how to handle new cfpb rules in 2017

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HOW TO HANDLENEW CFPB RULES IN 2017

Moderator

Former executive at:

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COMPLIANCE AND TECHNOLOGY

Stephanie Alsbrooks Moderated byMark Floyd

John Lewis

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•Front End Compliance

•Back End Compliance

•Challenges and Solutions

•Discussion and Q&A

•Conclusions

Objectives

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Stephanie Alsbrooks – [email protected]

(817)657-6375

defi SOLUTIONS

@defiSOLUTIONSSchedule a demo with defi SOLUTIONS:

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Existing Loan Origination Compliance Requirements

The usual suspects:1. Usury2. AA3. Reg Z4. Consistent decisions and audit trail

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New Loan Origination Compliance Requirements

The NEW kid on the block

Military Lending Act

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John Lewis– [email protected]

(916)730-3335

Intellaegis

@intellaegis

Schedule a demo of masterQueue:http://intellaegis.com/contact/

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What is the CFPB Proposed New Rules Report?• July 28th 2016 , 117 page CFPB report “proposed” new debt

collection rules

• Focused on small 3rd party Debt Collection vendors-75% w/ staff under 20

• 2012 – Larger Participant Rule – targeted 60% of industry revenue through 175 largest 3rd parties – revenue over $10m • 6000 debt collection firms in the US

• Debt Buyers, Collection Agencies, Law Firms and Loan Servicers

• “Next several months”…Creditors

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What does this report specifically address?

• Information•Verification•Validation•Disclosure

•Communication

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• “To drastically overhaul the debt collection market by capping collector contact and ensuring companies collect the correct debt”

• Collect the correct debt

• Limit excessive or disruptive communications

• Make debt details clear and disputes easy

• Document debt on demand for disputes

• Stop collecting or suing for debt without proper documentation

• Stop burying the dispute

What does the CFPB want?

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Debt collection generates more complaints to the CFPB than any other financial product or service.• Largest industry for consumer complaints

• 85,000 last year• 25% of all consumer complaints per FTC

•Debt they don’t owe•Harassment•Making false or misleading statements• Threatening legal action without taking illegal action• Improper contact•Disclosing debt to 3rd parties

Why?

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Who?

70 million Americans with one debt or more in arrears

1 of 3 consumers contacted by a debt collector in past year

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New Terminology

• Confirmed Consumer Contact (CCC)• This “exists once a collector i.e. whether the current or

prior collector, has communicated with the consumer about the debt, and the consumer has answered when contacted that he or she is the debtor. In general, CCC would pass from collector to collector.”• Pre CCC• Post CCC• They are considering caps on Pre and Post CCC

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Information• 3rd parties have to substantiate that debt and proper info

are received from the 1st party through a better process…a process involving technology and information sharing capabilities• Full name, last address & ph#, acct #, specific detailed default info

• Information sharing• Requirements and restrictions would follow the debt if it were sold

or transferred • Require information that could cause a subsequent debt collector or

company a regulatory issue must be shared

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Verification, Validation and Disclosure• After the information is shared, the 3rd party must verify they

have what they need from the 1st party to start the collection process• Debt info• Consumer info• Specific Pre and Post Confirmed Consumer Contact, location

attempts, and details to allow them to comply with the Federal and State regulatory contact requirements

• Pre collection notices will be required to be sent to consumers that disclose the specific debt and their consumer rights – 30 day moratorium

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Communication• Prior to initiating collection activity, subsequent collectors obtain

and review certain info arising from past collection activity• Not having this affects collectors ability to comply with FDCPA,

etc.• Require prior collectors to transfer info consumers provided or

relevant info such as:• Disputed Debts• Calling restrictions placed by consumers • Confirmed Consumer Contact• Info affecting collectors ability to comply with regulatory

rules• Location info – who has been contacted and can’t be contacted

again?• FDCPA 804 – not communicate with any person more than 1x

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Calling Restrictions• The most significant Collector Communication interventions under

consideration are:• Regulations to govern contact frequency and leaving of messages• Regulation to govern time, place and manner of collection contacts

• Details how to leave voicemails with specific examples of what is okay to say

• Adding numerical restrictions on contact frequency

• “Confirmed Consumer Contact” (CCC) exists once a collector, current or prior, has communicated with the consumer about the debt and consumer confirmed their identity• “In General, CCC would pass from Collector to Collector”

• “The contact caps would limit both successful and attempted contacts”. • Includes all communication methods; calling, email, text, mail, field

contact, etc.

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Impact and Solutions• Ballard Spahr: “It is clear from the outline that CFPB’s

rulemaking will dramatically alter the debt collection landscape and affect all aspects of the collections process.”

• KPMG – “Banks have a window to implement stronger 3rd party vendor management standards and investments in data automation and digitization now will facilitate both enhanced credit risk assessments and minimize regulatory compliance burdens.”

• “The CFPB’s outline holds significant implications….Strategic firms will take the opportunity to upgrade their compliance and management information systems.”

• https://assets.kpmg.com/content/dam/kpmg/us/pdf/cfpb-debt-collection-client-alert.pdf

John [email protected]

(916)730-3335

Intellaegis

@intellaegis© 2016

Stephanie [email protected]

(817)657-6375

defi SOLUTIONS

@defiSOLUTIONS

Schedule a call or demo with Stephanie or John here:

http://intellaegis.com/contact/

http://info.defisolutions.com/schedule-a-demo

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how to handle new cfpb rules in 2017

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