Mar 12

Recent Compliance Issues: 2/21/14 – 3/6/14

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1. The Dodd-Frank Act amended the Fair Debt Collection Practices Act (FDCPA) to give the Consumer Financial Protection Bureau rulemaking authority. The CFPB announced its goal of modernizing rules under the FDCPA by issuing an advance notice of proposed rulemaking in November 2013 seeking information on debt collection.

The notice included 162 questions that cover the debt collection industry and procedures, collectors’ interactions with borrowers and issues relating to state law and the federal guidelines. However, some banking groups are voicing their opposition to any type of extensive application of the FDCPA to first-party creditors in the CFPB’s effort to prohibit unfair, deceptive, or abusive acts and practices.

Their argument is that the collection of delinquent debt is vital to the availability and affordability of consumer credit so they are urging the CFPB to prioritize initiatives in this area to address issues having the greatest risk to consumers. The groups state that complaint data indicate that consumer concerns are several times more likely to be expressed about third-party debt collectors than first-party creditors.

Consequently, they recommend that the CFPB focus on improving that segment of the industry first. The groups also stressed the significance of early customer contact to avoid late fees, minimize the impacts to a borrower’s credit standing, prevent account closures, and work toward loss mitigation. The groups are concerned that stricter rules could inhibit early customer engagement.

This area will surely receive greater scrutiny in the days ahead. We can direct your efforts to ensure compliance with any final rule making, whether your institution performs its own debt collection or utilizes a third party in these efforts.


2. The FDIC has released revised interagency consumer compliance examination procedures for the Dodd-Frank Act mortgage rules. The revised procedures, applicable to all FDIC-supervised institutions, will be used to evaluate institutions’ compliance with the following residential mortgage loan rules:

  • Ability-to-Repay/Qualified Mortgage Rule
  • Loan Originator Compensation Rule
  • Mortgage Servicing Rules (RESPA and TILA)
  • High-Cost Mortgage and Homeownership Counseling Amendments Rule
  • Higher-Priced Mortgage Loan (HPML) Escrow Rule
  • HPML Appraisal Rule
  • Equal Credit Opportunity Act (ECOA) Appraisal Rule

These are all critical areas in the mortgage origination process and present many opportunities for potential non-compliance. Don’t get caught short in these transactions. Our staff is able to review your policies and procedures to help your institution avoid unforseen pitfalls.