[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Notices]
[Pages 9746-9750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03301]


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BUREAU OF CONSUMER FINANCIAL PROTECTION


Supervisory Highlights, Issue 21 (Winter 2020)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Supervisory highlights.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing its twenty first edition of Supervisory Highlights. In this 
issue of Supervisory Highlights, we report examination findings in the 
areas of debt collection, mortgage servicing, payday lending and 
student loan servicing that were completed between April 2019 and 
August 2019. The report does not impose any new or different legal 
requirements, and all violations described in the report are based only 
on those specific facts and circumstances noted during those 
examinations.

DATES: The Bureau released this edition of the Supervisory Highlights 
on its website on February 14, 2020.

FOR FURTHER INFORMATION CONTACT: Jaclyn Sellers, Counsel, at (202) 435-
7449. If you require this document in an alternative electronic format, 
please contact [email protected].

SUPPLEMENTARY INFORMATION: 

1. Introduction

    The Bureau of Consumer Financial Protection (Bureau) is committed 
to a consumer financial marketplace that is free, innovative, 
competitive, and transparent, where the rights of all parties are 
protected by the rule of law, and where consumers are free to choose 
the products and services that best fit their individual needs. To 
effectively accomplish this, the Bureau remains committed to sharing 
with the public key findings from its supervisory work to help industry 
limit risks to consumers and comply with Federal consumer financial 
law.
    The findings included in this report cover examinations in the 
areas of debt collection, mortgage servicing, payday lending, and 
student loan servicing that were completed between April 2019 and 
August 2019.
    It is important to keep in mind that institutions are subject only 
to the requirements of relevant laws and regulations. The information 
contained in Supervisory Highlights is disseminated to help 
institutions better understand how the Bureau examines institutions for 
compliance with those requirements. This document does not impose any 
new or different legal requirements. In addition, the legal violations 
described in this and previous issues of Supervisory Highlights are 
based on the particular facts and circumstances reviewed by the Bureau 
as part of its examinations. A conclusion that a legal violation exists 
on the facts and circumstances described here may not lead to such a 
finding under different facts and circumstances.
    We invite readers with questions or comments about the findings and 
legal analysis reported in Supervisory Highlights to contact us at 
[email protected].

2. Supervisory Observations

    Recent supervisory observations are reported in the area of debt 
collection, mortgage servicing, payday lending, and student loan 
servicing.

2.1 Debt Collection

    The Bureau's Supervision program has the authority to examine 
certain entities that engage in consumer debt collection activities, 
including nonbanks that are larger participants in the consumer debt 
collection market. Recent examinations of larger participant debt 
collectors identified one or more violations of the Fair Debt 
Collection Practices Act (FDCPA).
2.1.1 Failure To Disclose in Subsequent Communications That 
Communication is From a Debt Collector
    Section 807 of the FDCPA prohibits the use of any false, deceptive, 
or misleading representation or means in the collection of any debt.\1\ 
Specifically, section 807(11) of the FDCPA prohibits a collector from 
failing to disclose in communications subsequent to the initial written 
communication that the communication is from a debt collector.\2\ 
Examiners found that one or more debt collectors failed to disclose in 
their subsequent communications that those communications were from a 
debt collector. In response to these findings, the collectors revised 
their section 807(11) policies and procedures, monitoring and/or audit 
programs, and training.
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    \1\ 15 U.S.C. 1692(e).
    \2\ 15 U.S.C. 1692(e)(11).
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2.1.2 Failure To Send Notice of Debt
    Section 809(a) of the FDCPA requires that within five days after 
the initial communication with the consumer in connection with the 
collection of any debt, a debt collector must send a written validation 
notice unless the information is contained in the initial communication 
or the consumer has paid the debt.\3\ Examiners found that one or more 
debt collectors failed to send the prescribed validation notice within 
five days of the initial communication with the consumer regarding 
collection of the debt, where required. In response to these findings, 
the collectors revised their section 807(11) policies and procedures, 
monitoring and/or audit programs, and training.
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    \3\ 15 U.S.C. 1692(g)(a).
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2.2 Mortgage Servicing

