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The Enforcement Blog

NY Department of Financial Services Issues Significant Cybersecurity Proposal

Posted in Privacy, Regulatory Developments

On September 13, 2016, the New York State Department of Financial Services (NYDFS) proposed cybersecurity rules that, if finalized in their current form, would create one of the most comprehensive, detailed and onerous cybersecurity standards in the country. While the proposed rules would apply only to financial institutions subject to the NYDFS’s authority under New York law, this proposal is important for all companies. It highlights a trend that legislatures and regulators are revisiting decades-old approaches to cybersecurity and considering alternatives that would shift from a risk-based paradigm to a prescriptive approach. The NYDFS in particular has made great efforts to “spark additional dialogue, collaboration and, ultimately, regulatory convergence among” federal and state financial regulators on comprehensive cybersecurity standards for all financial institutions. In light of the significant role that New York plays in this country’s financial markets and NYDFS’s role as regulator for many financial institutions based in New York, this proposal comes with a level of credibility that could influence the broader, national dialogue and consideration of what cybersecurity standards are appropriate, even if NYDFS does not have unique expertise with respect to cybersecurity. If it does, consideration and monitoring of this proposal is important for all companies.

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HUD Releases New Guidance on Limited English Proficiency Discrimination Under the Fair Housing Act

Posted in Disparate Impact, Fair Lending, Mortgage

On September 15, 2016, the U.S. Department of Housing and Urban Development issued guidance on how the nondiscrimination provisions in the Fair Housing Act apply to persons who consider an individual’s “Limited English Proficiency,” or limited ability to speak, read, write, or understand English, in housing transactions. The “Office of General Counsel Guidance on Fair Housing Act Protections for Persons with Limited English Proficiency” (the Guidance) addresses liability for both intentional discrimination and practices that have a disparate impact. While the primary focus is potential discrimination in renting a dwelling, the Guidance also discusses mortgage loan transactions.

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Financial Services Report – Fall 2016

Posted in Add On Products, Arbitration, CFPB, Credit Cards, Credit Reports, Disparate Impact, Electronic Payments, Enforcement Actions, Fair Lending, Foreclosure, Military Issues, Mobile Payments, Mortgage, Payday Lending, Preemption, Privacy, Regulatory Developments, UDAAP

So much for summer! The weather is cooling, the kids are back to school, and we better not see you wearing white so long after Labor Day! For those of you having a little trouble getting back in the swing of things, we thought we’d lead with just a few of the animals making headlines recently: a skateboarding cat made her way into the Guinness Book of World Records by performing 20 skateboarding tricks in one minute; a bear spent the day hanging out on a Colorado University campus; and a cockatoo stole its owner’s breakfast. If you are thinking of another career path, a traveling cat circus is seeking a stage assistant.

If you’ll be sticking with your day job, read on for news about the CFPB’s largest assessment of civil money penalties, the Supreme Court’s decision to hear the latest effort of municipalities to hold mortgage lenders responsible for lost tax revenue due to foreclosures, and the latest on the Privacy Shield.

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A Closer Look at DOD’s New Guidance on the Military Lending Act Regulations

Posted in Fair Lending, Military Issues, Regulatory Developments

On August 26, 2016, the DOD issued an interpretive rule (the “Interpretive Rule”) providing guidance on the DOD’s regulations implementing the Military Lending Act. That same day, we published a high-level summary of the Interpretive Rule, noting that the Interpretive Rule aims to clarify certain ambiguities in the DOD’s July 2015 final rule. In this alert, we take a closer look at the interpretive rule, which is presented in a series of 19 questions and answers.

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EVENT: Mortgage Bankers Association’s Regulatory Compliance Conference 2016

Posted in Events, Fair Lending, Mortgage, Regulatory Developments

Grand Hyatt Washington
1000 H St. NW
Washington, DC 20001

September 18-20, 2016

Join Morrison & Foerster at the Mortgage Bankers Association’s Regulatory Compliance Conference as partners Joe Palmore and Don Lampe speak on the following topics:

Major Litigation Affecting Compliance Officers
September 19th, 12:45pm Eastern
Joe Palmore

Planning for CFPB TRID and Servicing Exams
September 19th, 3:45pm Eastern
Don Lampe

Click here to register.

