On September 4, the CFPB circulated its summer 2020 Supervisory Highlights, which details its supervisory and enforcement actions into the aspects of customer reporting, business collection agencies, deposits, reasonable financing, home loan servicing, and payday financing. The findings for the report, that are posted to aid entities in complying with relevant customer legislation, address examinations that generally speaking had been finished between September and December of 2019.

Features associated with the assessment findings include:

• Customer Reporting. The Bureau cited violations for the FCRA’s requirement that loan providers first set up a purpose that is permissible they obtain a customer credit history. Also, the report notes instances where furnishers didn’t review username and passwords along with other documents given by customers during direct and disputes that are indirect. The Bureau notes that “inadequate staffing and high dispute that is daily requirements contributed into the furnishers’ failure to conduct reasonable investigations.”
• Commercial Collection Agency. The report states that examiners discovered more than one loan companies (i) falsely threatened customers with unlawful legal actions; (ii) falsely implied that debts will be reported to credit scoring agencies (CRA); and (iii) falsely represented which they operated or had been utilized by a CRA.
• Build Up. The Bureau analyzes violations related to Regulation E and Regulation DD, including needing waivers of customers’ mistake resolution and prevent re re payment rights and failing woefully to meet bonus that is advertised.
• Fair Lending. The report notes circumstances where examiners cited violations of ECOA, including deliberately redlining majority-minority neighborhoods and failing continually to think about general public support income whenever determining a borrower’s eligibility for home loan modification programs.
• Mortgage Servicing. The Bureau cited violations of Regulation Z and Regulation X, including (i) failing woefully to offer regular statements to customers in bankruptcy; (ii) recharging insurance that is forced-placed a reasonable foundation; and (iii) different mistakes after servicing transfers.
• Payday Lending. The report talks about violations for the Consumer Financial Protection Act for payday loan providers, including (i) falsely representing which they will never run a credit check; (ii) falsely threatening lien placement or asset seizure; and (iii) neglecting to offer needed advertising disclosures.

The report also highlights the Bureau’s recently issued guidelines and guidance, such as the different reactions to the CARES Act while the Covid-19 pandemic.

Trade groups amend Payday Rule issue

On August 28, two cash advance trade teams (plaintiffs) filed an amended grievance within the U.S. District Court for the Western District of Texas in ongoing litigation challenging the CFPB’s 2017 last rule covering pay day loans, automobile title loans, and specific other installment loans (Rule). As formerly included in InfoBytes, the court granted the parties’ joint motion to carry the stay of litigation, that was on hold pending the U.S. Supreme Court’s decision in Seila Law LLC v. CFPB (included in a Buckley Special Alert, holding that the director’s for-cause elimination supply had been unconstitutional but had been severable through the statute developing the Bureau). The Bureau ratified the Rule’s payments provisions and issued a final rule revoking the Rule’s underwriting provisions (covered by InfoBytes here) in light of the Supreme Court’s decision.

The amended problem demands the court set aside the Rule and also the Bureau’s ratification regarding the guideline as unconstitutional plus in breach regarding the Administrative treatments Act (APA). Especially, the complaint that is amended, among other activities, that the Bureau’s ratification is “legally inadequate to cure the constitutional defects within the 2017 Rule,” asserting the ratification for the re re payment conditions must have been at the mercy of an official rulemaking process, including a notice and remark duration. Furthermore, the amended grievance asserts that the re payment conditions are “fundamentally at odds” with the Bureau’s not enough authority to generate usury limitations because they “improperly target installment loans with a rate greater than 36%.” Finally, the amended problem argues that the Bureau “arbitrarily and capriciously rejected” a petition from a lender wanting to exempt debit-card payments from the re re payment conditions regarding the guidelines.