    Bureau examinations continue to focus on the loss mitigation 
process. Examiners determined that one or more servicers violated 
Regulation X, by failing to provide certain required loss mitigation 
notices, providing incomplete notices, or not providing notices within 
the time required by the regulation.\4\ These violations were caused, 
in part, by servicers' efforts to handle an unexpected surge in 
applications due to natural disasters and impacted both borrowers in 
disaster areas and those outside of disaster areas. The Bureau had 
issued a statement regarding supervisory practices during natural 
disasters.\5\ The statement described flexibility in Regulation X that 
may make it easier for servicers to assist borrowers affected by 
natural disasters or emergencies but does not lift any requirements. 
However, since the violations set forth below occurred during a time 
period where the servicers were making specific efforts to address 
borrower needs arising from natural disasters, Supervision did not 
issue any matters requiring attention setting forth needed corrective 
actions by servicers. Instead, servicers developed plans to enhance 
staffing capacity in response to any future disaster-related increases 
in loss mitigation applications.
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    \4\ 12 CFR 1024.41.
    \5\ Statement on Supervisory Practices Regarding Financial 
Institutions and Consumers Affected by a Major Disaster or 
Emergency--September 2018, available at https://www.consumerfinance.gov/policy-compliance/guidance/supervisory-guidance/statement-supervisory-practices-regarding-financial-institutions-and-consumers-affected-major-disaster-or-emergency/.

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[[Page 9747]]

2.2.1 Loss Mitigation Notice Violations
    Regulation X generally requires servicers to send borrowers a 
written notice acknowledging receipt of a loss mitigation application 
and notifying borrowers of the servicers' determination that the loss 
mitigation application is either complete or incomplete within 5 days 
(excluding legal public holidays, Saturdays, and Sundays) after 
receiving a loss mitigation application. The notice includes a 
statement that the borrower should consider contacting servicers of any 
other mortgage loans secured by the same property to discuss available 
loss mitigation options.\6\
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    \6\ 12 CFR 1024.41(b)(2)(i)(B). This notice is only required if 
the servicer receives a loss mitigation application 45 days or more 
before a foreclosure sale.
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    In one or more examinations, examiners found that the servicers 
violated Regulation X by failing to notify borrowers in writing that an 
application was either complete or incomplete within 5 days of 
receiving the application.
    Regulation X also generally requires servicers to provide consumers 
with a written notice stating the servicers' determination of which 
loss mitigation options, if any, it will offer the consumer within 30 
days of receiving the complete loss mitigation application.\7\
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    \7\ 12 CFR 1024.41(c)(1). This notice is only required if the 
servicer receives a loss mitigation application more than 37 days 
before a foreclosure sale.
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    In one or more examinations, examiners found that the servicers 
violated Regulation X because the servicers did not provide a written 
notice stating the servicers' determination of available loss 
mitigation options within 30 days of receiving the complete loss 
mitigation application.
    Regulation X requires servicers to exercise reasonable diligence in 
obtaining documents and information to complete a loss mitigation 
application that servicers receive.\8\ In addition, Regulation X 
generally requires servicers to evaluate the borrower for all loss 
mitigation options available to the borrower and prohibits servicers 
from evading those requirements by offering a loss mitigation option 
based upon evaluation of an incomplete loss mitigation application, 
unless an exception exists.\9\ As an exception to that requirement, 
Regulation X permits servicers to offer a short-term loss mitigation 
option (short-term payment forbearance program or short-term repayment 
plan) to a borrower based upon an evaluation of an incomplete loss 
mitigation application. Regulation X requires servicers that do so to 
promptly provide a written notice stating that the offered program or 
plan is based on an evaluation of an incomplete application, that other 
loss mitigation options may be available, and that the borrower has the 
option to submit a complete loss mitigation application to receive an 
evaluation for all available loss mitigation options regardless of 
whether the borrower accepts the plan.\10\
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    \8\ 12 CFR 1024.41(b)(1).
    \9\ 12 CFR 1024.41(c).
    \10\ 12 CFR 1024.41(c)(2)(iii).
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    In one or more examinations, servicers automatically granted short-
term payment forbearances if a borrower in a disaster area experienced 
home damage or incurred a loss of income from the disaster. Borrowers 
did not submit any form of written application to receive the 
forbearance. Rather, borrowers spoke with the servicers over the phone 
about their financial concerns due to the disaster and received the 
forbearances based on these conversations. The borrowers' conversations 
with the servicers constituted loss mitigation applications under 
Regulation X.\11\ Examiners found that the servicers violated 
Regulation X by not providing a written notice with the required 
consumer information when it offered borrowers the short-term payment 
forbearance program based upon evaluation of an incomplete loss 
mitigation application. This consumer information is an important 
element of the rule because some borrowers may be experiencing a 
hardship where a longer-term loss mitigation option is more 
appropriate.\12\
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    \11\ Under Regulation X, a loss mitigation application ``means 
an oral or written request for a loss mitigation option that is 
accompanied by any information required by a servicer for evaluation 
for a loss mitigation option.'' 12 CFR 1024.31.
    \12\ Amendments to the 2013 Mortgage Rules Under the RESPA 
(Regulation X) and the TILA (Regulation Z), 81 FR 72247 (October 19, 
2016).
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    As noted above, because the violations were caused, in part, by 
servicers' efforts to handle an unexpected surge in applications due to 
natural disasters and occurred during a time period where the servicers 
were making specific efforts to address borrower needs arising from the 
natural disasters, examiners did not issue any matters requiring 
attention for these violations. Instead, servicers developed plans to 
enhance staffing capacity in response to any future disaster-related 
increases in loss mitigation applications.

