Top Story Lending Related

HUD has announced the awarding of $3.3 million in grants to support research to reduce housing-related health issues, and more than $14 million to help low-income housing residents secure higher paying jobs.

The Consumer Financial Protection Bureau (CFPB or Bureau) and the California Department of Business Oversight (DBO), after a coordinated investigation, have separately announced settlements with Flurish, Inc., doing business as LendUp, requiring the firm to make restitution to consumers.

The CFPB found that the company did not give consumers the opportunity to build credit and provide access to cheaper loans, as it claimed to consumers it would. The Bureau has ordered the company to provide more than 50,000 consumers with approximately $1.83 million in refunds. The company will also pay a civil penalty of $1.8 million to the Bureau's Civil Penalty Fund.

The DBO found over 385,000 violations of two state consumer protection laws and of the Federal Truth in Lending Act in examinations under those laws and ordered LendUp to pay $1.62 million in consumer refunds, a $100,000 penalty and $965,462 in costs. For details on the settlements with Flurish, Inc., see "LendUp penalized by CFPB and California for violations," in our Penalties pages.

The CFPB has posted an article informing student loan borrowers they have the right to make extra payments (known as prepayments) at any time, without any fees or penalties. If one can afford it, paying a little extra each month or making a lump sum payment towards principal is a great way to lower the total cost of a loan. Not only does that pay down debt faster, but it also saves money on interest charges over time.

The Consumer Financial Protection Bureau has taken action against TitleMax parent company TMX Finance LLC for luring consumers into costly loan renewals by presenting them with misleading information about the deals’ terms and costs. The lender also used unfair debt collection tactics that illegally exposed information about debts to borrowers’ employers, friends, and family. The Bureau ordered TMX Finance to stop its unlawful practices and pay a $9 million penalty. For more information, see "TMX Finance LLC pays $9M for lending UDAAP violations," in our Penalties pages.

Freddie Mac has announced a new front-end credit risk transfer offering, Freddie Mac Deep MI CRT, as a further innovation of its credit risk sharing program. Through a forward credit insurance policy by a panel of mortgage insurance company affiliates, this pilot structured transaction provides additional coverage beyond the primary mortgage insurance on 30-year fixed-rate mortgages with 80-95 percent LTVs -- which is placed immediately upon their sale to Freddie Mac. Transactions are executed via a competitive, transparent auction process. FHFA Director Melvin Watt said of the offering: "The deeper mortgage insurance pilot transaction that Freddie Mac is conducting represents an important step in the ongoing effort of both Enterprises to enhance their credit risk transfer programs. … The pilot transaction Freddie Mac is announcing today is consistent with the principles FHFA laid out in June in our Single-Family Credit Risk Transfer Request for Input, including the ability of an Enterprise to manage their counterparty exposure and thereby reduce taxpayer risk. This transaction will include mortgage loans that are originated by lenders of all sizes and it also has certainty of coverage and collateral requirements that are consistent with other credit risk transfer transactions. Further, the coverage begins at the time the loans are delivered to the Enterprise, consistent with FHFA's definition of a front-end credit risk transfer." FHFA’s Request for Input closes on October 13.

HUD and the Census Bureau have released their report of new residential sales for the month of August. Sales of new single-family houses in August 2016 were at a seasonally adjusted annual rate of 609,000, 7.6 percent below the revised July rate but 20.6 percent above the August 2015 estimate. The median sales price of new houses sold in August 2016 was $284,000; the average sales price was $353,600. The seasonally adjusted estimate of new houses for sale at the end of August was 235,000. This represents a supply of 4.6 months at the current sales rate.

The CFPB filed a suit in federal court on Thursday against the credit repair company Prime Marketing Holdings, LLC ("Prime"), which allegedly charged consumers a series of illegal advance fees as well as misrepresented the cost and effectiveness of its services. The CFPB is seeking to halt the company’s harmful conduct and to obtain relief for consumers, including refunds of fees paid to the defendant. The Bureau also released a consumer advisory with tips for consumers who are working to improve their credit history or who are dealing with credit repair services.

The Bureau's complaint alleges that Prime violated the Dodd-Frank Act’s prohibition on deceptive acts and practices in the marketing and promotion of its services. The company also allegedly violated the FTC's Telemarketing Sales Rule by charging illegal advance fees and making deceptive statements. The CFPB also alleges that Prime misled consumer about the costs of their services, failed to discuss limits on its "money back guarantee," and misled consumers about the benefits of their services. The Bureau's complaint seeks monetary relief, injunctive relief and penalties.

In separate actions, the Federal Trade Commission has banned a debt collection company’s former vice president from the debt collection business, and the operators of an alleged mortgage relief scam that preyed upon distressed homeowners.

The U.S.Treasury Department has announced its Community Development Financial Institutions Fund (CDFI Fund) has awarded 32 organizations nearly $91.5 million in grants for the development of affordable housing and community facilities in low-income communities. The awards were made through the fiscal year 2016 round of the Capital Magnet Fund and will support financing for the preservation, rehabilitation, development or purchase of affordable housing for low-income communities as well as related economic development and community service facilities such as day care centers, workforce development centers and health care clinics.

In an appearance before the House Committee on Financial Services, Treasury Secretary Lew discussed the 2016 annual report of the Financial Stability Oversight Council (FSOC). He noted the Council, which recently released its sixth annual report, convenes regularly to monitor market developments and to take action when needed to protect the American people from potential risks to the financial system. The current report focused on 12 themes that warrant continued attention and, in many cases, further action from the Council members and member agencies:

• cybersecurity;
• risks associated with asset management products and activities;
• capital, liquidity, and resolution;
• central counterparties;
• reforms of wholesale funding markets;
• reforms relating to reference rates;
• data quality, collection, and sharing;
• housing finance reform;
• risk management in an environment of low interest rates and rising asset price volatility;
• changes in financial market structure and implications for financial stability;
• financial innovation and migration of activities; and
• global economic and financial developments.

Lew concluded, “The Council has proven itself as an important forum for the financial regulatory community to come together, identify risks, and work collaboratively to respond to emerging threats to financial stability. It would be a mistake to roll back the clock on these protections or to constrain the ability of the Council or its member agencies to address new risks as they arise, including the Council’s nonbank financial company designations authority.“