CFPB Issues Semi Annual Report to Congress

The CFPB has issued its Semi-Annual Report to Congress for the time period beginning April 1, 2018 and ending September 30, 2018. The Report is the first issued by newly confirmed Director Kathy Kraninger and outlines the actions taken by her predecessor in the April-September 2018 time period.

Significant Problems Facing Consumers.

The Report identifies two “significant problems” facing consumers shopping for or obtaining consumer financial service products: (a) credit invisibility and (b) mortgage shopping. “Credit invisibility” is not a new concern and was identified as an issue during Cordray’s tenure. The Report highlights a study released by the CFPB which examines the relationship of geography to credit invisibility. It is significant that there appears to be consensus from CFPB leaders (both liberal and conservative) that credit invisibility is an issue. The Report also identified “mortgage shopping” as an issue, pointing to studies indicating that consumers do not shop for the lowest interest rates when applying for a mortgage.

Consumer Complaints Reflect a Status Quo.

The Report also summarizes the consumer complaints received by the Bureau from consumers for the past year. There were no surprises here – the three front runners for complaints filed with the CFPB were credit reporting, debt collection and mortgage. 

Debt Collection Rules Are Coming!

Perhaps the most significant news in the Report was confirmation that debt collection rules are coming. For those that have followed the rulemaking, an advanced notice of proposed rulemaking was issued in late 2013. In the summer of 2016, the CFPB issued an Outline of Proposals for Third Party Rules and indicated that “[a]s part of its overhaul of the debt collection marketplace, the CFPB plans to address consumer protection issues involving first-party debt collectors and creditors on a separate track.” Later that summer, a third party SBREFA was held.

For two years, there was no further action. In October, however, the CFPB announced that it anticipated a Notice of Public Rulemaking in March of 2019. The Report confirms that a proposed rule is coming, but that it is likely to be a more narrowed version that what was suggested by Cordray’s CFPB in 2016. According to the Report, “the Bureau will work towards releasing a proposed rules concerning FDCPA collectors’ communications practices and consumer disclosures.”

What's Next?

Kraninger is expected to testify before the House Financial Services Committee on March 7th and the hearing is highly anticipated as it will be the first opportunity to see her interactions with the Democratic led committee. No doubt, the committee will have a number of questions concerning the Bureau’s decision to walk back the Payday Lending Rules.