The Consumer Financial Protection Bureau (“CFPB”) recently issued a compliance bulletin warning financial institutions that they may face potential liability as indirect lenders for fair lending violations in the process of making indirect loans through automobile dealerships (the “Bulletin”). Indirect auto lending is a process where an automobile dealership will typically collect credit information from a consumer seeking financing and then forward the information to prospective lenders....
The Consumer Financial Protection Bureau (“CFPB”) recently issued a Small Entity Compliance Guide on the Ability-to-Repay and Qualified Mortgage Rule (the “Rule”). The Rule was issued under Dodd-Frank. The Guide provides an overall summary of the Rule and discusses application of the Rule in a Q&A format. The CFPB issued the final rule on January 10, 2013, with an effective date of January 10, 2014.
The FDIC, Federal Reserve, and OCC have issued joint guidance on the practice of leveraged lending (the “Guidance”). Although definitions of “leveraged lending” vary, generally speaking the practice involves the making of loans to highly-leveraged commercial borrowers or the making of loans to borrowers for the purpose of buyouts, acquisitions, or capital distributions.
Financial institutions are subject to numerous rules governing compensation, including a number we have discussed in prior blog entries. Among the new regulatory developments arising from Dodd-Frank are new disclosure requirements with respect to compensation paid to executives who work at SEC-reporting companies. One example is the “say-on-pay” rule promulgated by the Securities and Exchange Commission (“SEC”), which is already impacting SEC-reporting financial institutions. Additional requirements are already in the SEC’s pipeline. Greg Fryer and Gabriel Weiss, members of Verrill Dana's Securities Law Group, have written an article on recent developments in executive compensation disclosures under Dodd-Frank, applicable to SEC-reporting institutions. In their article, Executive Compensation Reporting After Dodd-Frank: Where We Came From and Where We Are Heading, the authors discuss the evolution of executive compensation reporting requirements and a look at additional future complexities that will be coming down the road.
The OCC, Federal Reserve, CFPB, FDIC, FHFA, and NCUA recently issued notice of a Final Rule establishing new appraisal requirements for “higher-priced mortgage loans” (HPMLs). The Final Rule is being implemented under the Federal Truth in Lending Act and was required under Dodd-Frank. We discussed an earlier proposed version of the rule last November. Whether a consumer mortgage loan is an HPML generally depends on if the interest rate exceeds 1.5% or 2.5% over prime (depending on principal amount) for a first-lien residential mortgage, or 3.5% over prime for a subordinate-lien residential mortgages. There are a number of significant exclusions from requirements under the Final Rule, for example, for property located in “rural counties” and for property acquired from servicemembers.