b'CREDIT CARDS AUTO LOANSCONSUMER FINANCIAL &TELEPHONE CONSUMER PROTECTION BUREAU PROTECTION ACT For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.comLast year we also predicted that the CFPB would pro- based on race, color, national origin, and/or sex, in vide clarification on the Truth in Lending Act (TILA) andviolation of the Fair Housing Act. Citibank self-reported Real Estate Settlement Procedures Act (RESPA) mort- data concerning its RLP program to the OCC in 2015. gage disclosure requirements. The Bureau did so byIn addition to paying a $25 million penalty, Citibank providing TILA-RESPA Integrated Disclosure FAQs per- agreed to reimburse approximately 24,000 impacted Mortgage Origination + Servicingtaining to compliance with the TILA-RESPA Disclosureborrowers at a cost of approximately $24 million. MORTGAGESTUDENT LENDINGDEBT COLLECTION Rule (TRID). The FAQs clarify (1) the types of changesDOJ Settles with First Merchants Bank Over Alleged to terms that must be disclosed to consumers at leastLending Discrimination. In January, the DOJ reached three days before closing, (2) the use of Regulation Za settlement with First Merchants Bank over the banks In 2019, Goodwin reported on mortgage servicing and origination enforcement actions at both themodel forms as a safe harbor, (3) TRIDs applicability toallegedly discriminatory mortgage origination practices. state and federal levels that resulted in total recoveries of approximately $100 milliona greater thanconstruction-only and construction-permanent loans,The DOJ alleged that the banks redlining practices 90% decrease from the $1.15 billion recovered in 2018. The 13 publicly announced enforcement actionsand (4) loan estimate requirements.included maintaining a horseshoe-shaped Indianapo-Goodwin tracked represent a 41% decrease from the 22 actions tracked in 2018, and an 81% decreaselis assessment area for Community Reinvestment Act FEDERAL COURTS OF since 2015. Federal agencies, primarily the DOJ, CFPB, OCC, and FDIC brought a majority of the actions2019 HIGHLIGHTS purposes that excluded almost every majority-Black APPEALS DATA SECURITY PAYDAY LENDING (8), while state attorneys general and enforcement agencies in California, Maryland, Massachusetts, andOCC Enters into Consent Order with Citibank Over Itscensus tract in the Indianapolis area. The DOJ further New York brought the remaining actions. Goodwin tracked fewer actions in the mortgage origination andRelationship Loan Pricing Program. In March, the OCCalleged that the bank had failed to advertise or operate servicing space in 2019 than at any point since it began tracking enforcement activity in 2015.entered into a Consent Order with Citibank, N.A. underbank branches in such census tracts, and prioritized which Citibank agreed to pay a $25 million civil moneycustomers in areas where it maintained physical branch penalty for allegedly violating the Fair Housing Act. Thelocations. To settle allegations that its conduct violat-KEY TRENDSrevised the FHAs loan-level certification, lender certifi- OCC alleged that the lender failed to ensure that itsed the Fair Housing Act and Equal Credit Opportunity The decline in enforcement activity related to mortgagecation, and defect taxonomy. Several of the largest FHARelationship Loan Pricing (RLP) program, which offeredAct (ECOA), the bank agreed to invest $1.12 million in a lending and servicing undoubtedly stems from thelendersincluding Wells Fargoleft the program afterclosing cost credits and interest rate deductions to cus- loan subsidy fund to subsidize credit opportunities for nearly complete cessation of enforcement activity aris- resolving FCA-related enforcement actions in recenttomers who had an existing relationship with Citibank,residents in majority-Black census tracts, and to spending from the Great Recession, and reflects the industrysyears. In 2010 depository institutions originated somewas offered to all eligible customers or that the reasonsan additional $500,000 in marketing efforts, community focus on compliance and increased transparency by45% of FHA-insured loans, but in 2019 they originatedfor any program denials were documented. The lenderoutreach, and other programs geared towards minority regulators. Last year, for example, we predicted a sharpless than 14% of FHA-insured loans. FHA Commissionerallegedly failed to train its loan officers on how to offerresidents. The bank also agreed to open a new branch decline in new enforcement actions brought by theBrian Montgomery announced that the changes wereits loan pricing program to all qualifying customers. Thein Indianapolis in a majority-Black census tract designed DOJ against mortgage lenders under the False Claimsmade because lending partners are seeking clarityOCC alleged that the banks ineffective risk manage- specifically to provide banking and credit opportunities Act (FCA) for their origination and servicing activitiesand greater certainty when documenting compliancement and control weaknesses had a disparate impactto minority borrowers. during and in the immediate aftermath of the Greatwith FHA requirements. Attorney General William P. Recession. The DOJ and HUD had brought over 30Barr also noted that uncertain and unanticipated FCA actions under this theory since 2012.liability for regulatory defects led to many well-capital-ized lenders, including many banks and credit unionsMortgage Actions by YearThat prediction proved true: there were no new publiclystatutorily required to help meet the credit needs ofMORTGAGE ACTIONS BY YEAR (WITH RECOVERIES)announced actions in 2019. Instead, in October 2019,the communities in which they do business, to largely HUD and the DOJ entered into a Memorandum of Un- withdraw from FHA lending. While the industry sharply derstanding (MOU) agreeing that HUDs administrativecriticized the initial draft of FHAs proposal that was re-enforcement mechanisms will be the primary tool usedleased in May, the final proposal published in October to enforce HUDs lender guidelines rather than DOJresolved some, but not all, of the industrys concerns. False Claim actions. The MOU further decreases theDuring 2019, federal and state agencies focused their likelihood that the industry will see a resurgence in FCAenforcement efforts primarily on protecting vulnerable2015 2016 2017 2018 2019claims brought against lenders participating in HUDspopulations from discrimination. One-fourth of all ac- $1,336M $3,642M $864M $1,154.8M $99.6Mprograms, and is a step intended to allay concerns oftions were brought under either the Fair Housing Act or6849492213traditional bank lenders that left the FHA mortgage in- Servicemembers Civil Relief Act (SCRA). And, the CFPB surance program in recent years because of the DOJssued a lender under HMDA for submitting data to the aggressive use of the FCA. Bureau that misrepresented the race, ethnicity, and sex In a related move that is also intended to encourageof certain loan applicants. more lenders to participate in the FHA program, HUD 12 13'