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5438 South Prairie View Drive West Des Moines, IA 50266
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On March 28, 2025, the Consumer Financial Protection Bureau (CFPB) announced that it will not prioritize enforcement or supervision actions with regard to the payday lending rule. In its press release , the CFPB said that it is contemplating issuing a notice of proposed rulemaking that would further narrow the scope of the rule. As a reminder, the payday lending rule, which took effect on March 30th, requires covered financial institutions to: Obtain new and specific automatic payment authorization for a covered loan after two consecutive automatic payment attempts have failed, and Provide specific disclosures and notices in connection with a covered loan. Only lenders that originate 2,500 or more covered loans in a calendar year are covered by the requirements of the rule.
The Financial Crimes Enforcement Network (FinCEN) has issued an interim final rule removing the requirement for domestic reporting companies to file their beneficial ownership information directly with the agency. The Corporate Transparency Act (CTA), passed by Congress in 2020, required reporting companies to submit information about their beneficial owners directly to FinCEN. The interim final rule now exempts domestic reporting companies from this registration requirement. A domestic reporting company is defined as any corporation, limited liability company, or other entity that is created by a filing with the secretary of state (or similar office) under the laws of any state or Indian tribe. Foreign reporting companies will continue to be subject to the reporting requirement; however, will not have to report information about any of its beneficial owners that are US persons. Existing foreign reporting companies will have 30 days from the rule's publication in the Federal Register to submit their information to FinCEN. New foreign reporting companies will have 30 days from formation to submit their information. FinCEN's interim final rule does not change the 2018 customer due diligence requirements, which charge financial institutions with collecting beneficial ownership information about legal entity customers at the time of account opening.
On March 19th, the US Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2025-08 . The letter rescinds, among other things, ML 2024-07, which imposed several borrower-initiated reconsideration of value (ROV) requirements in connection with FHA-insured residential mortgage loans with a case number assigned on or after October 31, 2024. The borrower-initiated ROV requirements rescinded by HUD's most recent mortgagee letter include, but are not limited to: Disclosure at application and again upon delivery of the appraisal copy information about the borrower's ability to initiate an ROV request, Policies and procedures that outline the steps a borrower must take to initiate an ROV request, along with milestones for communication with the borrower as to the status of his/her request, and The actions a creditor may take in response to an ROV request. While underwriter-initiated ROV requirements remain in effect for FHA loans, HUD states that the borrower-initiated requirements are being rescinded in response to President Trump's executive order dated January 20, 2025. That executive order was aimed at reversing policies that the administration feels have adversely affected key sectors, including the housing market. It remains to be seen whether the Federal Housing Finance Agency will follow suit and rescind their borrower-initiated ROV requirements in connection with Fannie Mae and Freddie Mac loans.
In Letter to Credit Unions 25-CU-03 , the National Credit Union Administration (NCUA) announced its new exam scheduling policy. Effective January 1, 2025, federally insured credit unions (FICUs) will be examined according to the following schedule: 8 to 12 months following its last examination date FICUs with ANY of the following characteristics - A CAMELS rating of 3, 4, or 5, Considered less than well capitalized, An outstanding enforcement action, or Assets greater than or equal to $10 billion. FICUs with assets between $1 billion and $10 billion, and A CAMELS rating of 3, 4, or 5, or A change in CEO since its last examination. 12 to 16 months following its last examination date FICUs with assets between $1 billion and $10 billion, and A CAMELS rating of 1 or 2, and No change in CEO since its last examination. 14 to 18 months following its last examination date Federal credit unions (FCUs) not included above Once every 5 years Federally insured state-chartered credit unions (FISCUs) not included above The NCUA believes this revised schedule will allow it to better respond to emerging risks and priorities using available resources. It is important to note that nothing in the new schedule limits the NCUA's authority to examine any FICU as frequently as the agency deems necessary.
Back in December 2023, the Federal Communications Commission (FCC) adopted a new rule amending the prior express written consent requirements under the Telephone Consumer Protection Act (TCPA). That rulemaking would have done a couple of things. First, it would have clarified that a consumer’s prior express written consent can apply to not more than one seller. In other words, the rule would have prevented a company from obtaining a consumer’s consent to the receipt of advertising and telemarketing messages both for itself as well as its affiliates. Second, the rule would have required that a consumer’s consent be logically and topically associated with the interaction that prompted the consent. That second requirement was particularly concerning for financial institutions. The language of the rulemaking seemed to suggest that an institution that captured prior express written consent at the time of account opening could not later rely on that same consent for purposes of sending advertising or telemarketing messages related to loans, credit cards, or other non-deposit products. The Insurance Marketing Coalition asked for a judicial review of the rulemaking at the Eleventh Circuit Court of Appeals. On January 24, 2025, that court vacated the new requirements. In its order, the court found that the FCC exceeded its statutory authority because the amendments to the definition of prior express written consent impermissibly conflicted with the statutory definition of the same term under the TCPA.
