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Category Archives: Consumer Financial Protection Act

CFPB Gives Heads Up to Mortgage Servicers

Posted by Michael C. Lueder on Posted in Bureau of Consumer Financial Protection; Compliance; Consumer Financial Protection Act; Consumer Financial Protection Agency; Consumer Financial Protection Bureau; Mortgage Foreclosures; Real Estate Settlement Procedures Act

During the Great Recession courts expressed frustration with sloppy paperwork and borrowers’ inability to get anyone to help them work out problem loans. Many courts refused to allow mortgage foreclosures to proceed because of the perceived mess. The Consumer Financial Protection Bureau just made it clear it was not going to tolerate these problems when it comes to the transfer of mortgage servicing rights. 

On Monday, the CFPB issued guidance directing servicers to “make sure consumers are not collateral damage in the mortgage servicing transfer process.” Servicer must be careful when transferring loans servicing rights. The CFPB wants servicers to know that, where appropriate, they will be required to prepare and submit “informational plans describing how they will be managing the related risk to consumers” when making transfers. 

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CFPB Proposes Amendments to New Final Ability-to-Repay Rule, Solicits Comment on Calculating Loan Originator Compensation

Posted by Jennifer M. Keas on Posted in Bureau of Consumer Financial Protection; Consumer Financial Protection Act; Consumer Financial Protection Agency; Consumer Financial Protection Bureau; Truth in Lending Act; Uncategorized

On January 10, 2013, the CFPB issued its final ability-to-repay rule (Rule), which implements Dodd-Frank mortgage reforms requiring creditors to make a reasonable and good faith determination that a consumer will have a reasonable ability to repay the loan according to its terms. Failure to comply with these requirements may give rise to various damages under TILA, and consumers also may assert an ability-to-repay violation as a defense to a foreclosure action. There is no time limit on the use of this defense (although there is a cap on the recoupment or setoff of finance charge and fees), which applies against assignees of the loan in addition to the original creditor.

Loans that meet the criteria to be a “qualified mortgage” (“QM”) are entitled to either safe harbor or a rebuttable presumption of compliance with the ability-to-repay requirements.

Qualified mortgage criteria prohibit certain risky features and practices such as negative amortization. A loan also cannot be a QM unless the consumer has a total debt-to-income ratio of less than or equal to 43 percent (although the CFPB has provided a temporary QM definition softening the debt-to-income ratio). In addition, the transaction’s total “points and fees,” cannot exceed specified thresholds. For a loan of $100,000 or more, the QM threshold is 3% of the total loan amount. 

Many in the industry are currently examining the loans they make loans to assess what percentage are expected to exceed the 3% threshold when the Rule becomes effective on January 10, 2014. The element of loan originator compensation remains an important — and unresolved — factor in this analysis.

Loan originator compensation as an element of “points and fees”

Under the Ability-to-Repay Rule, points and fees includes, among other things, all compensation paid directly or indirectly by a consumer or creditor to a loan originator that can be attributed to that transaction at the time the interest rate is set.” A “loan originator” includes mortgage broker firms and individual employees hired by either brokers or creditors, but generally excludes creditors themselves. 

Before the CFPB issued the final Rule, many in the industry commented that including all loan originator compensation in points and fees makes little sense.  Commenters pointed out that as a practical matter, compensation paid to individual employee originators is already included in the cost of the loan in the form of origination fees or as part of the interest rate.  Furthermore, including loan originator compensation in points and fees will often result in “double-counting.”  For example, points and fees include mortgage broker fees, including fees paid directly to the broker or the lender for delivery to the broker.  But also included is compensation paid to individual loan originators (i.e., loan officers who are employed by mortgage brokerage firms) to the extent their compensation can be attributed to the transaction at the time the interest rate is set.  Similarly, money collected by a creditor in up-front charges from consumers (which is already counted toward the points and fees thresholds as items in the finance charge) would be counted a second time as loan originator compensation if the creditor passed it on to its employee loan officer.

The CFPB proposes amendments on this issue

The CFPB is still considering exactly how it should require the inclusion of loan originator compensation under the Ability-to-Repay Rule.  The agency has expressed its belief that Congress did intend the Dodd-Frank statute to literally require that loan originator compensation be treated as “additive” to the other elements of points and fees.  Nonetheless, the CFPB is not convinced that “an automatic literal reading of the statute in all cases would be in the best interest of either consumers or industry…”  In particular, the CFPB does not believe that it is necessary or appropriate to count the same payment between a consumer and a mortgage broker firm twice, simply because it is both part of the finance charge and loan originator compensation. 

