Consumer Compliance Outlook: Second Issue 2019

News from Washington: Regulatory Updates

The Consumer Financial Protection Bureau (Bureau) issues its spring 2019 regulatory agenda. External Link

On May 22, 2019, the Bureau released its spring 2019 regulatory agenda, as part of the spring 2019 Unified Agenda External Link of Federal Regulatory and Deregulatory Actions. The Bureau’s spring 2019 agenda lists the regulatory matters that the agency reasonably anticipates having under consideration from May 1, 2019, to April 30, 2020, including initiatives to implement statutory requirements and to address the potential sunset of statutory and regulatory provisions. It includes:

Certain other Bureau rulemaking activities referenced in its spring 2019 agenda relating to the Fair Debt Collection Practices Act, the Home Mortgage Disclosure Act (HMDA)/Regulation C, and payday, vehicle title, and certain high-cost installment loans, are among the items discussed next.

The Bureau issues a Notice of Proposed Rulemaking (NPR) to implement the Fair Debt Collection Practices Act (FDCPA). External Link

On May 21, 2019, the Bureau published an NPR in the Federal Register to implement the FDCPA. Congress enacted the FDCPA in 1977 in “response to ‘abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.’’’ However, before Congress enacted the Dodd–Frank Act in 2010, the FDCPA prohibited the issuance of implementing regulations. The Dodd–Frank Act amended the statute to provide discretionary rulemaking authority to the Bureau (15 U.S.C. §1692l(d)). To implement the FDCPA, the proposal would, among other things:

The comment period closed on August 19, 2019.

The Bureau seeks public comment under the Regulatory Flexibility Act (RFA) on the economic effect of its overdraft rule on small entities. External Link

On May 15, 2019, the Bureau issued a notice External Link under §610 of the RFA seeking comments on the Regulation E overdraft rule (12 C.F.R. §1005.17). External Link Section 610 of the RFA requires federal administrative agencies to publish a plan for the periodic review of the rules issued by the agency that have a significant economic impact on a substantial number of small entities. Under the plan, the Bureau intends to initiate a §610 review approximately nine years after a rule’s publication and complete each review within 10 years of a rule’s publication in the Federal Register.

In 2009, the Federal Reserve Board (Board) issued the overdraft rule to prohibit financial institutions from imposing overdraft fees for automated teller machine (ATM) and one-time debit card transactions unless their customers opted in for the service after receiving a required disclosure about the terms of the overdraft program. As part of its §610 review of the overdraft rule, the Bureau sought comment on: (1) the nature and extent of the economic effects of the overdraft rule on small entities; (2) how the Bureau could reduce the costs of the rule on small entities; and (3) any other relevant information. The comment period on the overdraft rule closed on July 1, while the comment period of the Bureau’s §610 review plan closed on July 15.

The Federal Reserve Board (Board) issues Supervision and Regulation (SR) Letter 19-6 transmitting a new Federal Financial Institutions Examination Council (FFIEC) policy statement on developing Reports of Examination (ROE). External Link

On March 11, 2019, the Board issued SR Letter 19-6 transmitting the FFIEC’s new Interagency Statement on the Report of Examination, which replaces the 1993 Interagency Policy Statement on the Uniform Core Report of Examination applicable to commercial bank exams. The new policy statement uses a principles-based approach to developing ROEs to better promote consistency while providing supervisors the flexibility to tailor their assessments as appropriate for financial institutions’ sizes, activities, risk profiles, and financial and managerial conditions.

The Bureau proposes to exempt more lenders from HMDA’s data collection and reporting requirements and separately issues an advanced notice of proposed rulemaking (ANPR) seeking feedback on the costs and benefits of reporting the expanded data set required by the Bureau’s rulemaking in 2015 (2015 HMDA Rule). External Link

On May 13, 2019, the Bureau issued a notice of proposal External Link NPR to increase the loan thresholds used to determine when lenders are covered by HMDA and must report data on closed-end loans or open-end lines of credit. The proposal seeks to increase the loan threshold used to determine when a lender must collect and report data on closed-end mortgage loans (in addition to the asset size and geographic criteria) from the current 25 to either 50 or 100 closed-end mortgage loans in each of the two prior years. The Bureau proposes the 50 or 100 loan threshold in the alternative and seeks comment on which threshold, or any higher threshold, would be optimal.

The Bureau finds that increasing the closed-end mortgage threshold to 50 loans would relieve approximately 745 depository institutions from HMDA’s collection and reporting requirements, and increasing it to 100 loans would relieve approximately 1,682 depository institutions of the 4,263 reporters currently covered by HMDA. The proposal would also extend the current reporting threshold for open-end lines of credit, which is currently set at 500 and scheduled to expire on January 1, 2020, until January 1, 2022, and then permanently set the threshold at 200 open-end lines of credit after that date. The Bureau proposes an effective date of January 1, 2020.

The ANPR solicits information on whether to make changes to data points added or revised by the Bureau’s 2015 HMDA Rule. The Bureau seeks this feedback to confirm, in part, that the data requirements established by the 2015 HMDA rule “appropriately balance the benefits and burdens associated with data reporting.” This information will help the Bureau determine whether the burden associated with the collection and reporting of certain data is justified by the benefit of having such data. The ANPR also seeks comment on whether to continue coverage and reporting of business or commercial-purpose loans made to a nonnatural person (for example, a corporation, partnership, or trust) and secured by a multifamily dwelling.

The Bureau seeks comment on the following new data points added by the Dodd–Frank Act:

The Bureau also seeks comment on data points added pursuant to its discretional authority:

Last, the Bureau sought comment on the revised data points requiring additional information:

The comment period for the NPR closed on June 12, 2019, while the comment period for the ANPR closed on July 8, 2019.

The Bureau issued a rulemaking proposal to eliminate the mandatory underwriting provisions of its final rule regulating payday and other certain loans (payday loan rule) and a final rule to delay the compliance date of certain provisions of the payday rule. External Link

On February 14, 2019, the Bureau issued a rulemaking proposal External Link to rescind the mandatory underwriting provisions of its November 2017 final rule governing payday, vehicle title, and certain high-cost installment loans (payday loan rule). Under the mandatory underwriting provisions, making a covered short-term or longer-term balloon payment loan, including a payday or vehicle title loan, without reasonably determining that a consumer has the ability to repay the loan would be considered an unfair and abusive practice. The comment period closed on May 15, 2019.

Because the Bureau is reconsidering the payday loan rule, it also issued a final rule to delay the compliance date for the mandatory underwriting provisions from August 19, 2019, to November 19, 2020. The Bureau clarified that the delay would not affect the payment provisions of the payday loan rule, which are still subject to the August 19, 2019, compliance date. Under these provisions, after a lender makes two consecutive withdrawal attempts from the consumer’s financial account to repay the loan, and those attempts fail, the lender cannot attempt another withdrawal from the same account unless the lender obtains the consumer’s new and specific authorization to make further withdrawals. However, the payday loan rule is the subject of ongoing litigation, and a district court has stayed the compliance date for the entire rule until further action by the court.