2.3 Payday Lending

    The Bureau's Supervision program covers entities that offer or 
provide payday loans. Examinations of these lenders identified 
violations of Regulation Z, Regulation B, and unfair acts or practices.
2.3.1 Failing To Apply Borrowers' Payments to Their Loans
    Under the prohibition against unfair acts or practices in sections 
1031 and 1036 of the CFPA,\13\ an act or practice is unfair when: (1) 
It causes or is likely to cause substantial injury to consumers; (2) 
which is not reasonably avoidable by consumers; and (3) such 
substantial injury is not outweighed by countervailing benefits to 
consumers or to competition.\14\
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    \13\ 12 U.S.C. 5531, 5536.
    \14\ 12 U.S.C. 5531(c)(1).
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    One or more lenders engaged in unfair acts or practices in 
violation of the CFPA when borrowers paid more than they owed because 
the lenders failed to apply borrower payments to their loans in certain 
circumstances, lacked systems to detect the unapplied payments, and 
treated borrowers' accounts as delinquent.
    Examiners determined that under certain circumstances, borrowers' 
payments were being processed by lenders but not applied to the 
borrowers' loan balances in the lenders' systems. The lenders continued 
to assess interest as if the consumers had not made a payment and 
incorrectly treated affected consumers as delinquent. A number of 
consumers ultimately paid more than they owed. The lenders lacked 
systems to confirm that borrower payments were applied to their loan 
balances. Consumers who viewed their accounts online were given 
incorrect information that did not account for the unapplied payment.
    The borrowers' overpayments constituted substantial injury. The 
injury was not reasonably avoidable by the borrowers because the 
lenders conveyed incorrect information to them about their accounts and 
failed to timely follow up on borrowers' complaints. The injury was not 
outweighed by countervailing benefits to consumers or competition 
because the cost to lenders to implement appropriate accounting 
controls to reconcile payments against borrowers' loans would have been 
reasonable; because any cost-savings associated with not investing in 
such controls placed the lenders' competitors at a competitive 
disadvantage; and because the lenders' practices conferred no benefits 
to consumers. The Bureau is

[[Page 9748]]

