The Consumer Financial Protection Bureau today ordered Prospect Mortgage, a major mortgage lender, to pay a $3.5 million fine for improper mortgage referrals, in what the regulator calls an alleged "kickback" scheme, HousingWire.com reported yesterday. The lender paid illegal kickbacks for mortgage business referrals. But Prospect Mortgage isn’t the only one being fined. The CFPB also dealt out penalties to two real estate brokers and a mortgage servicer who took kickbacks from Prospect. These three will pay a combined total of $495,000 in consumer relief, repayment of ill-gotten gains and penalties. “Today’s action sends a clear message that it is illegal to make or accept payments for mortgage referrals,” CFPB Director Richard Cordray said.
The Federal Reserve’s preferred measure of inflation rose last month to the strongest reading in more than two years, providing fresh evidence of firming prices a day before policy makers meet to discuss the path of interest rates this year, the Wall Street Journal reported today. The personal-consumption-expenditures price index advanced 0.2 percent in December from the prior month, the Commerce Department said yesterday. The measure of consumer inflation rose 1.6 percent from a year earlier, a 12-month increase last seen in September 2014. The reading was last higher in July that year. The report also showed consumer spending increased solidly last month, with strong year-end car sales and higher utility spending with the return of seasonably cool temperatures.
The Consumer Financial Protection Bureau announced yesterday that it took action against a ring of law firms and attorneys who the government watchdog contends collaborated to charge illegal fees to consumers seeking debt relief, PYMNTS.com reported. In a complaint filed in federal court, the CFPB alleged Howard Law, Williamson Law Firm and Williamson & Howard, as well as attorneys Vincent Howard and Lawrence Williamson, ran this debt relief operation along with Morgan Drexen, which shut down in 2015 following the CFPB’s lawsuit against that company. The CFPB is aiming to stop the defendants’ unlawful scheme, obtain relief for harmed consumers and impose penalties. “The defendants exploited consumers who were already suffering financial difficulties by tricking them into paying steep, illegal fees,” said CFPB Director Richard Cordray in a press release. “We put a stop to this scam once already, and we intend to do it again.”
President Trump yesterday reiterated his intention to roll back Dodd-Frank financial regulations enacted to prevent another financial crisis, telling reporters that he soon planned to do “a big number” on the 2010 law, the New York Times reported today. During the 2016 campaign, Trump had pledged to “dismantle” Dodd-Frank, passed when Democrats controlled the White House and Congress, without specifying the actions he planned to take. Trump’s pick for secretary of the Treasury, Stephen T. Mnuchin, a hedge fund manager, also has promised to “kill” parts of the law, including the so-called Volcker rule restricting banks from making certain kinds of speculative investments of the kind that led to the 2008-9 global economic crisis. “Dodd-Frank is a disaster,” the president said during a 10-minute session with reporters as he signed an executive order slashing government regulations. Read more.
In related news, a new executive order that requires executive agencies to find at least two existing regulations to rescind for every new rule does not extend to independent agencies, according to the White House, MorningConsult.com reported. “All independent agencies are not covered by the EO,” Lindsay Walters, a White House spokeswoman, said in response to the question of whether the order applies to independent agencies like the Consumer Financial Protection Bureau, the Securities and Exchange Commission and the Commodity Futures Trading Commission. President Donald Trump signed the order yesterday requiring all executive departments or agencies to “identify” what existing regulations can be repealed. Agencies covered by the action also must ensure that regulations issued for the rest of this fiscal year, offset by rescinded regulations, have a net cost of zero dollars. Read more.
In Midland Funding, LLC v. Johnson, No. 16-348, the Supreme Court is consider two questions: whether filing a claim on a stale debt violates the FDCPA and whether the Bankruptcy implicitly repeals the FDCPA in this context, according to an analysis from ABI Resident Scholar Prof. Andrew B. Dawson. The Supreme Court recently heard the appeal on oral argument, with the Justices’ questions focusing primarily on the first issue. Although it is always risky to predict outcomes based on oral argument, it is nonetheless informative to consider the concerns expressed by the Justices, both for this case and for the next FDCPA challenge the Court has agreed to hear. Click here to read the full analysis from Prof. Dawson.
After an eight-year run, a troubled government effort to prevent foreclosures and keep struggling borrowers in their homes came to an end last month, the New York Times DealBook blog reported yesterday. What happens next will be a Trump-era laboratory experiment in how financial services companies conduct themselves when the regulatory fetters are loosened. The expired Obama-era program — known as HAMP, the Home Affordable Modification Program — was widely criticized for its poor execution. Participation was voluntary for banks, and many that opted in did so unenthusiastically. Consumer advocates were also not thrilled; many felt that the program did not go far enough to help troubled homeowners or hold accountable the banks that contributed to their predicaments. But Republican-led Washington has no intention of replacing it. So now it will be entirely up to the private sector to address a lingering social ill that was brought on by the financial crisis. Banks and mortgage lenders say they are ready to step in with their own foreclosure-prevention programs, modeled on what they learned from the Obama administration’s effort. Armed with years of new data, financial companies say that they now know how to make loan-modification programs successful, for both borrowers — who want to protect their homes — and lenders, who want to limit their losses on delinquent loans headed for default.
Wall Street veteran Bradley Reifler was facing a stark choice: He could pay J.P. Morgan Chase Bank $2 million — money he says he doesn’t have — or go to jail. So Reifler, a former star trader at defunct commodities brokerage Refco Inc. and co-founder of the once-high-flying boutique brokerage Pali Capital, devised a third alternative: He filed for bankruptcy, according to a Wall Street Journal report today. Reifler, the grandson of Refco’s founder and the chief executive of the fledgling investment firm Forefront Capital, filed for chapter 7 protection on Friday in U.S. Bankruptcy Court in Poughkeepsie, N.Y., listing assets of less than $50,000 and debts of more than $50 million, including a $23.3 million federal tax bill. The chapter 7 filing came days before U.S. District Court Judge Deborah Batts was set to consider whether Reifler should be held in civil contempt for failing to pay $2 million to JPMorgan Chase.
