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New York regulators have reached a settlement worth up to $2.7 million with a hedge fund that provided financing and assistance to a large rent-to-own home firm accused of engaging in predatory business practices, the New York Times reported. The settlement announced yesterday requires the hedge fund, Atalaya Capital Management, to provide at least $20,000 in restitution to the more than 100 state residents who thought they were entering into deals to ultimately buy homes from Vision Property Management. Atalaya, a $5 billion hedge fund based in New York, also agreed to pay a $250,000 civil penalty under the settlement, reached with the state attorney general and the Department of Financial Services. The deal came less than a month after the agencies filed a lawsuit against Vision, saying the company had operated an “illegal, unlicensed mortgage lending” business by using deceptive rent-to-own agreements to sell often-rundown homes.

The Consumer Financial Protection Bureau (CFPB) yesterday announced a settlement with Maxitransfers Corp., a company that serves consumers looking to send money overseas. This is the Bureau’s first enforcement action based on violations of the Remittance Transfer Rule, which implements the Electronic Fund Transfer Act (EFTA). Maxitransfers provides remittance transfer services from more than 1,600 third-party locations in the U.S., such as grocery stores and pharmacies, to over 19,500 payment locations in Mexico, Central and South America. The company is headquartered in Irving, Texas. From October 2013 until May 2017, Maxitransfers sent approximately 14.5 million remittance transfers for consumers in the U.S. For each transfer, Maxitransfers was required to provide consumer protection disclosures and to comply with other requirements of EFTA and the Remittance Transfer Rule. According to the consent order, the Bureau found that Maxitransfersviolated the Consumer Financial Protection Act of 2010 (CFPA) by stating to consumers that it would not be responsible for errors made by its third-party payment agents when in fact the Remittance Transfer Rule makes Maxitransfers responsible for the acts of the agent when the agent acts for the provider. The CFPB also found that Maxitransfers violated EFTA and the Remittance Transfer Rule by using inaccurate language in disclosures and failing to maintain required policies and procedures to comply with error resolution procedures.

A national bank regulator is touring the country to sell his plans to modify lower-income lending requirements and overcome resistance from other regulators, banks and community advocates, the Wall Street Journal reported. Comptroller of the Currency Joseph Otting, who took office in 2017, has made it a priority to revamp rules implementing the 1977 Community Reinvestment Act, which requires banks to serve borrowers of all income levels who reside near their branches. The law was intended to combat the practice of redlining, or banks carving out poor and minority neighborhoods from their lending and investment plans. But at a time when many banking services are provided online there is growing consensus that the rules implementing CRA should be updated. Otting is seeking to judge banks’ CRA performance by giving them dollar targets based on how many deposits they hold in different areas. Currently, banks are graded on the amount and quality of loans, investments and services they provide to poorer neighborhoods near their branches. Bad performance can bar banks from merging with or acquiring other banks.

The Consumer Financial Protection Bureau (CFPB) announced on Friday the appointment of Robert G. Cameron to serve as the CFPB’s private education loan ombudsman, according to a press release. Cameron is a Colonel and Staff Judge Advocate for the Pennsylvania Army National Guard. He has served in the United States Army for 29 years. Cameron also joins the CFPB from the Pennsylvania Higher Education Assistance Agency where he was a high-ranking official responsible for litigation, compliance, and risk mitigation efforts. The Dodd-Frank Act created a private education loan ombudsman position within the Bureau. The Dodd-Frank Act gave the Treasury Secretary, in consultation with the CFPB Director, the authority to designate the ombudsman. The ombudsman is responsible for receiving, reviewing, and attempting to resolve complaints from private student loan borrowers. The ombudsman is also responsible for compiling and analyzing complaint data on private education loans and making appropriate recommendations to the Secretary of the Treasury, the CFPB Director, the Secretary of Education, and Congress.