reviewing the lenders' remedial and corrective actions.
2.3.2 Inaccurate Disclosure of Annual Percentage Rate
    Regulation Z requires a creditor to disclose the annual percentage 
rate (APR) for certain transactions.\15\ The APR disclosed to a 
consumer will generally be considered accurate if it is not more than 
\1/8\ of 1 percentage point above or below the APR calculated as 
Regulation Z requires.\16\
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    \15\ 12 CFR 1026.18(e).
    \16\ 12 CFR 1026.22(a)(2).
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    Examiners found that one or more lenders relied on employees to 
calculate APRs when their loan origination systems were unavailable. 
Because of errors in calculating the term of the loan, the APRs were 
sometimes misstated to consumers, thereby violating Regulation Z. 
Examiners found that the errors resulted from weaknesses in employee 
training by the lenders. In response to these findings, such training 
will be improved.
2.3.3 Failure To Include a Fee in Calculation of Finance Charge and 
Annual Percentage Rate
    In addition to requiring disclosure of the APR,\17\ Regulation Z 
requires a creditor to disclose the finance charge associated with 
certain transactions.\18\ A finance charge is ``the cost of consumer 
credit as a dollar amount'' and includes any charge imposed ``as an 
incident to or condition of the extension of credit.'' \19\
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    \17\ 12 CFR 1026.18(e).
    \18\ 12 CFR 1026.18(d).
    \19\ 12 CFR 1026.4(a).
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    Examiners found that one or more lenders charged a loan renewal fee 
to consumers who were refinancing delinquent loans. The fee was not 
stated in the outstanding loan agreement, and therefore constituted a 
change in terms. Because the lenders conditioned the new loans on 
payment of the fee, the fee was a finance charge associated with the 
new loan that required new transaction disclosures under Regulation Z. 
However, the lenders did not include the renewal fee in their 
calculation of the finance charge or APR. Because the fee was omitted 
from the calculations, the finance charge and APR that the lenders 
disclosed to consumers violated Regulation Z. Examiners found that a 
lack of detailed policies and procedures for loan origination and a 
lack of training on the requirements of Federal consumer financial laws 
contributed to the violations of Regulation Z. As a result of these 
findings, the lenders strengthened their policies and procedures and 
training program. Additionally, the lenders refunded the fee to 
consumers and explained the reason for the refund.
2.3.4 Failure To Retain Evidence of Compliance With Regulation Z
    With certain exceptions, a creditor is generally required to retain 
evidence of compliance with the requirements of Regulation Z for two 
years.\20\ One or more lenders were unable to provide examiners with 
evidence of compliance with Regulation Z. While payment histories and 
loan data were maintained in the systems of record, other loan 
origination documentation was not consistently maintained, and evidence 
of compliance with Truth-in-Lending disclosure requirements could not 
be provided. Examiners found that this violated the record-retention 
requirements of Regulation Z. The violation resulted in part from a 
lack of training and of detailed policies and procedures related to 
record retention. In response to these findings, the lenders developed 
and implemented a record-retention program to support compliance with 
the requirements of Regulation Z.
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    \20\ 12 CFR 1026.25(a).
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2.3.5 Adverse Action Notices That Failed To Disclose the Principal 
Reason(s) for the Adverse Action
    Regulation B requires a creditor to provide a consumer a notice 
after taking certain adverse actions.\21\ Among the required content of 
the notice is a statement of the specific reason or reasons for the 
action taken,\22\ which ``must be specific and indicate the principal 
reason(s) for the adverse action.'' \23\ Examiners found that one or 
more lenders provided consumers with adverse action notices that stated 
one or more incorrect principal reasons for taking an adverse action. 
For example, lenders sent numerous incorrect notices due to a coding 
system error. Examiners found that the relevant adverse action notices 
violated Regulation B. As a result of this finding, the lenders sent 
corrected adverse action notices to consumers and made changes to the 
systems used to generate the notices.
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    \21\ 12 CFR 1002.9(a).
    \22\ 12 CFR 1002.9(a)(2)(i).
    \23\ 12 CFR 1002.9(b)(2).
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2.3.6 Unfair Imposition of Unauthorized and Undisclosed Fee
    Under the prohibition against unfair acts or practices in sections 
1031 and 1036 of the CFPA,\24\ an act or practice is unfair when: (1) 
It causes or is likely to cause substantial injury to consumers; (2) 
which is not reasonably avoidable by consumers; and (3) such 
substantial injury is not outweighed by countervailing benefits to 
consumers or to competition.\25\
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    \24\ 12 U.S.C. 5531, 5536.
    \25\ 12 U.S.C. 5531(c)(1).
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    Examiners found that one or more lenders assessed consumers a 
particular fee as a condition of paying or settling a delinquent loan. 
The fee was not authorized by the lenders' loan contract, which stated 
that the expense at issue would be paid by the lender. During the 
payment or settlement process, the fee was either incorrectly described 
as a court cost (which the contract would have required the consumer to 
pay) or not disclosed at all.
    Examiners found that imposition of the fee was an unfair act or 
practice. The fee caused or was likely to cause substantial injury to 
consumers who were required to pay extra in order to pay or settle 
their debts. The consumers could not reasonably avoid the fee. Often, 
consumers were not provided with an itemization of the amount due while 
paying or settling their debts. If they were provided with an 
itemization, the fee was inaccurately described as a court cost. The 
substantial injury was not outweighed by countervailing benefits 
because there were no benefits to consumers or to competition. 
Examiners found that the practice resulted in part from a lack of 
monitoring and/or auditing of the lenders' collection practices.
    As a result of this finding, the lenders made changes to their 
compliance management system and refunded the fee to affected 
consumers.

