' interpretation because it finds that the rule is not reasonable based on the TCPA's "context and structure."- Joel E. Tasca
The CFPB has issued a report, "Mortgages to First-time Homebuying Servicemembers," that focuses on mortgage loans made from 2006 to 2016 to first-time homebuyers who are serving in the military or are veterans. In its press release, the Bureau states that the report represents "the first time researchers have been able to provide a description and analysis of servicemembers' mortgage choices and mortgage performance, both during and after the housing crisis of the last decade."
The report is part of the Bureau's series of quarterly reports on consumer credit trends that uses a "longitudinal, nationally-representative sample of approximately five million de-identified credit reports from one of the three nationwide consumer reporting agencies." To distinguish credit reports for servicemembers from those of non-servicemembers, the consumer reporting agency providing the data matched credit records in the sample to the Department of Defense's Servicemembers Civil Relief Act database.
The report's key findings include:
- The share of first-time homebuying servicemembers using loans partially guaranteed by the U.S. Department of Veterans Affairs (VA Loans) increased from 30 percent before 2007 to 63 percent in 2009. Among non-servicemember first-time homebuyers there was a parallel increase in the use of FHA and Department of Agriculture mortgage loans. However, in contrast to non-servicemembers whose reliance on FHA/USDA mortgages declined after 2009, servicemembers continued to increase their reliance on VA loans, with VA Loans comprising 78 percent of servicemember loans in 2016.
- The greater share of VA Loans among servicemembers was part of a larger shift among consumers (both servicemembers and non-servicemembers) away from conventional to government-guaranteed mortgage loans between 2006 and 2009. Conventional (i.e. non-government-guaranteed) mortgage loans represented about 60 percent of loans among first-time homebuying servicemembers in 2006 and 2007, but declined to 13 percent by 2016. In comparison, the share of conventional loans among non-servicemembers fell from almost 90 percent before 2008 to 41 percent in 2009, then increased back to 60 percent in 2016. The combined share of FHA and USDA mortgages to these borrowers increased and then decreased accordingly.
- The median VA Loan amount for first-time homebuying servicemembers increased from $156,000 in 2006 to $212,000 in 2016, closely tracking the median value of conventional home loans taken out by non-servicemembers. In contrast, the median loan amounts for servicemembers who used conventional or FHA/USDA mortgages during this period were lower and increased more slowly.
- Delinquency rates for nonprime servicemember borrowers with VA Loans peaked in 2007 at approximately 7 percent and fell to about 3 percent by 2016. Delinquency rates between 2006 and 2008 among nonprime borrowers were significantly higher for FHA/USDA loans to non-servicemembers and for conventional loans to both servicemembers and non-servicemembers. Conventional loans to nonprime borrowers, for both servicemembers and non-servicemembers, had delinquency rates greater than 13 percent in 2006 but were below two percent by 2016. After 2009, conventional loans to all nonprime borrowers generally had lower delinquency rates than both VA Loan to nonprime servicemembers and FHA/USDA loans to nonprime non-servicemembers.
The Senate Banking Committee has announced that it will hold a hearing on March 12, 2019, titled "The Consumer Financial Protection Bureau's Semi-Annual Report to Congress" at which CFPB Director Kraninger is scheduled to appear.
Director Kraninger is also expected to appear at the hearing of the House Financial Services Committee scheduled for March 7, 2019, titled "Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau."
As we reported previously, the Economic Growth, Regulatory Relief and Consumer Protection Act (Act) subjects Property Assessed Clean Energy (PACE) financing to Truth in Lending Act (TILA) ability-to-repay (ATR) requirements under rules to be adopted by the CFPB. The CFPB recently issued an advance notice of proposed rulemaking to solicit information regarding PACE financing. Comments will be due 60 days from publication of the notice in the Federal Register.
