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Lori Sommerfield

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With over two decades of consumer financial services experience in federal government, in-house, and private practice settings, and a specialty in fair lending regulatory compliance, Lori counsels clients in supervisory issues, examinations, investigations, and enforcement actions.

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On October 15, the Consumer Financial Protection Bureau (CFPB or Bureau) and the Department of Justice (DOJ) announced that they reached a settlement with Fairway Independent Mortgage Corporation (Fairway). This settlement addresses allegations of redlining in majority-Black neighborhoods in Birmingham, Alabama. Fairway is headquartered in Madison, WI, but operates under the trade name MortgageBanc in the Birmingham area. Fairway, the third-largest mortgage lender in the United States, is now the second non-bank mortgage company to enter into a redlining settlement.

On October 10, the U.S. Department of Justice (DOJ) announced a landmark redlining settlement with Citadel Federal Credit Union (Citadel), marking the first such agreement with a credit union in the DOJ’s history. This settlement, the 14th in DOJ’s Combatting Redlining Initiative since 2021, addresses allegations that Citadel engaged in discriminatory lending practices by redlining predominantly Black and Hispanic neighborhoods in and around Philadelphia. Under the terms of the proposed consent order, Citadel will pay over $6.5 million to resolve these allegations.

On September 17, the Consumer Financial Protection Bureau (CFPB or Bureau) published Circular 2024-05 (Circular) addressing whether a financial institution violates the Electronic Fund Transfer Act (EFTA) and Regulation E by charging overdraft fees for ATM and one-time debit card transactions without proof of the consumer’s affirmative consent to enrollment in covered overdraft services. (According to the CFPB’s press release, the Bureau considers this to be a “phantom opt-in.”) The Bureau’s response is clear: Yes, charging fees in these circumstances can indeed constitute a violation of EFTA and Regulation E.

On August 27, U.S. Senator Mike Rounds (R-SD) introduced the “Unleashing AI Innovation in Financial Services Act” (S. 4951), a bill aimed at fostering artificial intelligence (AI) innovation within the financial services industry. According to his press release, this legislation is part of a broader set of five bipartisan AI bills that Senator Rounds has released for consideration by Congress this fall.

Yesterday, the League of Southeastern Credit Unions (LSCU) and the Virginia Credit Union League (VCUL) announced plans to merge, marking the first state league consolidation since 2022. According to the leagues’ combined website, this strategic partnership will provide a larger, more diverse membership base and will have a stronger voice in industry discussions and advocacy efforts. Additionally, by implementing a modernized dues formula, the leagues’ members will benefit from increased efficiencies and cost savings.

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) announced it had entered into a consent order with NewDay USA, a Florida-based non-bank direct mortgage lender, over allegations that the lender misled veterans and military families about the costs associated with cash-out refinance loans. According to the Bureau, NewDay USA gave misleading and incomplete cost comparisons to borrowers refinancing in North Carolina, Maine, and Minnesota, which made the company’s loans appear less expensive relative to the borrowers’ existing mortgages.

Yesterday, the U.S. District Court for the Southern District of Texas granted the Consumer Financial Protection Bureau’s (CFPB or Bureau) motion for summary judgment on all Administrative Procedure Act (APA) challenges brought by several trade associations to the CFPB’s Final Rule under § 1071 of the Dodd-Frank Act, the “Small Business Lending Data Collection Rule” (Final Rule).

Yesterday, the Federal Trade Commission (FTC) and the State of Arizona announced a joint action against Coulter Motor Company, an Arizona-based motor vehicle dealership, and its former general manager, for allegedly engaging in deceptive pricing practices and discriminatory financing treatment of Latino consumers. The complaint alleges violations of the FTC Act, the Equal Credit Opportunity Act, and the Arizona Consumer Fraud Act. The defendants have agreed to a $2.6 million settlement, most of which will be used to provide refunds to affected consumers.

This week, the Biden-Harris Administration launched a comprehensive initiative aimed at addressing what it describes as everyday hassles that waste Americans’ time and money. This new government-wide effort, called “Time Is Money,” seeks to regulate various business practices that the administration claims add unnecessary burdens to consumers’ lives. The initiative includes actions from multiple federal agencies, including the Consumer Financial Protection Bureau (CFPB or Bureau) and the Federal Trade Commission (FTC).

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) issued Circular 2024-04 warning financial institutions about the potential illegality of nondisclosure agreements (NDAs) that could deter whistleblowing. Specifically, the Bureau addressed whether requiring employees to sign broad confidentiality agreements violates § 1057 of the Consumer Financial Protection Act (CFPA). According to the CFPB, the answer is “yes” under circumstances that could lead an employee to reasonably believe that they would be sued or subject to other adverse actions if they disclosed suspected violations of federal consumer financial law to government investigators or a law enforcement agency.