Therefore, concurrent with the final Ability-to-Repay Rule, the CFPB issued proposed amendments to the Rule that would provide that loan originator compensation is not necessarily always counted against the QM points and fees threshold if it is already counted elsewhere in points and fees.

  • The CFPB proposes a new comment that would provide that mortgage broker fees already included in the points and fees as items included in the finance charge need not be counted again as loan originator compensation. 
  • Another proposed comment would clarify that compensation paid by a mortgage broker to its individual loan originator employee is not loan originator compensation.
  • With regard to the creditor context, the CFPB has proposed two alternatives. 
    • The first alternative would enshrine double-counting by creditors, specifying that a creditor must include compensation paid by a consumer or creditor to a loan originator in points and fees in addition to any fees or charges paid by the consumer to the creditor.  
    • Under the second alternative, the CFPB would permit all consumer payments of up-front fees and points to offset creditor payments to the loan originator.  This alternative would provide that a creditor should reduce the amount of loan originator compensation included in the points and fees calculation by any amount paid by the consumer to the creditor and included in the points and fees calculation as part of the finance charge. For example, if the consumer paid a creditor a $3,000 origination fee and creditor paid the loan originator $1,500 in compensation attributed to the transaction, points and fees would include the $3,000 origination fee but not the $1,500 in loan originator compensation.  However, if the consumer paid the creditor a $1,000 origination fee and the creditor paid the loan originator $1,500 in compensation, then the points and fees would include the $1,000 origination fee as well as $500 of the loan originator compensation.

Comments on these important issues are due by February 25, 2013.  A link for submitting comments to the CFPB may be found here.

National Mortgage Database Formed

Posted by Thomas I. Elkind on Posted in Bureau of Consumer Financial Protection; Consumer Financial Protection Act; Consumer Financial Protection Agency; Consumer Financial Protection Bureau; Mortgage Foreclosures

The Consumer Financial Protection Bureau (“CFPB”) and the Federal Housing Finance Agency (FHFA”) have agreed to jointly produce a National Mortgage Database containing detailed mortgage loan information. In a press release dated November 1, 2012, the CFPB said: “The database will primarily be used to support the agencies’ policymaking and research efforts and to help regulators better understand emerging mortgage and housing market trends.”

The National Mortgage Database will include comprehensive information regarding a mortgage loan, from its origination through servicing, and will include borrower characteristics. It will include loan-level data about the mortgage, including the borrower’s credit profile, the terms of the mortgage, the property financed, and the payment history of the loan. Data will be updated monthly and will be available back to 1998. Additionally, this database fulfills an FHFA requirement under prior legislation to conduct a monthly mortgage market survey.

The database will not contain personally identifiable information, and appropriate precautions will be taken by the agencies to ensure that individual consumers cannot be identified through the database. However, the agencies will undoubtedly use the information from the database to better monitor the mortgage industry and to further develop consumer protections.

The agencies hope that the database will help them track the health of the mortgage markets and of consumers, by showing whether payments are being made on time, as well as information regarding loan modifications, foreclosures, and bankruptcies. The database will also be used to conduct surveys to understand consumer decision-making and how they shop for mortgages and deal with distressed homeownership. The agencies will also monitor the performance of various products to identify potential problems or risks. The database will allow policy makers to see how many mortgages consumers may have and how they are performing. The database will be the first comprehensive database to permit such analysis. The database will also include information about a borrower’s other debts, such as auto loans and student loans.

The agencies expect early versions of the full dataset to be complete in 2013. The agencies hope to be able to share database information with other federal agencies, academics an the public once the database is complete.

An Uplifting Look into Non-Bank Supervision

Posted by Christine T. Adams on Posted in Bureau of Consumer Financial Protection; Compliance; Consumer Financial Protection Act; Consumer Financial Protection Bureau

Legislation was introduced in Congress August 2, 2012 that would prevent the Federal Reserve from designating nonbanks as systemically significant. This bill is significant, because it in effect prevents the Federal Reserve from supervising insurance companies and other nonbanks. Under Dodd Frank, nonbank entities that are designated as systemically important are subject to the Federal Reserve’s rules governing capital, contingency and succession planning (“living wills”). Entities designated as systemically significant are also subject to the FDIC’s authority. 

