Top Story Lending Related

The Federal Trade Commission and the State of Florida have announced actions taken against two operations charged with running phony student loan debt relief schemes, and defendants in a similar FTC action brought earlier this year have agreed to a ban on participating in any debt relief business, as part of a consumer protection crackdown to combat such frauds.

In the first case, the operators of Consumer Assistance Project lured borrowers with promises such as “GET RID OF YOUR DEBT TODAY!” and charge illegal up-front fees for their purported services, typically $250, plus monthly fees of up to $303 for as long as 36 months. In the second case. an operation called Student Aid Center Inc. enticed people with promises such as “Get Your Student Loans Forgiven Now!” and “$17,500 in Up Front Forgiveness."

The operators of another student debt relief scheme have agreed to a settlement with the FTC that will permanently ban them from the debt relief business. The FTC alleged that Tobias West and his wife, Komal West, the owners of Good EBusiness, Select Student Loan Help LLC, and Select Document Preparation Inc., charged consumers up-front fees of $500 to $800 based on phony claims that they could renegotiate, settle, or alter payment terms on student loan debt. In addition, the FTC charged that two of the defendants deceptively marketed home loan and student modification services under the name “AAP Firm,” and illegally charged advance fees ranging from $1,000 to $5,000.

The Federal Reserve Board has released its Report on the Economic Well-being of U.S. Households. The report is based on the Board's annual survey of household economics and decision making. Aggregate-level results show several signs of improvement. Sixty-nine percent of respondents said they are either "living comfortably" or "doing okay," up 4 percentage points from 2014 and up 6 percentage points from 2013. Seventy-seven percent of non-retired adults without a disability are confident that they have the skills necessary to get the kind of job that they want now—an increase of 10 percentage points from the 2013 survey results. A video summary of the report was also released.

The Federal Housing Finance Agency (FHFA) has released its House Price Index (HPI) for the first quarter 2016. U.S. house prices rose 1.3 percent, the nineteenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index. House prices rose 5.7 percent from the first quarter of 2015 to the first quarter of 2016. This is the fourth consecutive year in which prices grew more than 5 percent. FHFA's seasonally adjusted monthly index for March was up 0.7 percent from February. The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

The OCC has announced it has terminated a mortgage servicing-related order against Wells Fargo Bank, N.A. (Wells Fargo), and assessed a $70 million civil money penalty (CMP) against the bank for previous violations of the order. The OCC terminated the consent order against Wells Fargo after determining that the institution now complies with the order. The OCC originally issued related orders in April 2011 and amended the orders in February 2013 and June 2015. The termination of the orders ends business restrictions affecting the bank that the OCC mandated in June 2015. See Wells Fargo Bank pays $70M in servicing-related CMP for additional information.

The May issue of the CFPB's Monthly Complaint Report focuses on credit reporting complaints. The Bureau reports that consumers continue to complain about incorrect information on their credit reports as well as difficulty having errors resolved. This month’s report also highlights trends seen in complaints coming from New Mexico.

HUD and the Census Bureau have announced that sales of new single-family houses in April 2016 were at a seasonally adjusted annual rate of 619,000, which is 16.6 percent above the revised March rate of 531,000 and 23.8 percent above the April 2015 estimate. The median sales price of new houses sold in April 2016 was $321,100; the average sales price was $379,800. The seasonally adjusted estimate of new houses for sale at the end of April was 243,000. This represents a supply of 4.7 months at the current sales rate. Historic seasonally adjusted data are available back to January 1999.

The Federal Emergency Management Agency (FEMA) has published a final rule at 81 FR 32660 in today's Federal Register in which the agency identifies communities where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on July 6, 2016, for noncompliance with the floodplain management requirements of the program. The affected communities are located in:

• Morehouse Parish, Louisiana
• Dona Ana County, New Mexico
• Aroostook, Knox and Middlesex Counties, Maine

The Consumer Financial Protection Bureau has posted an article on its Spring 2016 rulemaking agenda, a semi-annual status report on the agency's plans for adding or amending consumer protection rules assigned to the agency for implementation.

• Arbitration. The Bureau today published a proposed rule that would restrict the use of mandatory arbitration agreements in contracts for consumer financial products or services. Comments are due August 22, 2016.
• Payday, auto title, and similar lending products. The CFPB plans to release a Notice of Proposed Rulemaking addressing consumer protections for these small consumer loans "in the next several weeks." Industry observers have suggested that the proposed rule is likely to be announced June 2, at a small dollar lending field hearing in Kansas City, Missouri.
• Prepaid accounts. The Bureau expects to issue a final rule this summer to create a comprehensive set of consumer protections for prepaid financial products. A proposed rule was issued in November 2014.
• Mortgage servicing. The Bureau reports that a final rule can be expected this summer to amend a proposal published in December 2014. The proposal addressed enhanced loss mitigation requirements and compliance with certain servicing rules when a successor in interest or bankruptcy may be involved.
• TRID Rule. Also expected this summer is a proposed rule to "make small clarifications and provide further regulatory guidance" on the TRID Rule.
• Pre-rule stage. The Bureau reports it is still in the "pre-rule stage" in any potential rulemaking related to overdraft services on consumer checking accounts; debt collection practices; and data gathering and reporting for women-owned, minority-owned and small business lending.

Aside from the status of the proposed Arbitration Rule, none of the dates in the Bureau's regulatory agenda are commitments. This update reflects later target dates for most of the agenda items than seen on the Bureau's Fall 2015 agenda. Nonetheless, this summer promises to be one of active regulatory change.

The CFPB has published in today's Federal Register its previously-announced proposal (see our May 5 Top Story) to establish a new part 1040 in Chapter X in title 12 of the Code of Federal Regulations, which would contain regulations governing two aspects of consumer finance dispute resolution. First, the proposed rule would prohibit covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action with respect to the covered consumer financial product or service. Second, the proposal would require a covered provider that is involved in an arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the Bureau. The Bureau proposes that the rulemaking would apply to certain consumer financial products and services. The Bureau is also proposing to adopt official interpretations to the proposed regulation. Comments on the proposal are due by August 22, 2016.

NMLS has released its 2015 Mortgage Industry Report, its 2015 Q4 Mortgage Update and Q4 Fact Sheets for its licensing of Money Service Businesses, Debt Collectors and Payday Lenders.