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Monday, January 26, 2015

CFPB Takes Action Against Large Banks for Illegal Mortgage Kickbacks

By Outside Counsel, Chrys D. Lemon, McIntyre & Lemon, PLLC

The CFPB took action against two large banks and their employees for participating in an allegedly illegal marketing-services-kickback scheme with a title company.

According to the CFPB, the title company “gave the banks’ loan officers cash, marketing materials, and consumer information in exchange for business referrals. The proposed consent orders, filed in federal court, would require $24 million in civil penalties from [one of the banks], $600,000 in civil penalties from [from the other bank], and $11.1 million in redress to consumers whose loans were involved in this scheme.”

The title company “was a Maryland-based title company that offered real-estate-closing services from 2005 until it went out of business in April 2014. As part of the marketing-services-kickback scheme, [the title company] offered loan officers valuable services to increase the amount of loan business generated. . . . The services the company offered included purchasing, analyzing, and providing data on consumers and creating letters with the banks’ logos that the company had printed, folded, stuffed into envelopes, and mailed. In return, the banks’ loan officers would . . . [refer] homebuyers to the company for closing services. This scheme was especially profitable for the loan officers, who generally are paid by commission.”

The CFPB found this “marketing-services-kickback scheme [to be a violation of] the Real Estate Settlement Procedures Act (RESPA), which prohibits giving a ‘fee, kickback, or thing of value’ in exchange for a referral of business related to a real-estate-settlement service.”

Read the CFPB Press Release, Complaint, Consent Order 1, Consent Order 2.

Friday, January 23, 2015

This Week at the CFPB

A summary of this week's news about the CFPB from the ABIA and ABA Dodd-Frank Tracker:
The ABIA has a Task Force of members that work on issues related to the CFPB's regulation of insurance products. If you are an ABIA member and would like to learn more about ABIA's work with CFPB to educate them about the bank-insurance industry or join our CFPB Task Force, please contact us and visit our website.

Thursday, January 22, 2015

ABIA Hosts Compliance Webinar on Federal Bank-Insurance Sales Regulation

Yesterday, the American Bankers Insurance Association hosted a Compliance Webinar on Federal Bank-Insurance Sales Regulation.  The webinar focused on bank-insurance sales regulation and discussed a thorough primer on the rules for selling insurance or annuities at a bank or on behalf of a bank — when the rules apply, and how (compensation, separation, disclosures, customer acknowledgment).

View the presentation and FAQ.

Download the recording.

Want to learn more about upcoming ABIA Compliance Webinars and Discussion Groups? Contact us and view our website.

CFPB Finalizes Changes to “Know Before You Owe” Mortgage Rules

By Outside Counsel, Chrys D. Lemon, McIntyre & Lemon, PLLC

The CFPB finalized two minor modifications to the “Know Before You Owe” mortgage disclosure rules to address, among other things, when consumers will receive updated disclosures after locking in an interest rate.

“For more than 30 years, federal law has generally required that mortgage lenders deliver two different, overlapping disclosures to consumers within three business days after receiving a mortgage application. At the closing stage, federal law again generally requires two forms. All of these forms contain duplicative and sometimes confusing information. . . . In 2013, the CFPB introduced new mortgage disclosure forms that will replace the existing federal forms and help consumers understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.

“Under the [finalized] rule . . . , creditors are required to provide a revised Loan Estimate within three business days after a consumer locks in a floating interest rate. The original rule required creditors to provide the revised Loan Estimate on the date the rate is locked. . . . Allowing three business days for the new Loan Estimate will give creditors enough time to provide new disclosures without having to reduce flexibility that consumers may have today in locking their rates.

“The second change being finalized . . . is a minor addition on the Loan Estimate form for loans that involve new home construction. . . .  Today’s change creates a space on the Loan Estimate form where creditors could include language informing consumers that they may receive a revised Loan Estimate for a construction loan that is expected to take more than 60 days to settle.

“The ‘Know Before You Owe’ mortgage disclosure rule, including the changes finalized today, is effective August 1, 2015.”

Read CFPB Press Release, Final Rule

Wednesday, January 21, 2015

ABA Celebrates 140th Anniversary

To commemorate ABA’s 140th anniversary in 2015, the association has published an interactive timeline documenting key moments in the history of both ABA and banking in the United States. Starting with 1782, the timeline demonstrates how bankers have innovated better ways of keeping deposits safe, giving customers convenient choices and making loans to help people buy homes and grow businesses. It also highlights ABA innovations that have helped banks meet their customers’ needs. View the interactive timeline. To learn more, visit aba.com/140.