Concerns regarding the Federal Reserve’s oversight of nonbank entities first began to surface when the Federal Reserve announced the results of its “stress test” for large nonbank entities, such as MetLife. After MetLife and others failed the “stress test,” it was apparent that the Federal Reserve was trying to fit square pegs into round holes. The Federal Reserve was employing the same metrics it had historically used to evaluate depository banks. Those metrics do not translate well to determine the viability and sustainability of large nonbank entities. 

The proposed legislation is an extension of that square peg-round hole argument. It seeks to prevent the Federal Reserve from classifying nonbank entities as “too big to fail.” Trade groups argue that the designation of nonbank entities as systemically significant would subject such entities to such massive compliance costs, thereby forcing them out of business, or at the very least, further stifling an economic rebound.  

Critics disagree. Critics of the bill argue that allowing nonbank entities to escape the Federal Reserve’s supervision may cause a financial panic. Thus, based on the opposing sentiments, it appears we have come full circle to damned if you do, or damned if you don’t. 

Hot Off of the Regulatory Printer — CFPB Releases Its Proposed “Know Before You Owe” Disclosures

Posted by Christine T. Adams on Posted in Bureau of Consumer Financial Protection; Compliance; Consumer Financial Protection Act; Consumer Financial Protection Agency; Consumer Financial Protection Bureau; Fair Housing Act; Real Estate Settlement Procedures Act; Truth in Lending Act

For weeks the Consumer Financial Protection Bureau has been advertising the pending release of its proposed mortgage loan disclosures that “are easier for both consumers and lenders to understand and use.”  Alas, await no more.  The CFPB released its proposed mortgage loan disclosures today.   The purpose of the new, supposedly friendlier disclosures, is for the CFPB to meet the requirement under the Dodd-Frank Act that the Truth in Lending Act (commonly referred to as TILA) and the Real Estate Settlement Procedures Act (commonly referred to as RESPA) disclosures be combined into one easy-to-read disclosure.  If adopted, the new rule will modify the rules commonly known as Regulations X and Z.Continue reading this entry

Bureau and Prudential Banking Regulators to Coordinate Certain Supervisory Activities

Posted by Timothy S. Crisp on Posted in Consumer Financial Protection Act; Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (the Bureau) recently entered into a Memorandum of Understanding on Supervisory Coordination (the MOU) with the Board of Governors of the Federal Reserve System (the Federal Reserve Board), the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (collectively, the Prudential Regulators). The existence of the MOU was disclosed today, though it was signed on behalf of the Bureau and the Prudential Regulators on various dates in early- and mid-May 2012 and it became effective on May 16, 2012. Congress mandated coordination of supervisory activities and sharing of examination reports among the Bureau and the Prudential Regulators in various sections of Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The MOU applies to certain examinations conducted by, and certain supervisory activities of and information sharing among, the Bureau and Prudential Regulators with respect to (a) insured banks, thrifts and credit unions with more than $10 billion in total assets, and their depository and non-depository affiliates, and (b) non-depository subsidiaries of banks, thrifts and credit unions with $10 billion or less in total assets. (The Bureau and the Federal Reserve Board plan to enter into a separate agreement with respect to holding companies and their subsidiaries.) 

The supervisory activities covered by the MOU include: evaluation of compliance with with federal consumer financial laws and certain other laws; obtaining information about activities subject to such laws and related compliance systems and procedures; detecting and assessing risks to consumers and to markets for consumer financial products and services; consumer compliance risk management programs and systems (including vendor management); underwriting, sales, marketing, servicing, collections and other activities related to consumer financial products and services; and other matters mutually agreed upon between the Bureau and a Prudential Regulator.

Pursuant to the MOU, the Bureau and each Prudential Regulator will designate a point of contact for each covered institution. Those points of contact will consult regarding the scheduling, and any material changes in timing, of regularly scheduled examinations of each covered institution and will agree to a reasonable timetable for sharing scheduling information for the coming year or supervisory cycle. 

The agencies will generally conduct point-in-time examinations and prescheduled targeted review examinations in a simultaneous (though not necessarily a joint) manner; however, a covered depository institution may request that examinations be conducted separately, and the Bureau may ask a covered depository institution to make such a request so that the Bureau may conduct concurrent examinations of affiliated entities which are regulated by different Prudential Regulators. The agencies have agreed to provide each other with the maximum practicable prior notice of supervisory activities that are not included in the annual schedule of examinations.

