b'For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.comat the federal level, with a slight uptick at the stateThree federal agencies in particular are responsible for levelparticularly in Democratically-controlled statethis marked decrease: the CFPB, the DOJ, and HUD. governments. House and Senate Democrats will likelySince 2016, CFPB enforcement is down 52%although continue to attempt to apply pressure on current admin- 2019 saw it trend back upwards under Director istration appointees and executive agencies in advanceKraninger and as a result of a number of actions taken Overviewof the coming election, but these efforts will likely havein cooperation with state attorneys general. The drop in little impact aside from the political. Beyond the CFPBDOJ (82%) and HUD (17 in 2016; 0 in 2019) enforcement constitutionality question, the Supreme Court is set tohas been even more dramatic. Some of this decrease 2019 largely came and went with a whimpermostly.present, or future agency actions because the clausedecide a number of questions in 2020 that are import- can be explained by the divergence in agendas, Much as expected by the consumer finance industry,can be severed from the Dodd-Frank Act, a number ofant to the consumer finance industry. November 2020,policies, and priorities between the current and former there were few notable surprises. Enforcement activityBureau opponents continue to argue that because thehowever, could mark another sea change in enforce- administrations. But much can also be attributed to the remained down at both the federal and state levelsCFPB is unconstitutionally structured, its actions mustment, regulatory agendas, and rulemaking if executivedramatic decrease in enforcement in areas such as as a result of the current administrations policies andbe overturned or dismissed. One such partys chal- power changes hands or if Democrats seize control ofmortgage lending and servicing, where financial-crisis agenda, and with the resolution of financial crisis-eralenge is currently pending before the Supreme Courtthe Senate. era lawsuits are largely complete and the practices that litigation in the rearview mirror. this term in Seila Law LLC v. CFPB, (No. 19-7). The Courtled to those suits have been corrected.Although Consumer Financial Protection Bureau (CFPB)is expected to issue a much anticipated decision thisKEY TRENDS Although the FTC had been the federal exception, Director Kathy Kraningers enforcement agenda June.namely the CFPBs obtaining of consumer relief andOther political and apolitical federal agencies, includingAs predicted, the role of federal agencies in consumerholding steady on enforcement the past three years restitutionhas been subject to scrutiny by Democraticthe Department of Justice (DOJ) and the Federal Tradefinance enforcement continued the downward(bringing between 21-25 actions per year), 2019 saw a lawmakers, her regime brought some stability to theCommission (FTC), also significantly decreased con- trend that began in 2017 following the election ofslight decline in FTC consumer finance enforcement, Bureau for industry participants. Her efforts to createsumer finance enforcement activities in 2019. On theDonald Trump. Although enforcement activity did notas the agency brought only 18 actions that year. This is an open dialogue and provide clarity to CFPB rules andhousing front, the Department of Housing and Urbandecrease significantly in 2019, the decrease in federalnot to say that the FTC has been less active, just that its expectations has been received with open arms.Development (HUD) continued to take a backseat onenforcement activity since 2016 is dramatic. In 2016,priorities and focus are shifting. For example, the FTC enforcement matters, but took several notable actionswe tracked 118 federally-initiated enforcement actions;obtained a number of significant privacy settlements Under Director Kraninger, the Bureau remained ac- in an effort to provide certainty to mortgage lenders2019 saw only 48 federal actions, 13 of which wereoutside of the financial services industrymost notably tive in 2019, although considerably less so than underand servicersthe result of which could limit futurejoint actions conducted with the assistance of statewith Facebook. Indications are that privacy law and the leadership of former-Director Richard Cordray.enforcement by HUD, the DOJ, and certain privateattorneys general or agencies.data security will continue to be an area of focus for The pace of existing and new investigatory activities and publications remained down relative to Directorplaintiffs. In May, HUD announced a series of changes Cordrays reign and, keeping with the theme of de- to lender certifications and the implementation of a de-parture from the Cordray agenda, the CFPB delayedfect taxonomy in an effort to coax institutional lenders implementation of the anticipated Payday Rule untiland others back to the Federal Housing AdministrationTOTAL ACTIONS BY AGENCYNovember 2020. The CFPB did, however, issue a final(FHA) program. HUD also proposed a new disparate rule under the Home Mortgage Disclosure Act (HMDA)impact rule that would set a much higher standard for50clarifying partial exceptions to HMDA reporting require- Fair Housing Act plaintiffs. If the new disparate impactCFPB 37ments, and also issued its much-anticipated notice ofstandard is adopted, it will likely limit or deter future17 24proposed rulemaking regarding implementing the Fairdisparate impact Fair Housing Act actions.34Debt Collection Practices Act (FDCPA).On the state side, although 2019 did not see the an- DOJ/USAO 8 22 2016The one potentially game-changing event of 2019 oc- ticipated swell in activity following the November 20186 2017curred in September when Director Kraninger reversedelection of additional Democratic governors and attor- FTC23 25 2018course and informed the Supreme Court, Congres- neys general, state activity remained steady and result- 18 21 2019sional leadership, and various federal courts that theed in two significant settlements concerning for-profit22Bureau would no longer defend the constitutionality ofuniversities and related student lenders. Three statesHUD 17the CFPB Directors for-cause removal provision. Direc- in particular (California, Massachusetts, and New York)0 1tor Kraninger now believes that the provision is uncon- continued to lead the charge with actions focusing71primarily on student lending and debt-relief, and autoState AG/ 70stitutional under Article II of the Constitution becauseAgencies 32it prevents the President from removing her exceptlending and repossession.43for cause. Although the CFPB maintains that the con- We expect that the trends observed in 2019 will con- 0 10 20 30 40 50 60 70 80stitutional defect should not affect the validity of past,tinue in 2020. Enforcement is likely to remain downActions by Year4 5'