Consumer Financial Services Alert

In this Issue:

CFPB Announces Changes in Senior Leadership CFPB Releases Update of Private Student Loans Report CFPB Seeks Comment on Information Collection of the Office of Intergovernmental Affairs Outreach Activities CFPB Extends Comment Deadline for "All In" Finance Charge and High Cost Test Parts of RESPA/TILA Integration Proposal The CFPB Issues Exam Procedures for the Consumer Reporting Market FHFA Announces Short Sale Guidelines Federal Court Dismisses Class Action Alleging HELOC's Payment Processing Terms Violated TILA Third Circuit Holds that Federal Arbitration Act Preempts State Law Federal Court Rules State Consumer Protection Statute Applicable to Consumer-Facing Conduct Only DOJ Settles Fair Lending Suit Against Mortgage Firm Eighth Circuit Dismisses "Show Me the Note" Class Action New Jersey Federal Court Rejects Class Action Alleging Home Refinancing Foreclosure Violations First Circuit Refuses to Extend the Scope of the Rescission Period Florida Federal Court Upholds Vicarious Liability under TILA The Ninth Circuit Affirms Retailer Credit Card Online Disclosures Comply with TILA Progress Report on National Mortgage Settlement Released Massachusetts Attorney General Urges FHFA to Comply with State Mortgage Law New York Limits Compensation on High-Interest Home Loans Illinois Amends Collection Agency Act to Include Debt Buyers CFPB HAPPENINGS CFPB HAPPENINGS

CFPB Announces Changes in Senior Leadership

The CFPB recently announced the following changes in senior leadership: Kelly Thompson Cochran, who previously served as the Deputy Assistant Director for Regulations, will replace Leonard Chanin as Acting Assistant Director for Regulations; Stephen Van Meter, who previously served as Assistant General Counsel for Policy, will now serve as Deputy General Counsel. Also joining the CFPB is: Chris Lipsett, Senior Counsel in the Office of the Director and Delicia Reynolds, Staff Director for the Consumer Advisory Board and Councils.

CFPB Releases Update of Private Student Loans Report

The CFPB released an updated report on private student loans and a summary of the updates. The revised report was issued after the CFPB received feedback from researchers and industry participants. The updated report refined results in two areas: (1) the extent to which private student loan borrowers have exhausted their federal loan options, and (2) the extent to which private student loans were originated without certification of the borrower's need by the college or university. For example, the updated report shows that a higher percentage of students did not exhaust their federal loan eligibility. In particular, the percentage increased from 40% to 54.5% after the CFPB decided to include students who chose not to obtain Stafford loans. The updated report also includes a log of changes and the reasons for each change.

The release of the updated report coincided with remarks given by the CFPB's Student Loan Ombudsman, Rohit Chopra, to the Congressional Forum on Student Loans. Mr. Chopra addressed the rising student loan debt and identified three lessons for the student loan market gleaned from the mortgage market crisis: (1) aligning incentives, (2) spurring refinance and (3) ensuring adequate servicing.

CFPB Seeks Comment on Information Collection of the Office of Intergovernmental Affairs Outreach Activities

The CFPB's Office of Intergovernmental Affairs issued a notice and request for comment seeking to conduct outreach by collecting information from state, local and tribal governments related to the CFPB's activities. Comments are due September 24, 2012.

CFPB Extends Comment Deadline for "All In" Finance Charge and High Cost Test Parts of RESPA/TILA Integration Proposal

The CFPB announced that it has extended the comment period on the proposals concerning the definition of finance charge and the high-cost mortgage coverage test in its mortgage loan disclosure integration rule (see July 10, 2012 Alert). The original comment period was set to end on September 7, and now will end November 6, 2012.

The CFPB Issues Exam Procedures for the Consumer Reporting Market

The CFPB announced the release of Examination Procedures for larger participants of the consumer reporting market. The Examination Procedures set forth the procedures by which the CFPB will examine larger participants including their use and provision of accurate information, handling of consumer disputes, availability of disclosures to consumers, and prevention of fraud and identity theft. The CFPB finalized its rule defining larger participants for the consumer reporting market in July 2012 (see July 24, 2012 Alert).

REGULATORY DEVELOPMENTS

FHFA Announces Short Sale Guidelines

The Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac issued new guidelines regarding short sales that go into effect on November 1, 2012. Under the new guidelines, homeowners with an eligible hardship will be able to sell their homes through a short sale, even if their mortgages are current. In addition, servicers can expedite processing without Fannie Mae or Freddie Mac's approval for certain borrower hardships, including death of a borrower or co-borrower, divorce, disability or job relocation. Other key features include offering second...