The Bureau and Prudential Regulators will share with each other examination request letters and draft examination reports, and they will have up to 30 days to provide comments on draft reports to the issuing agency prior to issuance of final examination reports. 

The agencies have agreed to share with each other supervisory letters, memoranda of understanding and other supervisory actions, appeals of material supervisory determinations and the relevant agency’s response, final examination reports (including those with respect to depository institutions with total assets of $10 billion or less), and other supervisory information which the agencies may agree to share.

Who’s Your Regulator? Federal Regulatory Agencies Jointly Clarify CFPB Jurisdiction

Posted by Timothy S. Crisp on Posted in Consumer Financial Protection Act; Consumer Financial Protection Bureau

A new Supervisory Statement clarifies when insured depository institutions and insured credit unions will be subject to supervision and enforcement by the Bureau of Consumer Financial Protection (CFPB). The CFPB issued the Supervisory Statement jointly with the federal prudential regulators–the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA). 

Section 1025 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) gives the CFPB exclusive supervisory authority and primary enforcement authority with respect to federal consumer financial laws over any insured bank, thrift or credit union and its affiliates, but only if its total assets exceed $10 billion (Large Institutions). For other institutions and their affiliates, the federal prudential regulators retain supervisory and enforcement authority with respect to federal consumer financial laws. 

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Bureau Issues Report on Remittance Transfers, Makes Recommendations

Posted by Timothy S. Crisp on Posted in Consumer Financial Protection Act; Consumer Financial Protection Bureau; Electronic Funds Transfer Act

The Consumer Financial Protection Bureau issued a report to the President and congressional committees regarding remittance transfers and remittance exchange rates. The report covers transparency and disclosure to consumers of exchange rates used in remittance standards, and examines the potential for using remittance histories to enhance consumers’ credit scores. The report was required by Section 1073(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Remittance transfers are electronic funds transfers from senders in the United States to recipients in foreign countries. Each year, U.S. consumers send billions of dollars to family members and others through remittance transfers.

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Bureau Reports to Congress on Differences Between Creditor-Purchased and Consumer-Purchased Credit Scores

Posted by Timothy S. Crisp on Posted in Consumer Financial Protection Act; Consumer Financial Protection Bureau

The Bureau has issued a report to Congress which examines different credit scoring models and products, their availability and use, and how differing availability of types of credit scores may disadvantage consumers. 

Section 1078 of the Dodd-Frank Wall Street Reform and Consumer Protection Act required the Bureau to “conduct a study on the nature, range, and size of variations between the credit scores sold to creditors and those sold to consumers by consumer reporting agencies that compile and maintain files on consumers on a nationwide basis…, and whether such variations disadvantage consumers,” and then to report to Congress on the results of its study.

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Higher Dollar Threshold Amounts for Exempt Consumer Credit and Leasing Transactions

Posted by Timothy S. Crisp on Posted in Consumer Financial Protection Act; Truth in Lending Act

Effective July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act increased the threshold amount for transactions exempt from the Truth in Lending Act and the Consumer Leasing Act from $25,000 to $50,000. Dodd-Frank also requires annual adjustment of the threshold amount based on annual percentage increases in the consumer price index.

In recently published final rules, the Federal Reserve Board revised its Regulations Z and M to increase the threshold amount to $51,800, effective December 31, 2011.

Generally, consumer credit transactions and lease transactions which are at or below the threshold amount are subject to the disclosure and substantive requirements of Truth in Lending Act and Federal Reserve Board Regulation Z, in the case of consumer credit, or the Consumer Leasing Act and Federal Reserve Board Regulation M, in the case of consumer leases.

Federal Reserve Board and FTC Amend Adverse Action and Risk-Based Pricing Notice Requirements

Posted by Timothy S. Crisp on Posted in Compliance; Consumer Financial Protection Act; Fair and Accurate Credit Transactions Act; Fair Credit Reporting Act

As mandated by Section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act, new final rules issued by the Federal Reserve Board and the Federal Trade Commission (FTC) require creditors to disclose credit scores and information about credit scores to applicants for credit in adverse action and risk-based pricing notices. 

Creditors who use credit scores in denying applications for credit (or otherwise taking adverse action), and/or in granting or extending credit on material terms that are materially less favorable than the most favorable terms offered by them to a substantial proportion of their consumer customers, will need to modify their forms of adverse action and risk-based pricing notices. The rules prescribe model forms for these notices.

