To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:
- On October 27, the Consumer Financial Protection Bureau (CFPB) outlined options to strengthen consumers’ access to, and control over, their financial data as a first step before issuing a proposed data rights rule that would implement Section 1033 of the Dodd-Frank Act. For more information, click here.
- On October 27, CFPB Director Rohit Chopra issued a statement at the Federal Deposit Insurance Corporation (FDIC) Advisory Committee on Economic Inclusion Meeting where the committee discussed the results of the FDIC’s survey of unbanked and underbanked households, conducted in partnership with the U.S. Census Bureau. The survey highlights the roles of unexpected and high fees, privacy concerns, and other impediments that contribute to Americans staying away from banking with an insured bank or credit union. For more information, click here.
- On October 26, the CFPB issued guidance about two “junk fee” practices that it contends are likely unfair and unlawful under existing law. The first — surprise overdraft fees — includes overdraft fees charged when consumers had enough money in their account to cover a debit charge at the time the bank authorizes it. The second addresses the practice of indiscriminately charging depositor fees to every person who deposits a check that bounces. For more information, click here.
- On October 25, the U.S. Department of Education announced one-time executive actions that will bring most department-managed loans closer to forgiveness, including credit toward the Public Service Loan Forgiveness (PSLF) program for borrowers who have qualifying employment. This action will coincide with the July 2023 implementation of permanent fixes to PSLF through regulation. These actions will provide borrowers with many of the same benefits already going to those who applied for PSLF under the temporary changes (known as the limited PSLF waiver) before its October 31 end date. Borrowers with direct loans or department-managed federal family education loans will receive credit toward forgiveness on income-driven repayment for all months spent in repayment, including payments prior to consolidation and regardless of whether they made partial or late payments or are on a repayment plan. Borrowers will also receive credit for specific periods in deferment and forbearance. For more information, click here.
- On October 25, CFPB Director Rohit Chopra spoke at Money 20/20, announcing that the CFPB will release a discussion guide for small businesses to further rulemaking efforts for consumer access to financial records. For more information, click here.
- On October 24, the Federal Housing Finance Agency (FHFA) announced changes to Fannie Mae and Freddie Mac’s guarantee fee pricing, eliminating upfront fees for certain borrowers and affordable mortgage products, while also implementing targeted increases to the upfront fees for most cash-out refinance loans. For more information, click here.
- On October 24, some congressional Democrats, led by Senator Elizabeth Warren (D-MA) and Representative Alexandria Ocasio-Cortez (D-NY), issued letters to leaders of seven federal agencies, inquiring about safeguards against “regulatory capture” in the crypto industry since more than 200 government officials have transitioned from regulatory posts to executive positions within crypto-related entities. For more information, click here.
- On October 24, the Federal Reserve Board announced its single-day implementation plan to migrate the Fedwire Funds Service to the International Organization for Standardization’ (ISO) 20022 message format standard, while also publishing a notice in the Federal Register. The Fedwire Funds Service — a real-time gross settlement system owned and operated by the Federal Reserve Banks — enables businesses and financial institutions to quickly and securely transfer funds using either balances held at the Reserve Banks or intraday credit provided by the Reserve Banks. The migration is scheduled for March 10, 2025. Currently, global financial markets rely on proprietary messaging systems that lack interoperability, which can lead to inefficiencies in payment processes with the messaging systems of other global payment systems. The ISO 20022 standard enables a common language for electronic data interchange between financial institutions facilitating payments, securities, foreign exchange, and trade services. For more information, click here.
- On October 24, the FHFA announced the validation and approval of the FICO 10T credit score model and the VantageScore 4.0 credit score model for Fannie Mae and Freddie Mac (enterprises). FHFA expects that FICO 10T and VantageScore 4.0 implementation will be a multiyear effort. Once implemented, lenders must deliver both FICO 10T and VantageScore 4.0 credit scores with each loan sold to the enterprises. FHFA and the enterprises will conduct outreach to stakeholders to ensure a smooth transition to the newer credit score models. For more information, click here.
- On October 21, the Federal Trade Commission (FTC) announced that it finalized a consent order against Opendoor Labs, Inc., designed to prevent the online real estate business from deceiving consumers about how much money they could save by selling their home to Opendoor, as opposed selling on the open market. The final order requires Opendoor to pay $62 million, which is expected to be used for consumer redress; prohibits it from making the deceptive, false, and unsubstantiated claims to consumers about how much money they will receive or the costs they will have to pay to use its service; and requires it to have competent and reliable evidence to support any representations made about the costs, savings, or financial benefits associated with using its service, as well as any claims about the costs associated with traditional home sales. For more information, click here.
- On October 21, the CFPB issued an advisory opinion to consumer reporting agencies (CRAs), highlighting their obligation to screen for and eliminate “obviously false data” from consumers’ credit reports. Specifically, CRAs were instructed to implement policies, procedures, and systems to screen for and remove “logically inconsistent” information. For more information, click here.
- On October 20, the CFPB issued the “Report of the CFPB Education Loan Ombudsman” under the Dodd-Frank Act. The report analyzes complaint data from September 1, 2021 through August 31, 2022, noting an overall increase in complaints. The report also covers the student lending market and makes recommendations to policymakers and law enforcement officials. Among other things, the report highlights borrower experiences regarding repayment defenses for borrowers who attended predatory institutions (including the protections provided by the Holder Rule); collection on nonqualified private student loans discharged in bankruptcy; and processing delays and incorrect information provided by federal student loan servicers. For more information, click here.
- On October 28, California Attorney General Rob Bonta, along with the FTC, announced a settlement with a clean energy finance company, alleged to have engaged in misconduct as to its administration of the Property Assessed Clean Energy (PACE) program. PACE enables property owners to obtain home-improvement financing through private investors that have partnered with certain California local governments. The company is alleged to have engaged in forgery, unscrupulous sales tactics, and other misconduct aimed at enticing homeowners to use its PACE financing products. On the heels of this settlement, AG Bonta urged California residents “to familiarize themselves with this program and take the time to understand what it is and, most importantly, what it isn’t.” For more information, click here.
- On October 24, West Virginia Attorney General Patrick Morrisey sent a letter to the CFPB, calling its continued operations into question and foreshadowing potential state challenges to its actions in response to the Fifth Circuit’s ruling in Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau (CFSA). While some state AGs and financial regulators will likely help offset any reduction in CFPB activity through their own investigations and coordination with the CFPB, the dark cloud of the CFSA opinion hangs over the agency. For more information, click here.
- On October 20, state regulators issued licensee tips to prepare for the Nationwide Multistate Licensing System annual license renewal that starts on November 1. More than 261,000 mortgage loan originators (MLOs) and companies are licensed to conduct business, accounting for nearly 1.1 million state licenses to be renewed. There are nearly 21,000 more MLOs eligible to renew their licenses now than this time last year. In addition, the number of individual state licenses eligible for renewal is 13% higher than the same time last year, while the number of company licenses eligible for renewal is up 16% compared to this time last year. For more information, click here.