17 Aug Federal and Utah Regulatory Update
The Consumer Financial Protection Bureau (“CFPB”) issued Compliance Bulletin 2017-01 on July 31, 2017 providing guidance regarding fees for pay-by-phone services. The Utah Division of Real Estate recently amended its rules governing lending manager licensing, effective July 11, 2017.
CFPB Compliance Bulletin 2017-01
CFPB Bulletin 2017-01 provides guidance to covered persons and service providers regarding fee assessments for pay-by-phone services (phone pay fees) and the potential for violations of Dodd-Frank’s prohibition on engaging in unfair, deceptive, or abusive acts or practices (collectively “UDAAP” violations) when assessing phone pay fees.
“Covered Persons” means any person that engages in offering or providing a consumer financial product or service and any affiliate of such a person if such affiliate acts as a service provider to such person.
Depending on the facts and circumstances, the following non-exhaustive list of examples of conduct related to phone pay fees may constitute UDAAP violations:
- Failing to disclose the prices of all available phone pay fees when different phone pay options carry materially different fees;
- Misrepresenting the available payments options or that a fee is required to pay by phone;
- Failing to disclose that a phone pay fee would be added to a consumer’s payment could create the misimpression that there was no service fee; and
- Lack of employee monitoring or service provider oversight may lead to misrepresentation or failure to disclose available options and fees.
The CFPB also indicated that mortgage servicers may meet the definition of a debt collector under the Fair Debt Collection Practices Act (“FDCPA”) and therefore may be prohibited from charging fees, including phone pay fees, in certain instances. The Bulletin provides the following list of suggested practices that lenders should consider in assessing whether their practices present a risk of constituting a UDAAP or FDCPA violation:
- Review applicable State and Federal laws, including the FDCPA, to confirm whether entities are permitted to charge phone pay fees;
- Review underlying debt agreements to determine whether such fees are authorized by the contract;
- Review internal and service providers’ policies and procedures on phone pay fees, including call scripts and employee training materials, and revise policies and procedures to address any concerns identified during the review, as appropriate;
- Review whether information on phone pay fees is shared in account disclosures, loan agreements, periodic statements, payment coupon books, on the company’s website, over the phone, or through other mechanisms;
- Incorporate pay-by-phone issues in regular monitoring or audits of calls with consumers;
- Review consumer complaints regarding phone pay fees;
- Perform regular reviews of service providers as to their pertinent practices; and
- Review that the entity has a corrective action program to address any violations identified and to reimburse consumers when appropriate.
The Bulletin is a non-binding general statement of policy that articulates considerations relevant to the CFPB’s exercise of supervisory and enforcement authority. A full copy of the bulletin may be found by clicking on the link below:
Utah Administrative Rules R162-2c-201
To obtain a Utah license to practice as a lending manager, an individual must provide to the Utah Division of Real Estate (“Division”) the following:
- The individual’s unique identifier as assigned through the nationwide database;
- Evidence that the individual has taken and successfully:
- Passed the 20-hour national mortgage loan originator pre-licensing course; and
- Passed the mortgage loan originator examination that meets the requirements and is approved and administered through the nationwide database; and that consist of a national test with uniform state content;
- Completed the Division approved 40-hour Utah-specific lending manager pre-licensing education within the 12-month period prior to the date of application to the Division;
- Applied to the testing contractor designated by the Division to sit for the lending manager licensing examination;
- Paid a nonrefundable examination fee to the testing contractor; and
- Passed both the state and national components of the licensing examination.
An applicant for a lending manager license must satisfy certain experience requirements which are specified in the rule. The rule also specifies the procedure and documentation required for applying for a license through Nationwide Multistate Licensing System and Registry.
If an individual passes one test portion of the lending manager examination but fails the other, the individual may retake and pass the failed portion of the exam within 90 days of the date on which the individual achieves a passing score on the first portion of the exam.
An application for licensure as a lending manager must be submitted:
- Within 90 days of the date on which the individual achieves passing scores on both examination portions; and
- Within 12 months of the date on which the individual completes the pre-licensing education.
If any deadline falls on a day when the Division is closed for business, the deadline is extended to the next business day.
A mortgage loan originator licensee who is licensed on or after May 8, 2017, must complete a Division approved continuing education course for new loan originators, in addition to other required continuing education, prior to renewing at the end of the first full calendar year of licensure.