The new rules were issued on July 6, 2011, and modify the Federal Reserve Board’s Regulations B and V (12 CFR Parts 202 and 222) and the FTC’s risk-based pricing and model forms rules (16 CFR Parts 640 and 698). The new rules will become effective 30 days after publication in the Federal Register (which is expected imminently).

The Consumer Financial Protection Act – Understanding Subtitles F through H

Posted by Christine T. Adams on Posted in Consumer Financial Protection Act

Due to the creation of the new Consumer Financial Protection Bureau (the “CFPB” or the “Bureau”), the existing federal agencies that are currently tasked with oversight of various consumer protection laws now have the unenviable task of transferring their consumer protection functions to the CFPB. The Consumer Financial Protection Act (“CPA” or the “Act”) lays out the initial foundation for the transfer of functions to the Bureau.

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CFPA Q&A: Which Laws Are Within The Bureau’s Purview?

Posted by Martin J. Bishop on Posted in Consumer Financial Protection Act

Virtually every well- and lesser-known federal consumer financial protection statute. Under the CFPA, the Bureau will regulate the offering and provision of any consumer financial product or service under the “Federal Consumer Financial Laws,” which includes, among other things, the CFPA, any rules promulgated by the Bureau, and the “Enumerated Consumer Laws.” The CFPA expressly excludes the Federal Trade Commission Act from the definition of the Federal Consumer Financial Laws.

The CFPA defines the Enumerated Consumer Laws to include all of the following statutes:

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TCF Challenges Constitutionality of Durbin Amendment

Posted by Linda Annoye on Posted in Consumer Financial Protection Act

TCF National Bank filed a complaint in the United States District Court for the District of South Dakota to challenge the constitutionality of the Durbin Amendment. 

The Durbin Amendment was included as Section 1075 of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010, Public Law 111-203. The amendment directs the Board of Governors of the Federal Reserve System to issue standards setting the maximum debit card interchange rates that banks with more than $10 billion in assets may receive or charge. The Board is directed to set the interchange rates by reference to the incremental costs of authorizing, clearing, or settling debit card transactions. 

TCF argues that the incremental costs that the Board is to consider when setting TCF’s interchange fee rate constitute only a small fraction of the costs that TCF incurs in creating and administering its debit card programs, and TCF takes issue with the fact that the provision is limited to banks with assets of $10 billion or more. TCF argues that the Durbin Amendment is discriminatory, violates its right to equal treatment under the law, and deprives it of its property without due process or compensation.

How the Wall Street Reform Act Impacts Affiliated Businesses

Posted by Michael C. Lueder on Posted in Consumer Financial Protection Act

Foley & Lardner partner Jay Varon will serve as a speaker in an audio seminar sponsored by the Real Estate Services Providers Counsel, Inc. (RESPRO®).

The program will feature discussions on:

  • The Consumer Financial Protection Bureau
  • The “Ability to Repay” Standard and Its Impact on Affiliated Businesses
  • The Lower HOEPA Threshold and Its Impact on Affiliated Businesses
  • New Rules for Appraisal Management Companies
  • A New State Preemption Standard for Affiliated Businesses

When:
Thursday, September 16, 2010

2:00 p.m. Eastern
1:00 p.m. Central
12:00 p.m. Mountain
11:00 a.m. Pacific

Program duration: 90 minutes

For details on the program and to register, please click here 
 

Enforcement of the new Consumer Financial Protection Act

Posted by Thomas I. Elkind on Posted in Consumer Financial Protection Act

The new Consumer Financial Protection Act (the "Act") creates a Consumer Financial Protection Bureau (the "Bureau") which will become the primary enforcer of the provisions of the Act. When fully operational, the Bureau is expected to have a bigger budget than the Equal Employment Opportunity Commission (EEOC). Anyone involved in the consumer lending business should become familiar with the powers that the Bureau will have, and the ways those powers can be asserted.

The Bureau will have broad investigatory powers, will hold hearings, and will litigate violations of the Act, other Federal consumer finance laws, and of its own regulations in the courts.

Investigative Powers

The Bureau will be able to investigate all matters relating to "fair lending", not just those matters that are dealt with in the Act. The Bureau will also be able to conduct joint investigations with HUD or with the Attorney General. The Bureau can issue its own subpoenas with can be enforced by the Federal district courts.

