In response to the Consumer Financial Protection Bureau’s Request for Information (RFI), the American Bankers Association has submitted comments to the CFPB concerning the Bureau’s adopted regulations and new rulemaking authorities. In its June 18, 2018, comment letter, the ABA expresses its support for CFPB Acting Director Mick Mulvaney’s decision to evaluate the Bureau’s existing and planned rules. While the ABA’s 24-page letter states that it does not seek to identify "every possible regulatory change the Bureau should make," it focuses on what the ABA views as the "key priorities" of the banking industry: (i) pending rulemakings on small business lending, records disclosures, and debt collection; (ii) adopted regulations on remittance transfers, mortgage lending, and loan servicing; (iii) reforming the "TILA/RESPA Integrated Disclosure (TRID)" Rule; (iv) modifying the "Loan Officer Compensation Rule" and the "Equal Credit Opportunity Act Valuation Disclosure Rule;" (v) revising the definition of a "prepaid account" under Regulation E (Electronic Fund Transfers); and (vi) amending the process for CFPB "No-Action Letters."
In March 2018, the CFPB issued its pertinent RFI. In particular, the Bureau sought feedback about whether it should amend the rules it adopted since the CFPB’s inception in July 2011, and whether it should issue any additional rules. The RFI noted that Section 1022(d) of the Dodd-Frank Act requires the CFPB to conduct an assessment of each significant rule or order adopted by the Bureau under federal consumer financial law and to publish a report of that assessment not later than five years after the effective date of the rule or order. The assessment, which must be based on available evidence and data, is to take into account the rule’s effectiveness in meeting the purposes and objectives of the Dodd-Frank Act as well as the Bureau’s stated goals (see Banking and Finance Law Daily, March 15, 2018).
Highlights. The ABA’s comment letter, authored by Virginia O’Neill, Senior Vice President of the Center for Regulatory Compliance at the ABA, emphasizes, among other things, that:
- the ABA opposes proposed amendments to the CFPB’s "Disclosure of Records and Information" rule governing the sharing of confidential supervisory information, and accordingly urges the CFPB to withdraw the proposed changes;
- in connection with the small business lending market and to better implement Section 1071 of the Dodd-Frank Act, the Bureau should initiate a "small scale pilot" to evaluate the usefulness of its present data collection; data collection should be limited to statutorily-mandated data points; and the CFPB should curtail or limit public disclosure of certain information to "mitigate consumer privacy concerns;"
- the ABA supports the Bureau’s statement that it will enforce the Fair Debt Collection Practices Act "as written," and recommends that the Bureau’s anticipated rulemaking regarding the FDCPA facilitate communication, standardize disclosures, clarify FDCPA definitions, and apply only to third-party debt collectors and not first-party creditors;
- the CFPB should engage in an "evidence-based assessment" of the effectiveness of the "Remittance Transfer Rule," and should reform the rule, following the list of priorities and recommendations articulated by the ABA and other trade groups;
- the cumulative impact of the Bureau’s massive, complex, and burdensome mortgage rules has resulted in mortgages becoming the "most labor-intensive product banks offer," and the cost to originate a mortgage loan has "nearly doubled over the past decade;"
- in connection with mortgage loan servicing, although the Dodd-Frank Act requires the CFPB to consider the potential costs and benefits to covered entities in addition to the costs and benefits to consumers, "this statutory mandate has been insufficiently weighted by the Bureau;"
- the Bureau should "limit the scope of the successor in interest requirements" in the mortgage loan servicing rules to "cases involving the death of the borrower;"
- the CFPB should exempt borrowers who are debtors in bankruptcy "from the live contact and written early intervention notice requirements in Regulation X and to restore the general exemption from the requirement in Regulation Z to provide modified periodic statements for closed-end mortgage loans for consumers who are debtors in bankruptcy;"
- the Bureau should reform the "Ability-to-Repay Rule" to: identify an acceptable replacement for "GSE Patch;" liberalize debt-to-income "ATR/QM standards;" expand Appendix Q; eliminate the "points and fees test;" and enact cure provisions for the "ATR Rule;"
- in connection with the TRID Rule, the ABA recommends that the CFPB respond to legal and compliance questions with clear and authoritative guidance; revise TRID tolerances; exempt construction financing; clarify TRID liabilities; expand opportunities to cure inadvertent errors; and "fix" the rules pertaining to title-related disclosures;
- regarding the "Loan Officer Compensation Rule," the Bureau should "eliminate inequity in the proxy provisions" and expand the "permissible circumstances for adjusting LO compensation;"
- in connection with the ECOA "Valuation Disclosure Rule," the CFPB should clarify that only "final" appraisals must be delivered to consumers, and that there is no obligation to disclose valuations when a loan application is denied and the consumer has not paid for the appraisal;
- regarding the "ECOA Appraisal Rule," the Bureau should clarify that the rule does not require lenders to provide appraisal reports to applicants when the applicant is a developer and the loans are secured by inventories of one-to-four unit dwellings;
- the CFPB should revise Reg. E’s definition of a "prepaid account" to "make clear the distinction between checking accounts and prepaid accounts;" and
- the Bureau should amend the "No-Action Letter Process" to encourage innovation.
Attorneys: Virginia O’Neill, Senior Vice President of the American Bankers Association’s Center for Regulatory Compliance.
Companies: American Bankers Association
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