Consumer Financial Protection Bureau

The scope of the power of the Consumer Finanical Protection Bureau is under challenge by a New Jersey lender, which is arguing the CFPB Director Richard Cordary illegally imposed a $109 million penalty against it, The Wall Street Journal's Yuka Hayashi reports.

An in-house CFPB judge originally ruled that PHH Corp. took "kickbacks" from mortgage insurers and increased costs for mortgage borrowers. The CFPB says PHH referred borrowers to mortgage-insurance companies and would collect up to 40 percent of the premiums. On appeal, Cordray imposed a penalty that was 18 times more than the in-house judge had sought. Cordray concluded that PHH had violated the law each time it received a monthly payment.

The case is now pending before the U.S. Court of Appeals for the D.C. Circuit and "revolves around the CFPB’s new hard-line interpretation of the four-decade-old Real Estate Settlement Procedure Act, designed to keep lenders and realtors from inflating home-sale transaction costs."

Consumer Financial Protection Bureau Director Richard Corday says that new disclosure rules for mortgage lenders have not turned out to be a problem, HousingWire's Ben Lane reports. In a speech last week, Cordary compared the panic about the TILA-RESPA Integrated Disclosures rule to the panic about Y2K. The disclosure rule did not paralyze the market when it came into effect in October, Corday added.

The Washington Post's Kenneth R. Harney reports that mortgage problems make up 28 percent of the 600,000 complaints posted on the Consumer Financial Protection Bureau's website. Complaints about mortgage lenders, debt collectors, credit-card companies and credit bureaus are logged on the site.

The CFPB started posting narratives for those complaints June 25, but lenders can't post their own narratives. David Stevens, president and chief executive of the Mortgage Bankers Association, told Harney the process is one-sided and uses '“unsubstantiated and unverified'” information that can be submitted by anyone, and the bureau does not “'validate the authenticity of the complaint or the individuals making the complaint.”'

The Consumer Financial Protection Bureau has conducted a study of mandatory arbitration for consumers, finding that less than 10 percent of consumers won awards in cases with American Arbitration Association neutrals, The National Law Journal's Jenna Greene reports. In contrast, consumers won 1,200 individual lawsuits in court, and consumers won $2.7 billion in cash, in-kind relief, expenses and fees through class actions.

The agency also found no evidence that arbitration clauses led to lower prices for consumers, Greene further reports.

The study could lay the groundwork for the agency to regulate arbitration agreements in the financial-services sector, Greene also reports.