The Consumer Financial Protection Bureau (Bureau) and the Office of the Arkansas Attorney General yesterday filed a proposed settlement with Andrew Gamber; Voyager Financial Group, LLC; BAIC, Inc.; and SoBell Corp. The companies, owned and operated by Gamber, were brokers of contracts offering high-interest credit to veterans, many of whom are disabled, and to other consumers, according to a CFPB press release. Under the proposed settlement, Gamber and the companies will be banned from the industry and a judgment requiring redress, a civil money penalty, and a payment to the State of Arkansas will be entered against them. The Bureau and the Arkansas Attorney General alleged that Gamber and his companies misrepresented to consumers that the contracts the companies facilitate are valid and enforceable when, in fact, the contracts are void under federal and state law; misrepresented to consumers that the product is a sale of payments and not a high-interest credit offer; misrepresented to consumers when they will receive their funds; and failed to inform consumers of the applicable interest rate on the credit offer. Under the proposed settlement, Gamber and the companies are permanently banned from brokering, offering, or arranging agreements between pension recipients and third parties under which the consumer purports to sell a future right to an income stream from the consumer’s pension. The proposed settlement would also impose a judgment for redress of $2.7 million, a civil money penalty of $1 to the Bureau, and a payment of $75,000 to the Arkansas Attorney General’s Consumer Education and Enforcement Fund in lieu of a civil money penalty to the State of Arkansas.

The U.S. Consumer Financial Protection Bureau (CFPB) said yesterday that it had reached a settlement with ITT Educational Services Inc. over predatory lending practices, but does not plan to collect any of a $60 million judgment from the bankrupt for-profit college, Reuters reported. The proposed settlement stipulates that the bureau will not seek any funds through bankruptcy proceedings from ITT, citing the limited amount available to be distributed to former students. The settlement, filed in the U.S. District Court for the Southern District of Indiana also bars ITT, which filed for bankruptcy in September 2016, from providing student loans in the future. The CFPB had sued ITT in 2014, alleging it engaged in predatory lending practices, pushing student borrowers into high-cost private loans that they did not understand and could not afford. ITT closed roughly 130 campuses as it filed for bankruptcy, amid growing government scrutiny of for-profit colleges. In June, the government announced ITT’s affiliated lender, Student CU Connect CUSO, would stop collecting on $168 million in outstanding student loans.

A federal judge on Wednesday cleared the way for the Education Department to stop using private debt collectors and revamp the way it handles overdue student loans, the Washington Post reported. Instead of having private collection agencies solely dedicated to recouping past-due education loans, the department wants to fold those duties into student loan servicing as part of a broader overhaul called the Next Generation Financial Services Environment, or NextGen. Bundling those functions would require companies competing for the business to provide a wide array of services or team up with other firms. Neither option is appealing to private debt collectors, who argue that the Education Department arbitrarily restricted competition and illegally canceled a contract solicitation they were vying to win. Last year, the courts barred the department from canceling the collection contract. But when the agency issued three new solicitations for loan servicers that included default collection duties, a group of debt collectors filed another lawsuit to block the NextGen request for proposals. On Wednesday, U.S. Court of Federal Claims Judge Thomas C. Wheeler said that the Education Department provided sufficient justification for consolidating loan servicing and default collection work. He said that the department was within its right to cancel the collection contract solicitation in light of its rollout of NextGen. Judge Wheeler pushed back against the argument that NextGen would create irreparable harm for the debt collectors, noting that they can team up with other companies for a slice of the business. Still, he criticized the Education Department’s messy bid for new contractors to manage its $1.5 trillion portfolio of student loans.

Illinois residents who have had judgments entered against them for consumer debts soon will start paying less interest on those debts, and collectors will have a shorter time frame in which to demand payments, the Chicago Daily Herald reported. That's the result of a new law Gov. J.B. Pritzker (D) signed on Monday. House Bill 88, known as the Consumer Fairness Act, reduces the interest rate charged on post-judgment debt of $25,000 or less to 5 percent, instead of 9 percent. It also reduces the time for collecting on a judgment to 17 years, instead of 26 years. The bill passed both chambers by unanimous votes without opposition from debt collectors or other financial institutions. The new law will take effect Jan. 1, 2020.