Southern District of New York Holds the CFPB Is Unconstitutionally Structured

By: Louise Bowes Marencik, Diana M. Eng, and Jonathan K. Moore

On June 21, 2018, the United States District Court for the Southern District of New York (“Southern District”) held that Title X of the Dodd Frank Act, which established the Consumer Financial Protection Bureau (“CFPB”) as an “independent bureau” within the Federal Reserve System, is unconstitutional.

In Consumer Financial Protection Bureau v. RD Legal Funding, LLC, et al., the CFPB and The People of the State of New York, by Eric T. Schneiderman, Attorney General for the State of New York (collectively, “Plaintiffs”) alleged that the defendant entities violated the Consumer Financial Protection Act (“CFPA”) by offering cash advances to consumers awaiting payouts on settlement agreements or judgments entered in their favor, which Plaintiffs argued were actually usurious loans prohibited by state law. 2018 U.S. Dist. LEXIS 104132 (S.D.N.Y. June 21, 2018). The consumers at issue were class members in the National Football League Concussion Litigation class action, and individuals eligible for compensation from the September 11th Victim Compensation Fund of 2001. Continue reading

CFPB Issues Proposed Amendment to Home Mortgage Disclosure Act

By: Jessica McElroy

On April 13, 2017, the Consumer Financial Protection Bureau (“CFPB”) issued a Notice of Proposed Rule Making[1] targeted at amending Regulation C to make technical corrections to and clarify certain requirements adopted by the CFPB’s Home Mortgage Disclosure final rule (“2015 HMDA Final Rule”), which was published on October 28, 2015.[2]

Regulation C implements the Home Mortgage Disclosure Act (“HMDA”).[3] HMDA has historically provided the public and public officials with information about mortgage lending activity by requiring financial institutions to collect, report and disclose certain data pertaining to mortgage activities. The Dodd-Frank Act amended HMDA and transferred rule-making authority to the CFPB.[4] The Dodd-Frank Act additionally expanded the scope of information that institutions must collect and disclose under HMDA.[5]

The 2015 HMDA Final Rule modified the types of institutions and transactions subject to Regulation C, the types of data that institutions are required to collect and the processes for reporting and disclosing the required data.[6] Most of the modifications take effect in January 2018.

The CFPB now proposes establishing transition rules for two data points: loan purpose and the unique identifier for the loan originator. According to the CFPB, the rules would allow financial institutions to report “not applicable” for these data points when reporting certain purchased loans that were originated before the regulatory requirements took effect. Additionally, the proposal would facilitate reporting the census tract of the property securing the covered loan required by Regulation C via a geocoding tool that the CFPB intends to make available on its web site. This tool would allow financial institutions to identify the census tract in which a property is located. The proposal also includes a safe harbor provision for institutions that obtain the incorrect census tract number from the CFPB’s geocoding tool, provided that an accurate property address is entered and the tool returned a census tract for the address entered.

Comments on the proposal are due 30 days after the Notice of Proposed Rulemaking is published in the Federal Register.

Click below for the proposal: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201704_cfpb_NPRM_HMDA.pdf.


 

[1] See https://www.consumerfinance.gov/policy-compliance/rulemaking/rules-under-development/technical-corrections-and-clarifying-amendments-home-mortgage-disclosure-october-2015-final-rule/ (last accessed April 17, 2017).

[2] See https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201704_cfpb_NPRM_HMDA.pdf.

[3] 12 U.S.C. § 2801 et seq.

[4] Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, section 2097- 101 (2010).

[5] Id.

[6] October 2015 HMDA Final Rule, 80 FR 66128, 29.