Banking and Finance Law Daily CFPB issues no-action letter for Bank of America housing counseling arrangements
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Monday, January 13, 2020

CFPB issues no-action letter for Bank of America housing counseling arrangements

By Colleen M. Svelnis, J.D.

Bank of America submitted its no-action letter application regarding its funding arrangements with housing counseling agencies using the template approved by the Bureau in response to HUD’s request.

The Consumer Financial Protection Bureau has granted a no-action letter (NAL) to Bank of America regarding the bank’s funding arrangements with housing counseling agencies certified by the U.S. Department of Housing and Urban Development (HUD). Under its revised policy the Bureau issued an NAL template in September 2019 in response to a request by HUD. Bank of America submitted its application using the template approved by the Bureau in response to HUD’s request.

Under the NAL, the Bureau will not make supervisory findings or bring a supervisory or enforcement action against Bank of America under:

  1. Section 8 of the Real Estate Settlement Procedures Act (RESPA) and section 1024.14 of Reg. X, or
  2. its authority to prevent unfair, deceptive, or abusive acts or practices,

For including and adhering to a provision in existing and future Bank of America Memorandums of Understanding (MOUs) that condition Bank of America’s payment for the housing counseling services on the consumer applying for a loan from the bank.

Bureau’s new NAL policy. In December 2018, the CFPB sought public comments on changes to its NAL Policy because it believed that both the process required to obtain a no-action letter and the available relief did not provide firms with sufficient incentives to seek NALs from Bureau staff. Under the new NAL Policy, the CFPB issued its first no-action letter to HUD. In 2018, HUD expressed its concerns to the CFPB about housing counseling agencies and lenders’ hesitation to enter into agreements that would fund counseling services. Along these lines, the Coalition of HUD Intermediaries also submitted a February 2019 comment letter, which noted the "insufficiency of the Bureau’s old NAL Policy" and which supported the "new NAL proposed policy" (see Banking and Finance Law Daily, Sept. 10, 2019).

Bank of America application. Bank of America stated it "strongly agrees with the Bureau and HUD on the critical importance of housing counseling services." According to the Bureau, there are more than 1,600 HUD-certified HCAs that serve more than one million households annually. They offer pre-purchase homeownership counseling to potential borrowers looking to purchase their first home. With the information, potential borrowers may be better able to make informed choices based on their financial circumstances to achieve safe and sustainable homeownership.

Bank of America operates a "Connect to Own" program in which it enters into Housing Counseling Funding Agreements with Participating Counseling Agencies that govern the provision of housing counseling. These types of counseling agencies are required to have been approved by and in compliance with HUD and its Housing Counseling Program requirements.

Bank of America submitted its application for an NAL that would address certain aspects of both Existing Bank of America MOUs and Future Bank of America MOUs between itself and these agencies. The bank also requested confirmation that, if the application was granted, all HUD-approved housing counseling agencies listed on the HUD website, including those added later, would be recognized as eligible Participating Counseling Agencies covered under the NAL.

Companies: Bank of America

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