October Featured Business Partner: Hudson Cook, LLP
October’s Featured Business Partner is Hudson Cook, LLP. We asked them a few questions about the state of play in Washington as we move into 2022. Learn more at hudsoncook.com.
What recent developments at the federal regulators should be on the radar for the financial services industry?
CFPB
Despite the delay in confirmation of a new permanent director of the CFPB, Acting Director Dave Uejio has been busy. Several rules affecting the industry – particularly small dollar lenders, debt collectors and mortgage servicers – are taking effect in 2021 and 2022.
The 2021 Mortgage Servicing COVID-19 Final Rule took effect on August 31, requiring most servicers to take certain steps to help homeowners in forbearance find options for repaying their loans. Before January 1, 2022, most servicers cannot start the foreclosure process—except in limited circumstances—without first reaching out to the homeowner. The new rule applies regardless of whether the mortgage is federally backed.
The compliance date for the Payments Provisions of the CFPB’s Final Small Dollar Rule governing payday, vehicle title and certain high-cost installment loans is set for June 13, 2022. While the rule initially required a complicated solvency assessment for each consumer that would have eliminated most small dollar lending nationwide, plus payment notice requirements, the rule was changed after Director Cordray left the Bureau. Provisions that remain intact include a limit on the number of payments a lender can pursue, a requirement to send various consumer notices, compliance management system requirements, and recordkeeping requirements.
Eight years after its introduction, the CFPB’s debt collection rule, Regulation F, will go into effect on November 30, 2021. Reg F may well be the biggest change for the debt collection industry since the inception of the Fair Debt Collection Practices Act (FDCPA) in 1978. Reg F addresses: telephone and electronic (email, text, social media) communications in connection with debt collection, debt validation notice requirements, limits on debt transfers, CRA furnishing, collecting time-barred debts, and disputes. Debt collectors, as well as some creditors and servicers subject to the rule, should be close to finishing updates to their policies and procedures and implementation thereof to comply with Reg F.
FTC
In September, the FTC voted to approve and make public eight new compulsory process resolutions that will guide the agency’s focus over the next ten years. The financial services industry should take note of the agency’s core investigative priorities: (1) Acts or Practices Affecting United States Armed Forces Service Members and Veterans; (2) Acts or Practices Affecting Children; (3) Bias in Algorithms and Biometrics; (4) Deceptive and Manipulative Conduct on the Internet; (5) Repair Restrictions; (6) Abuse of Intellectual Property; (7) Common Directors and Officers and Common Ownership; and (8) Monopolization Offenses. Holly Vedova, Acting Director of the Bureau of Competition (and current nominee for the position), warned the industry that, “. . . the FTC looks forward to aggressively using these resolutions and will not hesitate to take action against illegal conduct to the fullest extent possible under the law.”
Eye on credit reporting
Credit reporting continues to be a hot topic for regulators, consumers, and creditors. According to the CFPB’s Consumer Response Annual Report for 2020, credit and consumer reporting complaints accounted for more than 58% of complaints received. An FTC study on credit report accuracy found that one in four consumers had errors on their credit reports. President Biden has pushed for a public credit reporting agency as part of his job and economic recovery agenda, an effort that we think well-intentioned but substantially misguided. Francis Creighton, President and CEO of the Consumer Data Industry Association (CDIA), warns that overhauling the current credit system would make it difficult for lenders to issue loans.
Please join Hudson Cook for the Credit Reporting Compliance Session at 4:00 pm on Tuesday, October 26 during AFSA’s 2021 Annual Meeting in DC. AFSA has assembled a panel with different roles and perspectives on the overall credit reporting system, including CDIA’s Creighton and Hudson Cook Partner Lisa DeLessio, to share their thoughts about the strengths and weaknesses of the credit reporting system, along with ideas to help make it more understandable and responsive to the needs of its complex array of stakeholders.
October 4th, 2021