For purposes of the Act, a PACE financing is defined as financing to cover the costs of home improvements that result in a tax assessment on the real property of the consumer. The Act provides that the CFPB regulations must carry out the purposes of the TILA ATR requirements and apply the TILA civil liability provisions to violations of those requirements, accounting "for the unique nature of" PACE financing. The Act also provides that in connection with adopting regulations, the CFPB may collect such information and data that it determines is necessary, and must consult with state and local governments and bond-issuing authorities.
The CFPB seeks information dealing with five main categories and numerous sub-categories of information:
- Written materials associated with PACE financing transactions.
In particular, the CFPB requests (a) materials provided to consumers before they sign a PACE financing agreement, (b) PACE financing agreements, and (c) bills or statements that provide payment information to consumers.
- Descriptions of current standards and practices in the PACE financing origination process.
Among other items of information, the CFPB requests information regarding (a) the collection and verification of information from consumers and third parties, (b) current underwriting standards, and whether those standards include a determination of a consumer's ability to repay, (c) the process of approving or denying financing applications, (d) the parties to whom PACE financing obligations are "initially payable on the face" of the financing agreements, (e) the role of state or local governments in the origination and underwriting of PACE financing, and (f) the relationship between the PACE financing agreement and the home improvement agreement.
- Information relating to civil liability under TILA for violations of the ATR requirements in connection with PACE financing, as well as rescission and borrower delinquency and default.
The CFPB notes that this information request is intended to help the CFPB identify to whom TILA civil liability might apply and which parties would in fact bear the risk of any such liability. The CFPB requests information regarding (a) the assignment, sale or securitization of PACE financing agreements, (b) any indemnification agreements that are commonly part of PACE financing transactions, (c) the rescission rights available to consumers with respect to PACE financing agreements or home improvement contracts, and (d) what happens to PACE financing obligations when a consumer becomes delinquent or defaults, including information regarding any loss mitigation programs.
- Information about what features of PACE financing make it unique and how the Bureau should address those unique features.
The CFPB seeks information on a number of topics, including information regarding (a) any public or private financing options that satisfy the Act's definition of a PACE financing, whether or not the options are commonly understood to be PACE financing, (b) the source of funding for PACE financing, (c) the role of public bonds in PACE financing, (d) consumer repayment, (e) how PACE financing is integrated with local property tax systems and how specific information about the PACE financing is distinguished from other real property tax obligations in the tax system, (f) the financial costs to consumers that may be associated with PACE financing, (g) any costs savings associated with home improvement projects funded with PACE financing, (h) whether the addition of PACE financing affects consumers' ability to meet their financial obligations, (i) the liens associated with PACE financing, and (j) the treatment of PACE financing obligations by servicers of mortgage loans that were placed on the property before the PACE financing encumbrance,
- Views concerning the potential implications of regulating PACE financing under TILA.
The CFPB requests information regarding (a) any likely effects on state and local governments or bond-issuing authorities if existing TILA ATR requirements were to apply to PACE financing, (b) the likely effects on consumers and PACE financing industry participants resulting from the application of such requirements to PACE financing, (c) which specific TILA ATR requirements, if applied to PACE financing, would conflict with existing state or local legal requirements, (d) which specific TILA ATR provisions would be difficult for market participants to apply to current PACE financing origination practices, bond processes, or laws and practices implicating real property tax systems, (e) which specific TILA ATR provisions would be beneficial for consumers, (f) how the existing TILA ATR requirements could be tailored to account for the unique nature of PACE financing, (g) any likely impacts on consumers or PACE financing market participants resulting from the application of TILA civil liability provisions to PACE financing, and (h) whether the CFPB should address the application of other TILA provisions to PACE financing.- Richard J. Andreano, Jr.
Loan Originator Temporary Authority to Operate FAQs
FAQs re: the amendment of the SAFE Act (pursuant to The Economic Growth, Regulatory Relief, and Consumer Protection Act – S. 2155) to allow for temporary authority for loan officers transitioning from one company to another have been posted on the NMLS.- John D. Socknat
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