CFPB- busy for 2015

Posted by kevin on January 13, 2015 under Foreclosure Blog | Comments are off for this article

I have seen a plethora of articles which say that the Consumer Financial Protection Bureau (CFPB) looks to be pro-active in 2015. That is a good sign especially when you consider that the DOJ has done little in way going after the bailed out banks, and the Republicans have taken over the House and Senate.

On the agenda for 2015 are a review of debt collection practices by first parties (the owner of the debt) as opposed to third party collectors. Third party collectors are usually subject to the FDCPA and consumers have a private right of action to go after illegal activity by third parties. However, the FDCPA hardly ever applies to the owner of the debt. Employees of those organizations can engage in the same type of outrageous acts which could land a third party collector in court- but they skate. According to the articles that I have read, the CFPB wants to look into how debts are being reported by first parties to consumer reporting agencies. Moreover, the CFPB wants to review first party dispute resolution policies.

Other areas of concern are payday loans, arbitration clauses in credit agreements, student loans especially in cases dealing with for profit schools, and continued review of mortgage servicers.

I am especially interested in seeing what comes out of the student loan investigations. At this time, private lenders get all the benefits associated with the discharge exception in bankruptcy, but are not required (as with federal loans) to offer income based repayment plans. I do not know if that was an intended consequence of limiting the bankruptcy discharge or just something that fell between the slats. However, that law does present to private lenders a windfall. They get to go after the student and pound them for judgment and interest with little or no downside risk that the loan will be discharged in bankruptcy. While at the same time, the student loan creditor does not have to deal fairly with a student strapped with debt and just starting out.

The sense of urgency at CFPB seems to be fueled in part, however, by the reality that the Republicans have taken over the House and Senate. Senator Shelby, Chair of the Senate Appropriations Committee, and Congressman Hensarling, now Chair of the House Financial Services Committee, are no big fans of Dodd-Frank and the CFPB. They have promised to clip the CFPB’s wings. In fact, Hensarling has just attacked the CFPB for upgrading its offices. So, maybe the flurry of activity at CFPB is just trying to make themselves harder to hit moving targets.

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