Following years of litigation, the Consumer Financial Protection Bureau’s 2017 payday lending rule will take effect on March 30, 2025. Three types of consumer loans are covered by the payday lending rule: Short-term loans that require repayment within 45 days, Longer term loans with a balloon payment, and Longer term loans for which the APR exceeds 36% and automatic payment is required from the consumer's account. Under the rule, covered lenders will have to adhere to both payment restrictions and notice requirements. First, when two consecutive automatic payment attempts have failed in connection with a covered loan, the lender is prohibited from attempting another withdrawal until it has obtained a new and specific authorization from the consumer. Second, the rule imposes the following notice requirements in connection with a covered loan: Written notice before the lender attempts to withdraw the first automatic payment from the consumer's account, Written notice before a subsequent automatic payment attempt that will differ in amount or effective date, and Written notice when two consecutive payment attempts have failed. Lenders that do not originate more than 2,500 covered loans in a calendar year are exempt from the rule’s requirements. Additional implementation resources regarding the payday lending rule are available from the CFPB here .
The Consumer Financial Protection Bureau (CFPB) has issued an advanced technologies special edition of its supervisory highlights’ publication, available here . First, the CFPB found evidence of disparate treatment in the underwriting and pricing of credit cards. Certain complex credit scoring models used by some card issuers resulted in disproportionately negative outcomes for Black/African American and Hispanic applicants. In response, the CFPB is encouraging card issuers to test their scoring models for potential bias and look for less discriminatory alternatives. Second, the CFPB found that some auto lenders are using credit scoring models that rely heavily on alternative data. As explained in an Interagency Statement on the Use of Alternative Data in Credit Underwriting, data not directly related to a consumer’s finances may present greater consumer protection risks. These auto lenders are encouraged to look for less discriminatory alternatives when considering the input variables that make up their scoring models. Finally, auto lenders are reminded of the requirement under Regulation B to provide a statement of specific reasons for adverse action. When an application is denied by a credit scoring model, it is not sufficient to state on the adverse action notice that the applicant did not meet the required minimum credit score. Specific factors that contributed to the applicant’s credit score (e.g., delinquent past or present obligations) must be identified.
On January 10th, the Consumer Financial Protection Bureau (CFPB) issued a proposed interpretive rule that would make stablecoin transactions and other non-bank consumer asset accounts subject to Regulation E. The Electronic Fund Transfers Act and Regulation E apply to electronic fund transfers that authorize a financial institution to debit or credit funds from/to a consumer’s account. The proposed interpretive rule broadly defines the terms financial institution, funds, and account to make stablecoin, video game accounts, and virtual currency wallets subject to Regulation E. First, the proposed interpretive rule relies on the well-established definition of financial institution under 12 CFR 1005.2 to affirm that nonbank entities that directly or indirectly hold consumer accounts fall within the scope of Regulation E. Next, the proposed interpretive rule looks to previous judicial decisions and modern definitions to reason that the term funds encompasses much more than just US currency. It includes stablecoins and other similarly situated fungible assets that operate as a medium of exchange for paying for goods or services. Finally, the proposed interpretive rule confirms through legislative history that Congress intended that the term account extend to more than just checking and savings accounts. It covers any asset account established primarily for a personal, family, or household purpose that allows a consumer to pay for goods or services, withdraw funds, or conduct person-to-person transfers. Comments on the proposed interpretive rule must be received by March 31, 2025. It remains to be seen whether the new CFPB director under the Trump administration will pause this rulemaking or allow it to move forward.
On January 14th, the Consumer Financial Protection Bureau (CFPB) published in the Federal Register notice that it was withdrawing its proposed rule prohibiting financial institutions from charging NSF fees in connection with instantaneously declined transactions. By way of reminder, the CFPB had issued a proposed rule in January 2024 designating fees charged in connection with instantaneously declined transactions an abusive act or practice. For example, if a customer attempts a transaction using his/her debit card and that transaction is instantaneously declined due to non-sufficient funds, the proposed rule would have prohibited the assessment of a fee in connection with the attempt. In its notice of withdrawal, the Bureau indicated that it would take additional time to determine whether a more comprehensive approach to the prohibition of NSF fees will better protect consumers.
