Top Story Lending Related

The CFPB has scheduled a final rule making inflation adjustments to civil money penalty limits within its jurisdiction for publication in the January 8, 2025, Federal Register. The rule, which will become effective January 15, 2025, amends the CFPB's regulation at 12 C.F.R. part 1083.

The multiplier for the 2025 annual adjustment is 1.02598, as determined by the Office of Management and Budget. For example, the maximum Consumer Financial Protection Act Tier 3 penalty for knowingly violating a federal consumer financial law will increase to $1,443,275 for each day the violation continues.

This morning, the CFPB announced it has finalized a rule amending Regulation V, which implements the Fair Credit Reporting Act (FCRA), that will remove an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. The CFPB’s action will ban the inclusion of medical bills on credit reports used by lenders and prohibit lenders from using medical information in their lending decisions.

The CFPB said the rule will increase privacy protections and prevent debt collectors from using the credit reporting system to coerce people to pay bills they don’t owe. The CFPB has found that medical debts provide little predictive value to lenders about borrowers’ ability to repay other debts, and consumers frequently report receiving inaccurate bills or being asked to pay bills that should have been covered by insurance or financial assistance programs.

The CFPB’s final rule brings regulations in line with Congress’s decision to safeguard consumers’ privacy by restricting lenders from obtaining or using medical information, including information about medical debts. Federal financial regulators later created an exception to this restriction, allowing creditors to consider medical debts. This carveout has enabled debt collectors to use the credit reporting system to coerce payments from patients for inaccurate or false medical bills.

The amendments to Regulation V will become effective 60 days after the final rule is published in the Federal Register.

• Unofficial redline of the Regulation V amendments

The CFPB this morning announced it has sued Vanderbilt Mortgage & Finance for setting families up to fail when they borrowed money to buy a manufactured home. The CFPB alleges that Vanderbilt’s business model ignored clear and obvious red flags that the borrowers could not afford the loans. As a result, many families found themselves struggling to make payments and meet basic life necessities. Vanderbilt charged many borrowers additional fees and penalties when their loans became delinquent, and some eventually lost their homes. The CFPB is seeking to stop Vanderbilt’s illegal practices and obtain relief for the harmed homeowners.

Vanderbilt Mortgage & Finance, Inc. is a nonbank financing company based in Maryville, Tennessee that originates loans for manufactured homes across the country. Vanderbilt is a unit of Clayton Homes, Inc., which is the largest manufactured home builder in the U.S. and a wholly owned subsidiary of Berkshire Hathaway, Inc., the multinational conglomerate based in Omaha, Nebraska.

The CFPB alleges that Vanderbilt failed to make reasonable, good-faith determinations of borrowers’ ability to repay loans, as legally required. Specifically, the lawsuit alleges Vanderbilt:

• Manipulated lending standards when borrowers did not make sufficient income
• Fabricated unrealistic estimates of living expenses
• Made loans to borrowers it projected could not pay

The CFPB alleges that Vanderbilt violated the Truth in Lending Act and Regulation Z.

• Complaint against Vanderbilt

The FDIC has released its January 2025 list of banks recently examined for compliance with the Community Reinvestment Act (CRA). Of the 72 banks listed, 66 received evaluation ratings of Satisfactory.

Hill Bank & Trust Co., Weimar, Texas, received a "Needs to Improve" rating. These five banks received ratings of "Outstanding":

• Garfield County Bank, Jordan, Montana
• Mt. McKinley Bank, Fairbanks, Alaska
• Open Bank, Los Angeles, California
• Spring Bank, Brookfield, Wisconsin
• Truist Bank, Charlotte, North Carolina

The links above are to the banks' CRA evaluations.

The OCC has released a list of Community Reinvestment Act performance evaluations that became public during the month of December 2024. Thirteen of the institutions on the list received a CRA rating of Satisfactory.

Ratings of Outstanding were listed for —

• The First National Bank of Sparta, Sparta, Illinois
• First Seacoast Bank, Dover, New Hampshire
• Metropolitan Bank and Trust Company, New York, New York

The National Credit Union Administration has announced it has permanently prohibited two individuals from participating in the affairs of any federally insured depository institution.

• Demetria Baker, former chief executive officer at Lynchberg Municipal Federal Employees Credit Union (LMFECU), Lynchburg, Virginia, was issued a prohibition order after a finding that she made a series of loans to herself and her son that were in violation of LMEFCU policies for approval, documentation, or underwriting, and that a significant amount of cash was removed from a cash drawer that was only accessible to her.
• Teresa Paulo, a former employee at Southern Pine Credit Union, Valdosta, Georgia, received a notice of prohibition after she was convicted and sentenced for aggravated identity theft and bank fraud resulting from her misconduct at the credit union

The Federal Housing Finance Agency has reported that U.S. house prices rose 0.4 percent in October, according to the FHFA’s seasonally adjusted monthly House Price Index. House prices rose 4.5 percent from October 2023 to October 2024. The previously reported 0.7 percent price growth in September remained unchanged.

“Annual house price gains have been trending down since February, stabilizing around 4.5 percent during the last three months,” said Dr. Anju Vajja, Deputy Director for FHFA’s Division of Research and Statistics. “Even with elevated house prices and mortgage rates putting continued pressure on affordability, house prices continued to grow at a steady rate, likely due to a historically low inventory of homes for sale.”

The Federal Trade Commission has reported it has referred its federal court case against online cash advance firm Dave Inc. to the U.S. Department of Justice (DOJ), which has filed an amended complaint in the case that names Dave CEO Jason Wilk as a defendant and seeks civil penalties.

The FTC first brought its case against Dave in November 2024, charging that the company uses misleading marketing to deceive consumers about the amount of its cash advances, charges consumers undisclosed fees, and charges so-called “tips” to consumers without their consent.

The amended complaint charges Dave and Wilk with violating the FTC Act and the Restore Online Shoppers’ Confidence Act and seeks both refunds for consumers and civil penalties against the defendants, as well as asking the court to stop the company’s unlawful actions.

• FTC Case file information

The Consumer Financial Protection Bureau yesterday published [89 FR 106446] a notice to advise credit card issuers that they may voluntarily submit credit card price and availability data through the CFPB's Terms of Credit Card Plans (TCCP) Survey.

The NMLS has posted a reminder that its annual renewal period for Mortgage Loan Originators ends tomorrow (January 31). The NMLS system will not be available on January 1 (New Year's Day). MLOs who miss the renewal deadline can apply for reinstatement from January 2 through midnight EST February 28, 2025.