2.4 Student Loan Servicing

    The Bureau continues to examine student loan servicing activities, 
primarily to assess whether entities have engaged in any unfair, 
deceptive or abusive acts or practices prohibited by the CFPA. 
Examiners found one or more student loan servicers engaged in an unfair 
practice related to monthly payment calculations.
2.4.1 Inaccurate Monthly Payment Amounts After Servicing Transfer
    Under the prohibition against unfair acts or practices in sections 
1031 and 1036 of the CFPA,\26\ an act or practice is unfair when: (1) 
It causes or is likely to cause substantial injury to consumers; (2) 
which is not reasonably avoidable by consumers; and (3) the substantial 
injury is not outweighed by

[[Page 9749]]

countervailing benefits to consumers or to competition.\27\
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    \26\ 12 U.S.C. 5531, 5536.
    \27\ 12 U.S.C. 5531(c)(1).
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    In one or more examinations, examiners found that servicers engaged 
in an unfair act or practice by stating monthly amounts due in periodic 
statements that exceeded those authorized by consumers' loan notes, 
where either the servicers automatically debited incorrect amounts or, 
for borrowers not enrolled in auto debit, the borrowers submitted an 
inflated payment or were assessed a late fee for failing to submit the 
inflated payment by the due date. More specifically, during the 
transfer of private loans between servicing systems, data mapping 
errors led to inaccurate calculations of monthly payment amounts. The 
servicers sent periodic statements with the inaccurate monthly payment 
amounts to consumers, and, for some consumers enrolled in automatic 
debit, debited the inaccurate amounts from their accounts. Consumers 
not enrolled in auto debit may have submitted an inflated payment or 
were assessed late fees for failing to do so by the due date.
    The conduct caused or was likely to cause substantial injury to 
consumers for one of three reasons: (1) Because incorrect amounts were 
automatically debited from their accounts, (2) because they made 
payments based on the incorrect periodic statement amounts, or (3) 
because they incurred late fees when they did not pay the incorrect 
amounts. Consumers could not reasonably have avoided the injury because 
they reasonably relied on the servicers' calculations and 
representations in the periodic statements. The injury from this 
activity is not outweighed by the countervailing benefits to consumers 
or competition. For example, the benefits to consumers or competition 
from avoiding the cost of better monitoring of servicing transfers 
between entities would not outweigh the substantial injury to 
consumers. In response to the examination findings, the servicers have 
conducted reviews to identify and remediate affected consumers. 
Servicers also implemented new processes to mitigate data mapping 
errors.

