Recent Compliance Issues: 7/24/15 – 8/6/15

1. The Consumer Financial Protection Bureau (CFPB) issued a compliance bulletin to provide guidance to assist residential mortgage servicers and sub-servicers in their compliance with the private mortgage insurance (PMI) cancellation and termination provisions of the Homeowners Protection Act of 1998 (HPA). This compliance bulletin explains HPA requirements and describes examples from CFPB’s supervisory experience of PMI cancellation and termination procedures that violate the HPA or create a substantial risk of noncompliance. Many banks run into problems with the aspects of PMI cancellation and termination rules.

Let our former Federal bank examiners review your institution’s practices to ensure you are following the HPA requirements and that there is a strong compliance management system in place to monitor compliance with this Act as well as other rules and regulations.

2. When the concept of unfair, deceptive, or abusive acts or practices (UDAAP) was first introduced, many assumed it would target companies that adopted practices that were either intentionally or willfully misleading. Through various enforcement actions, it has become clear that the standard for UDAAP concerns negligence as well. The latest enforcement under UDAAP against JPMorgan Chase demonstrates that UDAAP claims can be built on activities that are likely more the result of systemic failures rather than any intention to mislead consumers. The allegations behind the CFPB’s enforcement action against JPMorgan were related to credit-card debt that was sold by Chase to collection companies. Some of this debt had been charged off or resolved. Since the bank knew that the purchasers of those debts would attempt to collect on them it was considered an unfair and deceptive act or practice.

Issues involving UDAAP continue to take on more importance and increased scrutiny. Out former Federal bank regulators are able to review your institutions policies and practices and highlight any weaknesses that need enhancements to avoid regulatory action and related fines for non-compliance.