VIDEO: Upcoming  CFPB Rules

VIDEO: Upcoming CFPB Rules

In this special Halloween Compliance Clip, Adam (dressed up for Halloween) explains what new rules we might expect from the CFPB in coming months. For example, Adam explains the upcoming new rule on small business data collection and explains how to find more information.


Video Transcript

The following is a transcript of this video:

This is our Halloween Edition of our Compliance Clips. This Compliance Clip is going to talk about the upcoming CFPB rules. It's always good to know what regulations are coming down the pipe, what's coming in the future, what we need to know about. But sometimes it's challenging. Sometimes it's actually quite difficult. It's kind of like trying to find Where's Waldo. That's the best I have for you.

What we're going to do is share with you a slide or two that we had in our Fall 2020 Quarterly Compliance Update. We just finished that program, it's our quarterly update which is the fall edition. We just finished that and one of the things we covered was the CFPB Spring 2020 quarterly agenda or semi-annual agenda that basically tells us what the CFPB is working on and what rules are coming in the future. It's a good way to get prepared and kind of have an understanding of what's coming down the road. They always release what's in the Final Rule stage and Proposed Rule stage but most of those have come and gone at this point. This was released in the summer of 2020 and there's a number of things that we could see out into the future that are coming down the pipe for us, and that we should probably pay attention to.

Couple of things that were in the Prerule Stage. The Prerule Stage is they're thinking about getting ready to come up with a proposal and move it to the Proposed Rule Stage. The first thing that’s in the Prerule Stage is Business Lending Data collection and reporting under Regulation B. If you recall back in 2010, a decade ago, when the Dodd-Frank Act came out, that law was passed. One of the requirements of the Dodd-Frank Act was that the CFPB had to come up with this Business Lending Data collection or reporting requirement for the lenders. This is something the CFPB has been putting off and I thought for years that they would wait until they finished HMDA. Well, HMDA is getting close to being behind us now. We're expecting a couple more rules still yet in 2020, but I knew that once HMDA got behind them, they would shift towards this new Business Lending Data collection and reporting requirements, because this is going to be a lot like HMDA but for commercial loans, at least the smaller commercial loans. It's going to cover small business loans and loans to women and minority owned businesses. Women-owned and minority-owned businesses are also covered in the small businesses. So this is going to be a pretty big learning curve.

In fact, in our Fall 2020 Quarterly Compliance Update, we have a whole 26-minute video where we talk about what the CFPB is thinking in their Prerule Stage. They actually released what they're thinking. They don't usually do that, but we have that information and that is definitely coming in the future.

Also in the Prerule Stage is a Property Assessed Clean Energy Financing rule. Something they've been talking about for a while and they're looking at passing this because I believe this is also required by law.

As far as Long-term Actions, this really helps us understand what's going to be the next phase. We've seen a lot of things in 2020 and in 2019, but the next phase of things that are coming are in the Long-term Actions. These could fall off. Sometimes we see things on this list, it's kind of a to-do list or thinking about list and sometimes things fall off of this or they fall back on. There's a number of things we're pointing out here.

In the CFPB's Long-term Actions list, we have things like a Review of the Inherited Regulations. The CFPB is required by law to review the regulations that they inherited and review any rules that they have implemented. So the next stop is the Credit Card rule that they inherited.

Also, they're looking at a long-term rule of Consumer Access to Financial Records.

They're looking at Abusive Acts and Practices. Now we've gotten some guidance from the CFPB regarding abusive, but really that guidance was just on how they plan to enforce abusive and really what it came down to is they're not going to double dip with unfair and deceptive, but they're going to only use abusive when it is not also unfair or deceptive, or it's obvious that it's also abusive. They gave us guidance on how they were going to enforce but they didn't give us any guidance to really understand what is an abusive act or practice. That's something that they're thinking about and it's something that's probably coming in the future. It's good to know and we do know that abusive is something that's challenging right now and it's something that continues to give us headaches and it will give us headaches until we get more guidance and we start to understand what acts and practices are considered, potentially, to be abusive.

Also in the Long-term Action is a rule for Loan Originator Compensation. Originator compensation has been identified as potential high risk for UDAAP violations. It has come out a couple of times this summer at different publications so watch out for it. It looks like the CFPB is looking to have written rules on motor originator compensation.

Also, in the Long-term Action is the E-sign Act Requirements. Up until this point, the only rules that we really have regarding e-sign is the law itself. There's not a regulation that implements it. In the past, we didn't rely on e-sign as an industry, as much as we do post-TRID. Now that we have TRID, now that we have the pandemic, we're relying on e-sign a lot more than we ever have and it looks like the CFPB is looking to give financial institutions guidance. I will say this. If your financial institution is not complying with e-sign and you're doing something wrong, you're not doing the things you need to do to comply with e-sign and sending out disclosures that don't comply with e-signs, it's like you never sent the disclosures. That of course could be a major, major issue and this is probably why the CFPB is looking at implementing a rule for this. So that's something that's potentially a long-term action item, as well as a long-term action of looking at Artificial Intelligence and having a rule regarding that.

These are the things that are coming down the pipe, and hopefully it makes it a little bit easier to find that thing that we're looking for in the future.

That's all I have for you in this Compliance Clip.

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