Regulatory and Enforcement

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In a major win for the CFPB, in CFPB v Touchstone Financial, a panel of the U.S. Court of Appeals for the Seventh Circuit (7th Circuit) recently held that the Regulation B provision prohibiting discrimination under the Equal Credit Opportunity Act (ECOA) against prospective applicants is consistent with the statute.… Continue Reading

Federal and state regulators risk stifling competition as they continue to develop a regulatory regime for fintech relationships with financial institutions, witnesses told a House subcommittee last week.

“We hope that Congress continues to monitor the regulatory agencies to assure that regulation or regulation through enforcement of these relationships and products doesn’t increase unnecessarily,” Steve Trager, executive chair of Republic Bank & Trust Company in Louisville, Ky.,… Continue Reading

The Federal Financial Institutions Examination Council (FFIEC) recently announced the release of the Snapshot National Loan-Level Dataset based on Home Mortgage Disclosure Act (HMDA) data from 2023. The CFPB also addressed the release of the dataset. Previously, we reported on the release by the CFPB of the HMDA Modified Loan Application Data for 2023, which did not include any analysis of the data.… Continue Reading

The Federal Housing Administration (FHA) recently finalized enhancements to its 203(k) rehabilitation mortgage loan program in Mortgagee Letter 2024-13. This action follows the FHA proposing enhancements to the program last Fall in a draft Mortgagee Letter. Lenders must implement the enhancements for FHA case numbers assigned on or after November 4, 2024.… Continue Reading

The U.S. Supreme Court’s 6-3 decision in Securities and Exchange Commission v. Jarkesy, et al. significantly curtails the SEC’s enforcement powers by ruling that the agency’s administrative adjudication of securities fraud cases seeking civil penalties violates the Seventh Amendment right to a jury trial.

This landmark ruling deals a major blow to the SEC’s ability to bring enforcement actions in its in-house administrative forum rather than federal court.… Continue Reading

The U.S. Department of Veterans Affairs (VA) recently proposed rules under its home loan guaranty program regarding adjustable rate mortgage (ARM) loans, hybrid ARM (h-ARM) loans and temporary buydown agreements. Comments are due August 20, 2024.

ARM Loans and H-ARM Loans

The VA’s rules currently provide that “Interest rate adjustments must occur on an annual basis, except that the first adjustment may occur no sooner than 36 months from the date of the borrower’s first mortgage payment.”… Continue Reading

The CFPB has launched the process for independent standard-setting bodies to receive formal recognition, as part of its efforts to shift towards open banking in the United States.

On June 5, 2024, the CFPB finalized a rule outlining the minimum attributes that standard-setting bodies must exhibit to issue standards in compliance with CFPB’s proposed Personal Financial Data Rights Rule.… Continue Reading

The U.S. Department of the Treasury (“Treasury”) has released a Request for Information on the Uses, Opportunities, and Risks of Artificial Intelligence (“AI”) in the Financial Services Sector (“RFI”).  Written comments are due by August 12, 2024. 

AI is a broad topic and the term is sometimes used indiscriminately; as the RFI suggests, most AI systems being used or contemplated in the financial services sector involve machine learning, which is a subset of AI. … Continue Reading

The steady drumbeat of steps during Rohit Chopra’s tenure as CFPB Director to call into question the reliability and predictability of medical debt information in credit underwriting reached a crescendo last week with the CFPB’s issuance of a proposed rule to eliminate the exception in Regulation V (which implements the Fair Credit Reporting Act) that currently allows creditors to obtain and use medical debt information in connection with credit eligibility determinations. … Continue Reading

Buyer-Broker Commissions

In connection with its guaranteed home loan program, the Department of Veterans Affairs (VA) recently adopted a temporary local variance allowing veterans to pay the commission of the real estate broker or agent assisting them (a “buyer-broker”). VA also recently urged servicers to implement a targeted foreclosure moratorium through year end, which would extend, with modifications, a previously announced moratorium.… Continue Reading