Top Story Lending Related

The law firm Brownstein Hyatt Farber Schreck has reported that the CFPB, on April 22, 2025, requested the U.S. District Court for the Southern District of New York to remove the Bureau as a plaintiff in CFPB v. Credit Acceptance Corporation [see "CFPB and NY AG sue Credit Acceptance"], a case that could have widespread impacts on the commercial sale and purchase of contracts in the secondary auto finance market.

Last year, Congressman Andy Barr, chairman of the Financial Institutions Subcommittee for House Financial Services, sent a letter to the CFPB outlining major concerns with the efforts to impose industrywide changes to longstanding practices in the auto finance industry through litigation against a single auto finance company. While the CFPB has withdrawn from the case, the State of New York remains as a plaintiff.

New Jersey's Office of the Attorney General and Division on Civil Rights (DCR) recently announced that DCR has issued a Finding of Probable Cause alleging that Advance Funding Partners/Same Day Funding (Advance Funding), a New Jersey business that provides cash advances and loans to borrowers, violated the New Jersey Law Against Discrimination (LAD) by engaging in unlawful lending discrimination and employment discrimination.

In the Finding of Probable Cause, DCR found that Advance Funding maintained a policy of refusing to lend to prospective clients based on race, national origin, and nationality. DCR’s investigation found that Advance Funding’s owner, Joseph Jurasic, instructed sales staff not to do business with “Chinese, African, and Spanish” prospective clients. Audio recordings sent to employees by Jurasic expressly told them “no Chinese, no Africans, no Spanish,” and told them not to “waste your time with the Chinese, with the Africans, and Spanish.” Other Advance Funding employees likewise instructed employees not to do business with these racial or ethnic groups.

The Finding of Probable Cause also alleges that Advance Funding engaged in unlawful retaliation against an employee who reported Advance Funding’s conduct to DCR. In February 2023, a then-employee of the company filed a verified complaint with DCR, alleging that Advance Funding had committed acts of unlawful discrimination. But shortly after the complaint was filed with DCR, Jurasic allegedly called the employee and left a vulgar voice message threatening him with a defamation lawsuit. After receiving this message and interpreting it as a threat, the employee resigned.

The issuance of a Finding of Probable Cause shows that DCR has concluded its preliminary investigation and determined sufficient evidence exists to support a reasonable suspicion that the LAD has been violated. A Finding of Probable Cause is not a final adjudication on the merits of a case. Once DCR issues a Finding of Probable Cause, the case will go to conciliation, where the parties will have the opportunity to negotiate a voluntary resolution. If no voluntary resolution is reached, DCR will appoint a Deputy Attorney General to prosecute the case either in the Office of Administrative Law or in court.

The Federal Housing Finance Agency has reported that its House Price Index rose 0.1 percent in the month of February 2025, and house prices climbed 3.9 percent from February 2024 to February 2025. The previously reported 0.2 percent increase in January 2025 was revised upward to 0.3 percent.

• FHFI HPI Monthly - April 2025

Various sources have reported that Paul R. Paoletta, Chief Legal Officer for the CFPB, has released a memo to Bureau staff outlining new supervision and enforcement priorities for 2025. In the memo, Paoletta listed these key points, as recently reported in Troutman Pepper Locke's Consumer Financial Services Law Monitor:

Reduction in Supervisory Exams
The Bureau will decrease the overall number of supervisory exams by 50% to reduce the cost of running businesses and consumer prices. The focus will be on conciliation, correction, and remediation of harms subject to consumer complaints.

Shift Back to Depository Institutions
The CFPB will shift its focus back to depository institutions. In 2012, 70% of the Bureau’s supervision focused on banks and depository institutions, but this has since changed, with over 60% of examinations performed on nonbanks. The Bureau aims to return to the 2012 proportion and focus on the largest banks and depository institutions.

Focus on Actual Fraud
The Bureau will prioritize cases involving actual fraud against consumers, with identifiable victims and measurable damages. Key areas include:

• Mortgages (highest priority)
• FCRA/Reg V related to data furnishing violations
• FDCPA/Reg F related to consumer contracts/debts
• Various fraudulent overcharges and fees
• Inadequate controls to protect consumer information resulting in actual loss

Redress for Tangible Harm
The CFPB will focus on getting money back directly to consumers rather than imposing penalties to fill the Bureau’s penalty fund.

Support for Service Members and Veterans
The Bureau will prioritize providing redress to service members, their families, and veterans.

Respect for Federalism
The Bureau will deprioritize participation in multi-state exams unless required by statute and minimize duplicative enforcement where state regulators are already engaged.

Coordination with Other Federal Agencies
The CFPB will eliminate duplicative supervision and coordinate exam timing with other federal regulators.

Avoidance of Novel Legal Theories
The Bureau will not pursue supervision under novel legal theories and will focus on areas clearly within its statutory authority.

Fair Lending Enforcement
The Bureau will not engage in redlining or bias assessment supervision based solely on statistical evidence. It will pursue matters with proven intentional racial discrimination and identified victims.

The FDIC issued 16 safety and soundness orders in March 2025. The administrative enforcement actions in those orders consisted of one consent order, one order of termination of insurance, three orders terminating consent orders, four orders to pay civil money penalties, and seven orders terminating a total of 101 waiver orders under Section 19 of the FDI Act, 12 U.S.C. § 1829 (Section 19 waiver orders).

