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Top Story Lending Related

07/16/2020

CFPB sues non-bank mortgage creditor for redlining

A CFPB press release reports that the Bureau has filed a lawsuit against Townstone Financial, Inc., a nonbank retail-mortgage creditor based in Chicago, for violations of the Equal Credit Opportunity Act, Regulation B; and the Consumer Financial Protection Act. ECOA and Regulation B prohibit mortgage lenders from discriminating against applicants in credit transactions on the basis of race, color, national origin, or other prohibited bases. ECOA and Regulation B also prohibit mortgage lenders from making statements, or engaging in acts or practices, that would discourage, on a prohibited basis, applicants or prospective applicants from applying for credit. The Bureau’s complaint alleges that Townstone violated ECOA and Regulation B by engaging in discriminatory mortgage-lending practices and that these violations also constituted violations of the CFPA. The complaint says that Townstone:

  • engaged in acts or practices, including making statements during its weekly radio shows and podcasts through which it marketed its services, that illegally discouraged prospective African-American applicants from applying to Townstone for mortgage loans;
  • engaged in illegal redlining by engaging in acts or practices that discouraged prospective applicants living in African-American neighborhoods in the Chicago MSA from applying to Townstone for mortgage loans, including by making discouraging statements during its weekly radio shows and podcasts through which it marketed its services; and
  • engaged in illegal redlining by engaging in acts or practices that discouraged prospective applicants living in other areas from applying to Townstone for mortgage loans for properties located in African-American neighborhoods in the Chicago MSA, including by making discouraging statements during its weekly radio shows and podcasts through which it marketed its services.

07/16/2020

Bureau article on military consumer protection

To mark Military Consumer Protection Month and National Consumer Protection Week, the CFPB has posted a blog article, "Alphabet soup: The ABCs of military consumer protection." The article summarizes and provides links to information on:

  • The Servicemembers Civil Relief Act (SCRA)
  • The Military Lending Act (MLA)
  • The Fair Debt Collection Practices Act (FDCPA)
  • The Fair Credit Reporting Act (FCRA)
  • Local and state laws

07/16/2020

NMLS Policy Guidebook updated

An updated version of the NMLS Policy Guidebook and a summary of changes have been posted to the NMLS Resource Center.

07/16/2020

Fed tweaks Reg O again

The Federal Reserve Board has published [85 FR 43119] in today's Federal Register an interim final rule amending section 215.3 of Regulation O, changing the ending date of the SBA Payroll Protection Program exception in paragraph 215.3(b)(8) to August 8, 2020.

The amendment is effective on publication, and has been posted to BankersOnline's Regulations page for section 215.3. Any comments are due by August 31, 2020.

07/15/2020

FHA proposes to streamline its single-family servicing policies

The FHA yesterday released proposed revisions to its single family servicing policies that are designed to remove unnecessary barriers for homeowners seeking mortgage payment relief, achieve operational consistency with industry standard best practices, and reduce burdens incurred by the industry when servicing an FHA-insured mortgage portfolio. FHA posted the proposal today on its Single Family Housing "Drafting Table" webpage. The revisions focus on:

  • Revising the standard servicing loss mitigation home retention waterfall to ensure borrowers are evaluated for the solution that is most likely to best help them avoid foreclosure;
  • Eliminating unnecessary and time-consuming borrower documentation requirements for Trial Payment Plans, bringing FHA requirements into alignment with industry best practices and allowing servicers to grant assistance more quickly; and
  • Modifying other servicing and operational policies, including the allowable fee structures, that provide more consistency between FHA policies and those used by the private market and the Government Sponsored Enterprises.

Comments on the proposal should be submitted via the process prescribed on the "Drafting Table" webpage, and will be accepted through September 12, 2020.

07/15/2020

Another "Outstanding" CRA rating released

Our review of the Federal Reserve Board's publication of CRA evaluation ratings in June revealed that eleven evaluations were made public, with ten banks garnering Satisfactory ratings. Our congratulations to Goldman Sachs Bank USA, New York, for its Outstanding rating.

07/14/2020

CFPB study on credit builder loans

The CFPB yesterday released a report indicating that a credit builder loan could increase the likelihood of establishing a credit record for consumers without one, and could help improve the credit scores of those with no current outstanding debt. The Bureau issued “Targeting Credit Builder Loans: Insights from a Credit Builder Loan Evaluation” report and an accompanying practitioner’s guide to broaden insight for community-based organizations and financial institutions working toward expanding financial inclusion.

In a typical credit builder loan agreement, the lender advances the loan funds to a locked savings account. The consumer then makes payments to the lender over 6 to 24 months. Funds are advanced from the locked account to the consumer's savings account either as payments are made or when the program has been completed. The lender reports the consumer's payment record to a credit reporting agency.

Among the report's findings:

  • For participants without an existing loan, opening a CBL increased their likelihood of having a credit score by 24 percent. Almost all participants with existing debt already had a credit score, so the CBL had minimal effect on their likelihood of having score.
  • Participants without existing debt saw their credit scores increase by 60 points more than participants with existing debt.
  • The CBL was associated with an average increase in participants’ savings balances of $253.

07/14/2020

Student-loan debt-relief operator and attorneys sued by CFPB

The Consumer Financial Protection Bureau yesterday filed a complaint in the U.S. District Court for the Central District of California against GST Factoring, Inc., which runs a student-loan debt-relief business in Texas, and two of its owners, Rick Graff and Gregory Trimarche, as well as Champion Marketing Solutions, LLC, a customer service and marketing company, and its owner, Scott Freda. The Bureau also filed suit against four attorneys, California attorneys Amanda Johanson and Jacob Slaughter, Arizona attorney David Mize, and Florida attorney Daniel Ruggiero. The Bureau alleges that the companies, their owners, and the attorneys were part of a nationwide student-loan debt-relief operation that charged thousands of consumers saddled with private student-loan debt approximately $11.8 million in illegal upfront fees in violation of the Telemarketing Sales Rule. Concurrent with the complaint, the Bureau and four of the defendants filed proposed stipulated final judgments and orders to resolve the claims against them. If entered by the court, the orders will ban Trimarche, Slaughter, Mize, and Ruggiero from participating in certain activities, impose monetary judgments to provide consumer redress totaling approximately $11.8 million, and impose a civil money penalty.

07/13/2020

CFPB report on debt settlements and credit counseling

The CFPB has released a report examining recent trends in debt settlement and credit counseling. The report documents changes over time in how consumers have used these debt relief options for unsecured debt.

The report shows that nearly one in thirteen consumers with a credit record had at least one account reported by the creditor as settled or with payments managed by a credit counseling agency from 2007 through 2019. It also shows debt settlements rose dramatically during the Great Recession to a peak of $11.4 billion. More than half of these settlements occurred within a year of the account first becoming delinquent. Debt settlement and credit counseling became less common after that recession, but recently settlements have been on the rise following changes in delinquencies and credit tightness.

07/13/2020

OCC launches Project REACh

The Office of the Comptroller of the Currency has announced the launch of Project REACh to promote financial inclusion through greater access to credit and capital. REACh stands for Roundtable for Economic Access and Change and brings together leaders from the banking industry, national civil rights organizations, business, and technology to identify and reduce barriers that prevent full, equal, and fair participation in the nation’s economy.

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