Risk & Regulation Report - March 8
Risk Management Solutions Group
RMSG provides risk, regulatory compliance, data analytics, and credit consulting services to financial institutions.
The March 8 edition of the Risk & Regulation Report summarizes the most significant developments in risk management, regulatory compliance, and cybersecurity affecting financial institutions.
Here are the latest happenings:
CFPB/FTC Submit Amicus Brief Against Illegal Mortgage Fees
On February 27, 2024, the CFPB announced its collaboration with the Federal Trade Commission in submitting an amicus brief to the U.S. Court of Appeals for the Eleventh Circuit in the case of Glover and Booze v. Ocwen Loan Servicing, LLC. This legal action addresses Ocwen's practice of imposing fees for online or telephone payments that are not stipulated in the original debt agreement nor authorized by law. Glover and Booze, having successfully challenged these fees in a lower court, face Ocwen's appeal. The joint brief by the FTC and CFPB supports the plaintiffs, advocating for the appellate court to uphold the lower court's decision against the unlawful fee practice.
For more information, visit: https://www.consumerfinance.gov/about-us/blog/unlawful-fees-in-the-mortgage-market/
1071 Compliance Costs Survey Reveals High Implementation Expenses
On February 26, 2024, a recent American Bankers Association (ABA) survey highlighted the significant costs associated with implementing section 1071 of the Dodd-Frank Act*, increasing the data reporting requirements for banks from 13 to 81 fields. Contrary to the CFPB's initial cost estimates of $44,800 to $77,800 for system development and process implementation, banks have reported one-time costs ranging from $112,685 to $7,474,186, with ongoing compliance costs between $71,944 and $2,010,125. These figures substantially exceed the CFPB's projections of $8,349 to $278,618, especially impacting smaller banks disproportionately. The discrepancy in cost estimates arises from the CFPB's survey, which focuses only on the one-time costs for reporting the originally mandated 13 data points.
For more information, visit: https://bankingjournal.aba.com/2024/02/the-true-cost-of-too-much-data/
*The implementation of the 1071 rule is on hold due to a nationwide injunction, awaiting a Supreme Court decision on the constitutionality of the CFPB's funding structure.
CFPB Orders Supervision for Installment Lender World Acceptance Corporation
On February 23, 2024, the CFPB issued a supervisory designation order to World Acceptance Corporation, marking the first time the Bureau has done so in a contested case. This decision follows the CFPB's determination that the installment lender meets the criteria for federal supervision. The process involved issuing a notice to World Acceptance Corporation, which had the option to consent to or contest the supervision. The CFPB's action is based on consumer complaints and other risk indicators but does not imply any wrongdoing by the company.
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For more information, visit: https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-federal-supervision-for-installment-lender-following-contested-designation/
Bureau Proposes Limiting Overdraft Fees at Very Large Banks
On February 23, 2024, the CFPB officially published its proposal to regulate overdraft fees at very large financial institutions. Detailed in the Federal Register [89 FR 13852], the proposed rule aims to address and potentially limit these banks' overdraft lending practices. Stakeholders and the public are invited to submit their comments on the proposal by April 1, 2024.
For more information, visit: https://www.federalregister.gov/documents/2024/02/23/2024-01095/overdraft-lending-very-large-financial-institutions
FinCEN Proposes Renewal of Information Collection Requirements
On February 26, 2024, FinCEN announced its intention to renew existing information collection requirements through two recent publications in the Federal Register without implementing any changes. On February 23, FinCEN sought to extend its authority on geographic targeting orders (GTOs) [89 FR 13802], crucial for the ongoing renewal of GTOs amidst deliberations on mandating nationwide Real Estate Reports for non-financed residential real estate transfers. Public comments for this notice are requested by April 23, 2024. Subsequently, on February 26, FinCEN proposed the continued enforcement of beneficial ownership requirements for legal entity customers [89 FR 14148] as outlined in 31 CFR 1010.230. This measure ensures banks maintain the practice of obtaining beneficial ownership certifications from entity customers until potential amendments are finalized, anticipated by the end of 2024. Stakeholders are invited to comment on this proposal by April 26, 2024.
For more information, visit: https://www.federalregister.gov/documents/2024/02/23/2024-03681/agency-information-collection-activities-proposed-renewal-comment-request-renewal-without-change-of
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