3. Supervision Program Developments

3.1 Recent Bureau Rules and Guidance

3.1.1 Federal Regulators Issue Joint Statement on the Use of 
Alternative Data in Credit Underwriting
    On December 3, 2019, five Federal financial regulatory agencies 
issued a joint statement on the use of alternative data in underwriting 
by banks, credit unions, and non-bank financial firms.
    The statement from the Bureau, the Federal Reserve Board, the 
Federal Deposit Insurance Corporation, the Office of the Comptroller of 
the Currency, and the National Credit Union Administration notes the 
benefits that using alternative data may provide to consumers, such as 
expanding access to credit and enabling consumers to obtain additional 
products and more favorable pricing and terms. The statement explains 
that a well-designed compliance management program provides for a 
thorough analysis of relevant consumer protection laws and regulations 
to ensure firms understand the opportunities, risks, and compliance 
requirements before using alternative data.
    Alternative data includes information not typically found in 
consumers' credit reports or customarily provided by consumers when 
applying for credit. Alternative data include cash flow data derived 
from consumers' bank account records. The agencies recognize that use 
of alternative data in a manner consistent with applicable consumer 
protection laws may improve the speed and accuracy of credit decisions 
and may help firms evaluate the creditworthiness of consumers who 
currently may not obtain credit in the mainstream credit system.
3.1.2 CFPB Issues Interpretive Rule on Screening and Training 
Requirements for Mortgage Loan Originators
    On November 15, 2019, the Bureau issued an interpretive rule 
clarifying screening and training requirements for financial 
institutions that employ loan originators with temporary authority. The 
rule went into effect on November 24, 2019.
    The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 
(SAFE Act) established a national system for licensing and registration 
of loan originators. It contemplates two categories of loan 
originators, those working for state-licensed mortgage companies and 
those working for Federally-regulated financial institutions. Section 
106 of the Economic Growth, Regulatory Relief, and Consumer Protection 
Act (EGRRCPA) establishes a third category, loan originators with 
temporary authority to originate loans. Loan originators with temporary 
authority are loan originators who were previously registered or 
licensed, are employed by a state-licensed mortgage company, are 
applying for a new state loan originator license, and meet other 
criteria specified in the statute. Loan originators with temporary 
authority may act as a loan originator for a temporary period of time, 
as specified in the statute, in a state while that state considers 
their application for a loan originator license.
    All loan originators must satisfy certain criminal history 
screening and training requirements. Under the SAFE Act, before issuing 
a state loan originator license, states must ensure that the individual 
never has had a loan originator license revoked; has not been convicted 
of enumerated felonies within specified timeframes; demonstrated 
financial responsibility, character, and fitness; completed 20 hours of 
pre-licensing education; and passed state specific testing 
requirements. Under Regulation Z, which implements the Truth in Lending 
Act, employers must perform substantially the same screening of certain 
loan originators before permitting them to originate loans. Employers 
must also ensure certain training for those loan originators. The 
interpretive rule clarifies that the employer is not required to 
conduct the screening and ensure the training of loan originators with 
temporary authority. The state will perform the screening and training 
as part of its review of the individual's application for a state loan 
originator license.
3.1.3 Agencies Announce Dollar Thresholds in Regulation Z and M for 
Exempt Consumer Credit and Leasing Transactions
    On October 31, 2019, the Bureau and Federal Reserve Board announced 
the dollar thresholds in Regulation Z (Truth in Lending) and Regulation 
M (Consumer Leasing) that will apply for determining exempt consumer 
credit and lease transactions in 2020. These thresholds are set 
pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (Dodd-Frank Act) amendments to the Truth in Lending Act and the 
Consumer Leasing Act that require adjusting these thresholds annually 
based on the annual percentage increase in the Consumer Price Index for 
Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual 
percentage increase in the CPI-W, the Federal Reserve Board and the 
Bureau will not adjust this exemption threshold from the prior year. 
However, in years following a year in which the exemption threshold was 
not adjusted, the threshold is calculated by applying the annual 
percentage change in CPI-W to the dollar amount that would have 
resulted, after rounding, if the decreases and any subsequent increases 
in the CPI-W had been taken into account. Transactions at or below the 
thresholds

[[Page 9750]]

