CFPB Has Kept Busy This Holiday Season

While most companies and government agencies are settling in for the typical holiday hibernation, the Consumer Financial Protection Bureau is keeping me and credit unions and banks on their toes! Here's what the CFPB has been up to...

CFPB to Propose Regulations Restricting Overdraft Fees

Like a boa constrictor in the Amazon rain forest, the CFPB continues to squeeze the life out of overdraft fees. According to press reports, the Bureau is shortly expected to propose Truth in Lending disclosure requirements for overdraft products. This would be a major shift in policy since regulators have previously exempted overdraft products, such as lines of credit from Reg Z’s disclosure requirements.

On the bright side, in testimony on Thursday, Bureau Director Chopra assured the assembled legislators that any proposal in this area would not impact financial institution liquidity. I’m not sure how he can be so confident, but we will have to wait and see. 

CFPB Fines BOA $12M for Failing to Record the Demographic Data of Mortgage Applicants

The CFPB announced that Bank of America had violated HMDA by willfully reporting false information about mortgage applicants. According to the CFPB, hundreds of Bank of America’s loan officers falsely reported that 100% of their mortgage applicants did not wish to report their demographic data. “In fact, loan officers were not asking applicants for demographic data but were falsely reporting that applicants were refusing to give the data.” 

While the numbers may certainly suggest that Bank of America is guilty, the fine does raise the question if there is a percentage of expected responses regarding applicant demographics below which mortgage lenders are presumptively violating HMDA. The bottom line is to make sure your loan originators are asking the appropriate questions. 

CFPB Cracks Down on Sloppy GAP Insurance Reimbursement Policies 

On November 20, the CFPB announced that it issued a $60M civil penalty against Toyota Motor Credit and ordered it to “stop its unlawful practices” related to add-on service purchases, including GAP and Credit Life and Accidental Health (CLAH) products. GAP is, of course, designed to allow a consumer to be relieved of paying the difference between the face value of a car that has been destroyed in an accident and the remaining balance outstanding on a car loan. CLAH is designed to pay the remaining balance due on a car loan if the debtor dies or becomes disabled. Both products have drawn scrutiny from regulators and class action attorneys who allege credit unions and banks make consumers overpay for these products and falsely report car loans as delinquent even though they have this coverage. For example, the Bureau said that Toyota Motor made it “unreasonably difficult for consumers to receive refunds for overpayments.”

CFPB Has Kept Busy This Holiday Season -