Among those orders are four orders for civil money penalties for violations of flood insurance requirements (links are to our Penalties pages, with details and a link to each order):

• Raccoon Valley Bank, Perry, Iowa — $12,750
• Community First Bank, New Iberia, Louisiana — $13,000
• American Bank of Oklahoma, Collinsville, Oklahoma — $7,500
• Quaint Oak Bank, Southampton, Pennsylvania — $17,000

Also among the orders is a Consent Order against Compass Savings Bank, Wilmerding, Pennsylvania, where the FDIC determined, and the bank neither admits not denies, that the bank engaged in unsafe and unsound banking practices, violations of law or regulations relating to Title 10, Section 13.31(a) of the Pennsylvania Banking Code (requiring inspection of property securing real estate obligations in arrears over 90 days), and nonconformance with Appendix B to 12 C.F.R. part 364 of FDIC Rules and Regulations.

New York Attorney General Letitia James has sued payday lenders MoneyLion Inc. (MoneyLion) and DailyPay, Inc. (DailyPay) for allegedly taking advantage of tens of thousands of New Yorkers with illegal high-interest loans. Both MoneyLion and DailyPay make paycheck advance loans to hourly workers in exchange for fees and tips, pretending to simply be advancing “earned” wages. Due to the short terms of the loans, the fees MoneyLion and DailyPay charge amount to annual percentage rates in the triple digits, frequently up to 750 percent. Both payday lenders also are alleged to engage in abusive tactics that push workers to frequently take out new loans to cover gaps created by their prior loans. With these lawsuits, Attorney General James is seeking to end MoneyLion and DailyPay’s illegal payday lending practices in New York, obtain restitution for tens of thousands of impacted workers, and impose civil penalties.

According to the Attorney General's press release, in a typical transaction with DailyPay or MoneyLion, a worker receives a small amount in advance of their paycheck – usually less than $100 – and repays that amount, plus fees and tips, in seven to ten days. The result is an extremely high annualized interest rate ranging between 200 percent and 350 percent on average, but rates for these short-term loans can reach much higher. For example, DailyPay’s most common loan, a seven-day $20 paycheck advance offered for $2.99 actually reflects an annual interest rate of over 750 percent. More than half of all MoneyLion loans impose annual interest rates above 500 percent.

MoneyLion allegedly asks for tips on top of its fees and sets an artificial limit of $100 per transaction that forces workers to take out repeat loans and pay repeat fees merely to receive the $500 they are prominently promised in MoneyLion’s advertisements.

DailyPay is alleged to engage in similar fraudulent and deceptive practices. It contracts with employees’ companies, requiring employers to send their workers’ paychecks directly to the lenders first on payday, which allows it to deduct all amounts it is owed before passing on any remaining balance to employees. While it promises workers interest-free advances and financial benefits, DailyPay collects fees on about 90 percent of its loans.

Attorney General James alleges that these two companies’ practices constitute illegal and deceptive conduct and abusive lending practices that violate New York’s longstanding usury prohibitions. The lawsuit against DailyPay also alleges the company has violated New York’s wage assignment laws. The lawsuits seek to end both companies’ technology-assisted payday lending practices in New York, obtain restitution for tens of thousands of workers, and impose civil penalties and costs.

The Small Business Administration has announced it will eliminate a package of reduced underwriting standards — the so-called "Do What You Do" standards adopted during the Biden Administration — by issuing a new SOP 50.10.8, which rejects the "Do What You Do" standards and returns previous, more robust, lending criteria.

The Federal Reserve Board has released the minutes of the Board's discount rate meetings on February 18, March 10, and March 19, 2025.

The FDIC, Federal Reserve Board, NCUA, and OCC have jointly announced they have temporarily paused certain appraisal requirements for real estate-related transactions, to help facilitate recovery efforts from wildfires and straight-line wind damage in Los Angeles County, California, this year, .

The agencies' action is expected to allow banks and credit unions to work with families and businesses without obtaining an appraisal. Banks and credit unions will still be required to determine that the value of the real estate supports the institution's decision to enter into the transaction.

The pause should make financial institutions better able to lend or modify loans in areas where wildfire and straight-line wind damage has made appraisals challenging to obtain. This action is also expected to reduce loan processing times, helping to facilitate recovery from the disaster.

The temporary pause order will be effective upon its publication in the Federal Register. It will expire on January 8, 2028, three years after the president declared the relevant area a major disaster. The agencies will monitor institutions' real estate lending practices to ensure that transactions are being conducted in a safe and sound manner.

• OCC Bulletin 2025-7, "Real Estate Appraisals: Temporary Exceptions to Appraisal Requirements in Areas Affected by Los Angeles County, California, Wildfires and Straight-Line Winds"
• FDIC FIL-10-2025, "FDIC Issues Temporary Exceptions to Appraisal Requirements in Los Angeles County as Affected by California Wildfires and Straight-line Winds"
• UPDATE ON PUBLICATION AND EFFECTIVE DATE: Published [90 FR 16455] on 4/18/2025, and effective on publication as noted above.

Our monthly review of the Federal Reserve Board's archive of Community Reinvestment Act evaluations has determined that the Reserve Banks publicly released 19 evaluations in March 2025. Sixteen of those evaluations received a Satisfactory rating.

We offer our congratulations to these three banks, whose evaluations received Outstanding ratings:

• East West Bank, Pasadena, California
• The Genoa Banking Company, Genoa, Ohio
• Green Dot Bank, Provo, Utah

Links are to the banks' evaluations.