Recent Action Items
Agencies issue guidance on deposit reconciliation practices
The Office of the Comptroller of the Currency, Federal Reserve Board, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation and National Credit Union Administration on May 18 issued “Interagency Guidance Regarding Deposit Reconciliation Practices.” The guidance ensures that financial institutions are aware of supervisory expectations regarding deposit reconciliation practices for customer accounts.
On the Radar
CFPB announces proposed arbitration rule
The Consumer Financial Protection Bureau published in the May 24 Federal Register a proposed rule with request for comment 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 CFPB. The CFPB is proposing the rulemaking would apply to certain consumer financial products and services, and it is also proposing to adopt official interpretations to the proposed regulation.
Comments are due by Aug. 22.
Emerging Regulatory Concerns
Auto title loan report issued by CFPB
The Consumer Financial Protection Bureau on May 18 issued a report finding that one in five borrowers who take out a single-payment auto title loan have their car or truck seized by their lender for failing to repay their debt. According to the CFPB’s research, more than four in five of these loans are renewed the day they are due because borrowers cannot afford to repay them with a single payment. More than two-thirds of auto title loan business comes from borrowers take out seven or more consecutive loans and are stuck in debt for most of the year.
CFPB releases spring 2016 rulemaking agenda
The Consumer Financial Protection Bureau posted an article on May 18 on its semi-annual status report on its plans for adding or amending consumer protection rules assigned for implementation. Aside from the status of the proposed arbitration rule, none of the dates in the CFPB’s regulatory agenda are commitments. The update reflects later target dates for most of the agenda items.
Here is an overview of the CPFB’s major initiatives:
• Arbitration. The CFPB published a proposed rule that would restrict the use of mandatory arbitration agreements in contracts for consumer financial products or services. Comments are due Aug. 22.
• 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 the proposed rule is likely to be announced June 2, at a small dollar lending field hearing in Kansas City, Mo.
• Prepaid accounts. The CFPB 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 CFPB reports 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.
• Prerule stage. The CFPB reports it is still in the “prerule 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.
Other Industry Issues of Interest
CFPB adds TILA-annotated TRID disclosures
On May 13, the Consumer Financial Protection Bureau added to its offering of blank model disclosure forms for compliance with the TILA-RESPA Integrated Disclosure (TRID) rule. Loan estimate and closing disclosure forms are available. The additions can be found on the implementation webpage for the rule.
NMLS releases year-end reports
On May 24, the Nationwide Multistate Licensing System 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.