Civil Investigative Demands

Before commencing litigation, the Bureau can issue a notice stating the nature of the alleged violations, and may serve document requests, requests for tangible items, interrogatories and notices of depositions. All evidence obtained by the Bureau will be kept confidential, but the Bureau may adopt rules to permit it to give material to Congress, with prior notice to the owner of the materials to be delivered.

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CFPA Q&A: Describe The Bureau’s Rulemaking Authority.

Posted by Martin J. Bishop on Posted in Bureau of Consumer Financial Protection; Consumer Financial Protection Act

Expansive. The Consumer Financial Protection Act’s ("CFPA") Bureau of Consumer Financial Protection ("Bureau") will not only be big, but it will have broad and sweeping rulemaking authority. Specifically, the Bureau’s Director, once selected and confirmed, will have the power to "prescribe rules . . . as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer laws, and to prevent evasions thereof." The Bureau’s purpose is "ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products are services are fair, transparent, and competitive." The Bureau’s objectives include exercising its authority to ensure that, among other things:

  • consumers get timely and understandable information about consumer financial products;
  • outdated and burdensome regulations are modified to reduce unwarranted regulatory burdens;
  • the Federal consumer financial law is consistently enforced; and
  • consumers are protected from discrimination, and unfair, deceptive, or abusive acts and practices.

In short, the CFPA’s virtually all-encompassing rulemaking power covers almost every aspect of most consumer financial products.   

CFPA Q&A: How Big Will The Bureau Be?

Posted by Martin J. Bishop on Posted in Consumer Financial Protection Act

Big. The Dodd Frank Act created the Consumer Financial Protection Bureau ("Bureau"), which will have the responsibility for protecting consumers in the financial services area. The Bureau is an independent federal agency funded by the Federal Reserve Board.  While "big" could mean a lot of things, the best measure of the Bureau’s size at this early stage is to look at its funding. The Bureau’s initial budget is substantial, with the expectation of an initial budget around $550 million. To put the Bureau’s budget in perspective, it may be helpful to compare the budgets of some other large federal agencies. The Consumer Protection Safety Commission has an annual budget of $118 million. The Federal Trade Commission, which focuses on protecting consumers against unfair, deceptive or fraudulent marketing and advertising practices, had a 2009 budget of $281 million. The Equal Employment Opportunity Commission, which is expected to have a backlog of discrimination complaints in excess of 105,000 by the end of 2011, will have a 2011 budget of about $385 million. The Securities and Exchange Commission’s 2009 budget was $961 million.

Consumer Financial Protection Act: Preemption Questions Web Conference

Posted by Michael C. Lueder on Posted in Consumer Financial Protection Act

Please join Foley attorneys on August 26 for the second installment of our Web series on the new Consumer Financial Protection Act.

Topics include:

  • Preemption standards under the new law, including the National Bank Act and the Home Owners’ Loan Act
  • The Barnett Bank standard
  • New powers of state attorneys general to enforce both state and federal law
  • What is left of the OCC’s Visitorial Rights Rule and Preemption Rule

When:

Thursday, August 26, 2010

1:00 p.m. Eastern

12:00 p.m. Central

11:00 a.m. Mountain

10:00 a.m. Pacific

Program duration: One hour

There is no cost to attend this seminar, but advance registration is required. For more information or to register for this program, please visit: Consumer Financial Protection Act: Preemption Questions

NOTE: To view the original program in the series, please click Consumer Financial Protection Act: What Lenders Need to Know.

Indiana Consumer Protection Law Violates The Commerce Clause

Posted by Thomas I. Elkind on Posted in Consumer Financial Protection Act; State Consumer Protection Laws

In a January 28, 2010 opinion, Midwest Title Loans, Inc. v. Mills, the Seventh Circuit has affirmed a permanent injunction issued by the district court invalidating a section of Indiana’s version of the Uniform Consumer Credit Code for violating the Commerce Clause of the U.S. Constitution.

Indiana added a provision to the Code in 2007 called the “territorial application” provision. It states that a loan is deemed to occur in Indiana if a resident of the state “enters into a consumer sale, lease or loan transaction with a creditor … in another state and the creditor …has advertised or solicited sales, leases, or loans in Indiana by any means ….” If the territorial application provision is triggered, the lender becomes subject to the Code and is bound by its restrictions, including a ceiling on the annual interest rate that a lender may charge.

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