REGULATORY CORNER

REGULATORY CORNER

FEDERAL COMPLIANCE

NATIONSTAR MORTGAGE SETTLES WITH CFPB AND STATES

The CFPB recently announced it has filed a complaint and proposed stipulated judgment and order against Nationstar Mortgage, LLC, which does business as Mr. Cooper. The Bureau’s action is part of a coordinated effort between the Bureau, a multistate group of state attorneys general, and state bank regulators.

Nationstar is one of the nation’s largest mortgage servicers and the largest nonbank mortgage servicer in the United States. The Bureau alleges that Nationstar violated multiple federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners. In its complaint, the Bureau alleges that Nationstar engaged in unfair and deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010, violated the Real Estate Settlement Procedures Act, and violated the Homeowner’s Protection Act of 1998.

NMLS ANNUAL CONFERENCE

Registration for the 2021 NMLS Annual Conference & Training is now open. It will be held online from February 23-26, 2021, 1:00-5:00 p.m. ET.

2019 CRA DATA AVAILABLE

The OCC, FRB, and FDIC have jointly announced on December 14, 2020, the availability of data on small business, small farm, and community development lending reported by certain commercial banks and savings associations, in accordance with the CRA.

An FFIEC disclosure statement on the reported 2019 CRA data, in electronic form, is available for each reporting commercial bank and savings association. The FFIEC also prepared aggregate disclosure statements of small business and small farm lending for all the metropolitan statistical areas and non-metropolitan counties in the U.S. and its territories. These statements are available for public inspection on the FFIEC website.

MORTGAGE DATA ANALYTICS COMPANY SETTLES FTC ALLEGATIONS

The FTC announced on December 15, 2020 a mortgage industry data analytics company will be required to implement a comprehensive data security program as part of a settlement resolving Federal Trade Commission allegations that the firm failed to ensure one of its vendors was adequately securing personal data about tens of thousands of mortgage holders. The complaint filed by the FTC alleged that Texasbased Ascension Data & Analytics, LLC violated the Gramm-Leach Bliley Act’s Safeguard Rule, which requires financial institutions to develop, implement, and maintain a comprehensive information security program. As part of that program, financial institutions must oversee their third-party vendors, by ensuring they can implement and maintain appropriate safeguards for customer information and requiring them to do so by contract.

The FTC alleged that a vendor, OpticsML, which Ascension hired to perform text recognition scanning on mortgage documents, stored the contents of the documents on a cloud-based server in plain text, without any protections to block unauthorized access, such as requiring a password or encrypting the information. The documents contained sensitive information about mortgage holders and others, such as names, dates of birth, Social Security numbers, loan information, credit and debit account numbers, drivers’ license numbers, or credit files. As a result of the inadequate security, the cloud-based server containing the mortgage data was accessed dozens of times.

HMDA ASSET-SIZE EXEMPTION THRESHOLD ADJUSTMENT

The CFPB published in the December 22, 2020, Federal Register a final rule adjusting the Regulation C (HMDA) asset-size exemption threshold for banks, savings associations, and credit unions for inflation. For calendar year 2021, that threshold is increased from $47 million to $48 million. Therefore, banks, savings associations, and credit unions with assets of $48 million or less as of December 31, 2020, are exempt from collecting HMDA data in 2021.

CFPB ADJUSTS SMALL-CREDITOR ASSET THRESHOLD FOR ESCROW EXEMPTION

The CFPB published in the December 22, 2020, Federal Register a final rule making an inflation adjustment to the asset-size threshold for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan under section 1026.35 of Regulation Z. The threshold is adjusted, effective January 1, 2021, to $2,230 billion from $2.202 billion. Therefore, creditors with assets of less than $2.230 billion (including assets of certain affiliates) as of December 31, 2020, will be exempt, if other requirements of section 1026.35(b)(2)(iii) of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2021. The change is effective January 1, 2021.

MORTGAGE SERVICER SETTLES WITH CFPB

The CFPB issued a consent order against Seterus, Inc. and Kyanite Services, Inc., as Seterus’s successor in interest, based on the CFPB’s finding that Seterus violated the Consumer Financial Protection Act of 2010 (CFPA) and Regulation X. The CFPB found that Seterus’s actions resulted in delaying or depriving some borrowers of a reasonable opportunity to get their loss mitigation applications completed and evaluated and in some borrowers' failing to timely receive protections against prohibited foreclosure activities to which they were legally entitled.

The order requires Kyanite to pay $4,932,525 in total redress to approximately 11,866 of the consumers to whom Seterus sent a defective acknowledgment notice. The order also imposes a $500,000 civil money penalty and includes injunctive relief that would apply in the event Kyanite engages in mortgage servicing. At its height, Seterus, a former mortgage servicer based in North Carolina, serviced approximately 500,000 residential mortgage loans. Seterus is no longer operating. On February 28, 2019, after the relevant period covered by the CFPB’s investigation, Seterus was sold and its entire mortgage servicing portfolio was transferred to Nationstar Mortgage LLC, doing business as Mr. Cooper, with which the CFPB reached a separate settlement earlier this month.

CFPB: SECOND PIECE OF FDCPA FINAL RULE ISSUED

On December 18, 2020, the CFPB announced a final rule to implement Fair Debt Collection Practices Act (FDCPA) requirements regarding certain disclosures for consumers. The rule requires debt collectors to provide, at the outset of collection communications, detailed disclosures about the consumer’s debt and rights in debt collection, along with information to help consumers respond. The rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers, orally, in writing, or electronically, before reporting information about the debt to a consumer reporting agency. The rule prohibits debt collectors from making threats to sue, or from suing, consumers on time-barred debt. The rule will become effective on November 30, 2021, with the rule reissuing Regulation F published on November 30, 2020.