States Champion Regulatory Streamlining; CFPB Remains Focused on Consumer Loan Servicing and Fair Lending

Carol Beaumier, Executive Vice President and Managing Director Regulatory Compliance Practice

While regulatory relief remains a topic within the Beltway, the Conference of State Bank Supervisors (CSBS), the nationwide organization of financial regulators from all 50 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands, has already taken action to streamline the multistate regulatory oversight framework for one group of its regulated entities – money services businesses (MSB). In April, the CSBS launched the Money Services Business Call Report (MSB Call Report) which will allow MSBs to submit a single periodic financial form and other activity reports rather than deal with state-specific reporting requirements in varying formats. The MSB Call Report includes a Financial Condition Report, Transaction Activity Report, Permissible Investment Report and (to be added in the fourth quarter 2017) a Transaction Destination Country Report. The initial report was due by May 15, 2017. While individual states need to opt into this reporting, this move is nonetheless a step in the right direction for the MSB community.

Among the topics on the agenda of the Consumer Financial Protection Bureau (CFPB) are mortgage servicing rights for consumers and fair lending. The CFPB’s 2016 final rule amending certain provisions of Regulation X (Real Estate Settlement Procedures Act) and Regulation Z (Truth in Lending) will be effective in October 2017. The rule requires a series of modifications to the procedures and technology platforms used by mortgage services. These modifications affect, among other things, key definitions (successors in interest, delinquency), lender-placed insurance, loss mitigation, communications with borrowers in bankruptcy, and periodic statements and coupon books. With the effective date less than six months away, mortgage services need to understand and be prepared to implement all of the required changes.

The 2016 CFPB Fair Lending Report, published in April, signals the agency’s fair lending priorities for 2017. These include identification of redlining activities; mortgage and student loan servicing issues based on race, ethnicity, sex or age; and fair lending challenges faced by women-owned and minority-owned businesses. Lenders engaged in mortgage and student loan servicing and small business lending activities should consider stepping up their monitoring and testing of these areas in preparation for upcoming CFPB examinations.

Learn more about these developments in our May issue of Compliance Insightsavailable here, and review our monthly recap of compliance developments on the same site.

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