On January 13th, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule that would resurrect the Federal Trade Commission’s Credit Practices Rule for financial institutions. The proposal would add a new subpart 1027 to Title 12 of the Code of Federal Regulations that would stand in place of the old Regulation AA, repealed by the Federal Reserve in 2016. First, the proposed Part 1027 speaks to unfair credit contract provisions. A credit contract that contains any of the following would generally be unenforceable against the consumer: Confession of judgment - a waiver of the right of notice and the opportunity to be heard in the event of suit or process Waiver of exemption - a waiver of the exemption from attachment, execution or other process applicable to certain real or personal property owned by the consumer Assignment of wages - unless specifically authorized by and revocable at any time by the consumer A nonpossessory security interest in household goods other than a purchase money security interest Next, the proposed Part 1027 discusses unfair or deceptive cosigner practices. A covered financial institution is prohibited from misrepresenting the nature or extent of a cosigner’s liability. To prevent this, the proposed rule requires a separate Notice to Cosigner that must be provided before the cosigner becomes obligated on the credit transaction. Third, proposed Part 1027 prohibits the pyramiding of late fees. Pyramiding is the practice of charging a borrower a subsequent late fee based solely on his/her failure to pay a previously outstanding late fee. Finally, proposed Part 1027 adds to the old Credit Practices Rule by prohibiting a covered financial institution from including any of the following terms and conditions in a contract for a consumer financial product or service: Waivers of law - a waiver of any remedy or cause of action available to a consumer under federal or state law Unilateral amendments - any language that allows the covered financial institution to unilaterally change, modify or revise a material term of the contract Restraint on expression - any language that purports to limit or restrain the free and lawful expression of a consumer Comments on the proposed rule, available here , are due by April 1, 2025.
Recent Blog Posts
On March 28, 2025, the Consumer Financial Protection Bureau (CFPB) announced that it will not prioritize enforcement or supervision actions with regard to the payday lending rule. In its press release , the CFPB said that it is contemplating issuing a notice of proposed rulemaking that would further narrow the scope of the rule. As a reminder, the payday lending rule, which took effect on March 30th, requires covered financial institutions to: Obtain new and specific automatic payment authorization for a covered loan after two consecutive automatic payment attempts have failed, and Provide specific disclosures and notices in connection with a covered loan. Only lenders that originate 2,500 or more covered loans in a calendar year are covered by the requirements of the rule.
The Financial Crimes Enforcement Network (FinCEN) has issued an interim final rule removing the requirement for domestic reporting companies to file their beneficial ownership information directly with the agency. The Corporate Transparency Act (CTA), passed by Congress in 2020, required reporting companies to submit information about their beneficial owners directly to FinCEN. The interim final rule now exempts domestic reporting companies from this registration requirement. A domestic reporting company is defined as any corporation, limited liability company, or other entity that is created by a filing with the secretary of state (or similar office) under the laws of any state or Indian tribe. Foreign reporting companies will continue to be subject to the reporting requirement; however, will not have to report information about any of its beneficial owners that are US persons. Existing foreign reporting companies will have 30 days from the rule's publication in the Federal Register to submit their information to FinCEN. New foreign reporting companies will have 30 days from formation to submit their information. FinCEN's interim final rule does not change the 2018 customer due diligence requirements, which charge financial institutions with collecting beneficial ownership information about legal entity customers at the time of account opening.
On March 19th, the US Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2025-08 . The letter rescinds, among other things, ML 2024-07, which imposed several borrower-initiated reconsideration of value (ROV) requirements in connection with FHA-insured residential mortgage loans with a case number assigned on or after October 31, 2024. The borrower-initiated ROV requirements rescinded by HUD's most recent mortgagee letter include, but are not limited to: Disclosure at application and again upon delivery of the appraisal copy information about the borrower's ability to initiate an ROV request, Policies and procedures that outline the steps a borrower must take to initiate an ROV request, along with milestones for communication with the borrower as to the status of his/her request, and The actions a creditor may take in response to an ROV request. While underwriter-initiated ROV requirements remain in effect for FHA loans, HUD states that the borrower-initiated requirements are being rescinded in response to President Trump's executive order dated January 20, 2025. That executive order was aimed at reversing policies that the administration feels have adversely affected key sectors, including the housing market. It remains to be seen whether the Federal Housing Finance Agency will follow suit and rescind their borrower-initiated ROV requirements in connection with Fannie Mae and Freddie Mac loans.
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5438 South Prairie View Drive
West Des Moines, IA 50266
Phone
319-325-1171
michael@mchristiansconsulting.com
Michael Christians Consulting, LLC
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