CFPB Levies Largest Civil Money Penalty in Agency History, Alleges “Abusive” Conduct

Posted in CFPB, Credit Cards, Enforcement Actions

On September 8, 2016, the CFPB, the OCC, and the City and County of Los Angeles entered into a Consent Order with Wells Fargo, with civil money penalties totaling $185 million. The CFPB’s portion of those penalties is $100 million, which is the largest fine the Bureau has imposed since opening its doors in July 2011. The alleged conduct in question involved bank employees opening new deposit and credit accounts, issuing debit cards, and initiating online banking services without the knowledge of customers.

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CFPB, OCC, and Federal Reserve Propose Clarifications to Small Loan Exemption from HPML Appraisal Requirements

Posted in CFPB, Fair Lending, Mortgage, Regulatory Developments

In August 2016, the CFPB, the OCC, and the Board of Governors of the Federal Reserve System (together, the “Agencies”) jointly published in the Federal Register a notice of proposed rulemaking (NPR) to amend the Agencies’ respective regulations exempting certain small loans from the special appraisal requirements that apply to lenders in connection with making higher-priced mortgage loans (HPMLs). Under the current HPML rules, the small loan exemption threshold is adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as calculated and published by the Bureau of Labor Statistics. The NPR proposes specifically to amend the official commentary to HPML rules to clarify how the threshold is calculated when the CPI-W does not increase in a given year.

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CFPB Issues Guiding Principles for Loss Mitigation after HAMP

Posted in CFPB, Fair Lending, Foreclosure, Mortgage, Regulatory Developments

On August 2, 2016, the CFPB published a new guidance document titled CFPB’s Principles for the Future of Loss Mitigation (the “Guidance”), which outlines a recommended framework for new, industry-driven foreclosure relief programs. The Guidance largely follows the July 25, 2016, white paper jointly issued by the U.S. Department of the Treasury (“Treasury”), the U.S. Department of Housing and Urban Development (HUD), and the Federal Housing Finance Agency (FHFA) (collectively, the “Agencies”), in which the Agencies called for industry stakeholders to design and implement a loss mitigation framework tailored to the post-crisis mortgage market (the “White Paper”). Importantly, both the Guidance and the White Paper come as Treasury’s Home Affordable Modification Program (HAMP) is set to expire on December 31, 2016.

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Department of Defense Issues New Guidance on Military Lending Act Regulations

Posted in Fair Lending, Military Issues

On August 26, 2016, the Department of Defense (DOD) issued an interpretive rule providing guidance on the DOD’s regulations implementing the Military Lending Act (MLA). Specifically, the interpretive rule aims to clarify certain ambiguities in the DOD’s July 2015 final rule, which significantly expanded the scope of the MLA to cover new types of creditors and new credit products. Presented in a series of questions and answers—19 in total—the interpretive rule by no means resolves all ambiguities present in the July 2015 final rule. The interpretive rule does, however, provide much needed clarity on a handful of issues that are critical to creditors’ compliance with the MLA. In this alert, we offer a high-level summary of some of the most significant issues addressed by the interpretive rule.

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FDIC Releases Proposed Third-Party Lending Guidance

Posted in Fair Lending, Regulatory Developments

On July 29, 2016, the board of directors of the Federal Deposit Insurance Corporation (FDIC) released a proposal regarding third-party lending guidance (“Proposed Guidance”) as part of a package of materials designed to “improve the transparency and clarity of the FDIC’s supervisory policies and practices.” The Proposed Guidance elaborates on previously issued agency guidance on managing third-party risks and, if finalized, could apply to all FDIC-supervised institutions that engage in third-party lending programs.

Read our client alert.