are subject to the protections of the regulations.
    Based on the annual percentage increase in the CPI-W as of June 1, 
2019, the protections of the Truth in Lending Act and the Consumer 
Leasing Act generally will apply to consumer credit transactions and 
consumer leases of $58,300 or less in 2020. However, private education 
loan and loans secured by real property (such as mortgages) are subject 
to the Truth in Lending Act regardless of the amount of the loan.
    Although the Dodd-Frank Act generally transferred rulemaking 
authority under the Truth in Lending Act and the Consumer Leasing Act 
to the Bureau, the Federal Reserve Board retains authority to issue 
rules for certain motor vehicle dealers. Therefore, the agencies issued 
the notice jointly.
3.1.4 Agencies Announce Threshold for Smaller Loan Exemption From 
Appraisal Requirements for Higher-Priced Mortgage Loans
    On October 31, 2019, the Bureau, the Federal Reserve Board, and the 
Office of the Comptroller of the Currency announced that the threshold 
for exempting loans from special appraisal requirements for higher-
priced mortgage loans during 2020 will increase from $26,700 to 
$27,200.
    The threshold amount went into effect on January 1, 2020, and is 
based on the annual percentage increase in the CPI-W as of June 1, 
2019.
    The Dodd-Frank Act amended the Truth in Lending Act to add special 
appraisal requirements for higher-priced mortgage loans, including a 
requirement that creditors obtain a written appraisal based on a 
physical visit to the home's interior before making a higher-priced 
mortgage loan. The rules implementing these requirements contain an 
exemption for loans of $25,000 or less and also provide that the 
exemption threshold will be adjusted annually to reflect increases in 
the CPI-W. If there is no annual percentage increase in the CPI-W, the 
agencies will not adjust this exemption threshold from the prior year. 
However, in years following a year in which the exemption threshold was 
not adjusted, the threshold is calculated by applying the annual 
percentage change in CPI-W to the dollar amount that would have 
resulted, after rounding, if the decreases and any subsequent increases 
in the CPI-W had been taken into account.
3.1.5 CFPB Issues Final HMDA Rule To Provide Relief to Smaller 
Institutions
    On October 10, 2019, the Bureau issued a rule which finalizes 
certain aspects of its May 2019 Notice of Proposed Rulemaking under the 
Home Mortgage Disclosure Act (HMDA). It extends for two years the 
current temporary threshold for collecting and reporting data about 
open-end lines of credit under HMDA. The rule also clarifies partial 
exemptions from certain HMDA requirements which Congress added in 
EGRRCPA.
    For open-end lines of credit, the rule extends for another two 
years, until January 1, 2022, the current temporary coverage threshold 
of 500 open-end lines of credit. For data collection years 2020 and 
2021, financial institutions that originated fewer than 500 open-end 
lines of credit in either of the two preceding calendar years will not 
need to collect and report data with respect to open-end lines of 
credit.
    For the partial exemptions under the EGRRCPA, the rule incorporates 
into Regulation C the clarifications from the Bureau's August 2018 
interpretive and procedural rule. This final rule further effectuates 
the burden relief for smaller lenders provided by the EGRRCPA by 
addressing certain issues relating to the partial exemptions that the 
August 2018 rule did not address.
    This rule finalizes the above aspects of the May 2019 Notice of 
Proposed Rulemaking, which also proposed raising the permanent coverage 
thresholds for closed-end mortgage loans and open-end lines of credit. 
On July 31, 2019, the Bureau reopened the comment period until October 
15, 2019 for aspects of the May 2019 Notice of Proposed Rulemaking 
related to raising the permanent coverage thresholds. The Bureau 
intends to issue a separate final rule in 2020 addressing these 
thresholds.

4. Remedial Actions

4.1 Public Enforcement Actions

Maxitransfers Corporation
    On August 27, 2019, the Bureau announced a settlement with 
Maxitransfers Corporation (Maxi), which provides remittance transfer 
services that allow consumers to send money overseas electronically. 
This was the Bureau's first action alleging violations of the 
``Remittance Transfer Rule'' of the Electronic Fund Transfer Act 
(EFTA). From October 2013 until May 2017, Maxi sent approximately 14.5 
million remittance transfers for U.S. consumers. The Bureau found that 
Maxi failed to provide certain consumer protection disclosures and did 
not maintain all of the policies and procedures required under the 
Remittance Transfer Rule. Maxi also violated the CFPA by stating to 
consumers that it was not responsible for errors made by its third-
party payment agents when in fact under the Remittance Transfer Rule, a 
provider is liable for any violation by an agent when such agent acts 
for the provider. The consent order required Maxi to pay a civil money 
penalty of $500,000 and prohibited Maxi from stating that it is not 
responsible for the acts of its agents. The consent order also required 
Maxi to take steps to improve its compliance management to prevent 
future violations of the CFPA, EFTA, and the Remittance Transfer Rule.

5. Conclusion

    The Bureau will continue to publish Supervisory Highlights to aid 
Bureau-supervised entities in their efforts to comply with Federal 
consumer financial law. The report shares information regarding general 
supervisory and examination findings (without identifying specific 
institutions, except in the case of public enforcement actions), 
communicates operational changes to the program, and provides a 
convenient and easily accessible resource for information on the 
Bureau's guidance documents.

    Dated: February 10, 2020.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2020-03301 Filed 2-19-20; 8:45 am]
 BILLING CODE 4810-AM-P