Top Story Lending Related

The CFPB yesterday announced it has ordered online lender Enova International Inc. to pay a $15 million penalty for widespread illegal conduct including withdrawing funds from customers’ bank accounts without their permission, making deceptive statements about loans, and cancelling loan extensions. Enova paid a $3.2 million penalty to the CFPB in 2019, and was ordered to cease its illegal conduct. For violating that order and continuing to break the law, Enova is now banned from offering certain consumer loans, must provide redress to the consumers it harmed, and is required to tie executive compensation to the company’s compliance with federal consumer financial protection laws.

Enova is a publicly traded nonbank lender headquartered in Chicago, Illinois. Enova extends or arranges unsecured installment loans and lines of credit to consumers in 37 states through its CashNetUSA- and NetCredit-branded subsidiaries. Up until 2022, Enova also extended unsecured payday loans to consumers through its CashNetUSA-branded subsidiaries.

After taking action against Enova in 2019, the CFPB investigated Enova’s compliance with the 2019 order. The investigation found that the company was continuing to engage in illegal behavior, affecting more than 111,000 consumers. The Bureau found that Enova—

• Withdrew funds without borrowers’ consent: Enova withdrew or tried to withdraw funds from consumers’ accounts without having obtained their express informed consent as required by the 2019 order. In some cases Enova used bank account information it had purchased from online lead generators, overwriting the bank account information that borrowers had authorized Enova to use.
• Backtracked on loan extensions: Enova cancelled loan extensions it had granted to certain consumers and in most instances debited such consumers’ bank accounts for the full loan payment instead of only a smaller loan extension fee, in violation of the 2019 order.
• Deceived borrowers with false statements and omissions: Enova failed to tell consumers who had been granted a loan extension that making an interim partial payment would result in cancellation of the loan extension and misrepresented the amount that Enova would charge to consumers who made such an interim partial payment. Enova also misrepresented the due date for certain loan payments, that consumers could skip certain loan payments, and the amounts due on certain loans.
• Failed to provide consumers copies of signed authorizations: Enova initiated recurring electronic fund transfers from consumers’ bank accounts without providing the consumer with a copy of a signed authorization identifying the particular bank account that the consumer had authorized for such transfers, in violation of the 2019 order.

The current consent order requires Enova to:

• Stop offering certain short-term loans: For seven years, Enova is prohibited from offering or providing closed-end consumer loans that must be substantially repaid within 45 days.
• Stop its illegal practices: Enova is prohibited for engaging in certain practices, including initiating attempts to debit funds from a consumer’s account without having obtained the consumer’s express informed consent and failing to honor loan extensions granted to consumers.
• Reform executive compensation: Enova’s executive compensation policies and agreements must consider the actions taken by the executive to ensure that the executive’s business or department complies with the order and federal consumer financial law.
• Provide redress to consumers: Enova must provide redress to all consumers whose accounts Enova debited without their express informed consent, including by returning to those consumers all unlawfully debited amounts and associated fees, costs, and interest.
• Pay a civil penalty: Enova will make a civil penalty payment of $15 million to the CFPB victims relief fund.

For a link to the CFPB's Consent Order, see "Enova ordered to pay $15 million for illegal conduct and violating 2019 order" in the BankersOnline Penalties pages.

The Federal Housing Administration has announced it has increased the allowable property inspection fee limits for property inspections of single-family homes associated with defaulted FHA-insured mortgages. These inspections are a crucial component of servicers’ preservation and protection of properties. They also safeguard neighborhoods from blight arising from inadequately maintained unoccupied homes.

With the updates announced yesterday, FHA is increasing fees for certain allowable inspection categories, making its fee limitations consistent with those in use by other industry participants. FHA intends to evaluate allowable parameters for other property preservation expenses in the future.

• FHA Mortgagee Letter 2023-20

The Federal Housing Finance Agency (FHFA) has announced that the 2024 multifamily loan purchase caps for Fannie Mae and Freddie Mac (the Enterprises) will be $70 billion for each Enterprise, for a combined total of $140 billion to support the multifamily market.

