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White House
Regulatory Freeze Pending Review
Among the series of Executive Orders issued by President Trump was an Executive Order which freezes all executive departments and agencies from proposing or issuing a rule until the department or agency head appointed by President Trump has a chance to review and approve the rule.
The Executive Order also requires any rule that was sent to the OFR but was not published in the Federal Register to be withdrawn until it can be reviewed and approved by the new agency head.
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National Credit Union Administration (NCUA)
NCUA Releases Research Note on Overdraft, NSF Fees at Credit Unions
The NCUA released a research note that analyses the statistics for overdraft and non-sufficient funds fees and observations on the relationship between overdraft and non-sufficient funds fees and other revenues. Beginning with the first quarter of 2024 Call Report, federally insured credit unions with more than $1 billion in assets were required to submit their year-to-date revenues from overdraft and NSF fees. The Research Note, prepared by NCUA’s Office of the Chief Economist using revenue data from the first three quarters of 2024, evaluates overdraft and NSF revenues as a fraction of total revenues.
The Research Note highlights two observations:
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Consumer Financial Protection Bureau (CFPB)
CFPB Takes Action Against Draper & Kramer Mortgage for Mortage Lending Practices
The CFPB took action against Draper & Kramer for alleged discriminatory mortgage lending activities that discouraged homebuyers from applying to Draper for homes in majority-Black and Hispanic neighborhoods in the greater Chicago and Boston areas. The CFPB alleges that Draper located all its offices in majority-white neighborhoods, concentrated its marketing in majority-white neighborhoods, and avoided marketing to majority-Black and Hispanic areas. These actions resulted in disproportionately low numbers of mortgage loan applications and mortgage loan originations from majority-Black and Hispanic neighborhoods in Chicago and Boston compared to other lenders. If entered by the court, the proposed order announced today would ban Draper from engaging in residential mortgage lending activities for five years and require Draper to pay a $1.5 million civil money penalty into the CFPB’s victims relief fund.
The CFPB alleges that Draper and Kramer:
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Intentionally focused mortgage lending activities in majority-white neighborhoods and excluded Black and Hispanic neighborhoods: Draper had no offices, no loan officers, and virtually no marketing or outreach in majority- or high-Black and Hispanic neighborhoods in Chicago and Boston. Draper did not assign any loan officers to solicit applications in majority-Black and Hispanic communities and failed to train or incentivize its loan officers to lend in these communities. Draper’s outreach and marketing also specifically targeted majority-white neighborhoods and largely avoided majority-Black and Hispanic neighborhoods.
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Discouraged mortgage applicants from pursuing properties in majority-Black and Hispanic neighborhoods: Draper’s business model discouraged borrowers from applying for loans to purchase property located in these neighborhoods. Draper’s peer lenders generated applications for properties in majority-Black and Hispanic areas in the Chicago metro area at over two and a half times the rate and in the Boston metro area at three times the rate that Draper generated such applications. Draper also originated disproportionately low amounts of mortgage loans for properties in these neighborhoods, with peers in Chicago and Boston originating two and a half times more loans than Draper in majority-Black and Hispanic neighborhoods.
Supervisory Highlights: Advanced Technologies Special Edition
The CFPB issued the Winter 2025 edition of the Supervisory Highlights which provides insight into CFPB supervisory activities and the use of advanced technology when making credit scoring models in making credit decisions. The CFPB highlights that there is no ‘advanced technology’ exception to Federal consumer financial laws and financial institutions still need to comply with the laws when using advanced technology, including artificial intelligence and machine learning.
The Supervisory Highlights focuses on credit scoring models and compliance with the Equal Credit Opportunity Act and dives into key areas such as:
CFPB Orders Equifax to Pay $15 Million for Improper Investigations of Credit Reporting Errors
Equifax is the latest consumer reporting agency to come under fire. The CFPB has ordered the company to pay a $15 million civil money penalty to be deposited into the CFPB’s victims' relief fund. Equifax failed to conduct proper investigations of consumer disputes by ignoring consumer documents and evidence, allowing previously deleted inaccuracies to be reinserted into credit reports, providing confusing and conflicting letters to consumers about the results of the investigations, and using flawed software which led to inaccurate consumer credit reports.
CFPB Orders Honda’s Auto Financing Arm to Pay $12.8 Million for COVID-19 and Other Credit Reporting Failures
The American Honda Finance Corporation has been ordered to pay $12.8 million for reporting false information that affected credit reports of 300,000 people who own Honda and Acura vehicles. During the COVID-19 pandemic, Honda Finance deferred vehicle loan payments. However, the CFPB had found that the company reported to credit reporting agencies that these borrowers on the deferment plan were delinquent when they should have been reported as current. In addition to this, the CFPB found that when customers disputed these reports, Honda Finance violated the Fair Credit Reporting Act by failing to properly investigate these disputes.
CFPB Finds More Vehicles Eligible for Repossession Than Pre-Pandemic
The CFPB has published a new report showing that the rate of auto repossessions at the end of 2022 surpassed pre-pandemic levels. Additionally, the report showed that lenders were increasingly more likely to use a third party to manage the repossession process. The use of a third-party company increases consumer costs. The data taken from 2018 to 2022 showed that consumer risk increased significantly in the auto loan market.
The report findings included:
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Consumers still owed thousands after repossession. The average outstanding balance after the repossession in December 2019 was more than $10,000. The average as of December 2022 increased to more than $11,000.
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