The FHFA will require that at least 50 percent of the Enterprises’ multifamily businesses be mission-driven, affordable housing. In addition, for 2024, loans classified as supporting workforce housing properties in Appendix A of the Conservatorship Scorecard will be exempt from the volume caps. All other mission-driven loans remain subject to the volume caps. To ensure the Enterprises continue to provide sufficient liquidity and support in the multifamily mortgage market, FHFA will continue to monitor the multifamily mortgage market and will increase the caps if necessary. However, to prevent market disruption, if FHFA determines that the actual size of the 2024 market is smaller than was initially projected, FHFA will not reduce the caps.

• 2024 ​Multifamily Caps Fact Sheet

This week, 845 former Student Aid Institute (SAI) consumers will receive checks in the mail in response to a lawsuit filed against Frank Ronald Gebase Jr., the founder, owner, and operator of Processingstudentloans, a student loan debt-relief company that illegally withdrew hundreds of thousands of dollars from the bank accounts of former SAI consumers without their authorization. The total distribution amount is $240,994.00, and the money is from the CFPB’s victims relief fund.

Payments were sent on November 13, 2023, through RUST Consulting.

• CFPB press release

The CFPB has issued a final rule to be effective January 1, 2024, to establish the maximum allowable charge for disclosures during 2024 by a consumer reporting agency to a consumer under section 609 of the Fair Credit Reporting Act. The CFPB is amending Appendix O to Regulation V, to set the maximum allowable charge at $15.50 for 2024.

BankersOnline has updated Appendix O to Regulation V in its Regulations pages to reflect this change.

The CFPB, Federal Reserve, and OCC have announced that the 2024 threshold for whether higher-priced mortgage loans are subject to special appraisal requirements will increase from $31,000 to $32,400.

BankersOnline has added comment 35(c)(2)(ii)-3.xi to Regulation Z in its Regulations pages to reflect this change.

The CFPB and the Federal Reserve Board have announced the dollar thresholds used to determine whether certain consumer credit and lease transactions in 2024 are subject to certain Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) requirements.

Based on the annual percentage increase in the CPI-W as of June 1, 2023, Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) generally will apply to consumer credit transactions and consumer leases of $69,500 or less in 2024. However, private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z (Truth in Lending) regardless of the amount of the loan.

These changes have been posted to the BankersOnline Regulations pages.

On Thursday, the Federal Housing Administration (FHA) announced it has posted for industry feedback a proposed update to its Home Equity Conversion Mortgage (HECM) assignment claims eligibility policy. The proposal enables certain categories of due and payable HECMs that were previously ineligible for assignment to be assigned to HUD, enabling servicers to obtain earlier resolution of these loans through HUD’s assignment claims process. This change will support servicer liquidity and strengthen the HECM market for senior homeowners who use a HECM to age in place.

FHA is seeking industry feedback on its proposal through December 11, 2023.

The Small Business Administration has announced that small nonfarm businesses in Clallam, Grays Harbor, Island, Jefferson, Kitsap and Mason counties in the state of Washington are now eligible to apply for low‑interest federal disaster loans from the SBA. These loans offset economic losses because of reduced revenues caused by drought in Clallam and Jefferson counties that began September 12.

Small nonfarm businesses, small agricultural cooperatives, small businesses engaged in aquaculture and most private nonprofit organizations of any size may qualify for Economic Injury Disaster Loans of up to $2 million to help meet financial obligations and operating expenses which could have been met had the disaster not occurred. These loans have an interest rate of 4 percent for businesses and 2.375 percent for private nonprofit organizations, a maximum term of 30 years and are available to small businesses and most private nonprofits without the financial ability to offset the adverse impact without hardship. No interest accrues for the first year.

There is a notice on the Department of Defense's Military Lending Act (MLA) website indicating that the site is scheduled for system maintenance on Saturday, November 11, 2023, and will not be available from 6:00 p.m. until 9:00 p.m. PST (9:00 p.m. to midnight EST).