Legal Blog

Financial Compliance Attorney Outlines CFPB Compliance Requirements

Financial Compliance AttorneyOffit Kurman financial compliance attorney Ari Karen writes a weekly blog for   National Mortgage News,  entitled, “Compensation and Compliance Matters.” In this blog, Mr. Karen, an experienced litigator whose practice focuses on compliance in the mortgage banking industry, provides regulatory updates and commentary on compliance best practices, recent regulatory decisions, breaking news and trends. He regularly counsels mortgage banks and financial services firms on the development and implementation of policies and procedures related to allowing institutions to remain compliant with wage hour laws.

In his December 30 blog, “Five Key January Steps for Lenders,” Mr. Karen identifies five compliance requirements / items that lenders should have already done (or should do immediately) based on what “we have been seeing from the Consumer Financial Protection Bureau (CFPB).”

CFPB Compliance Requirements

  1. Competent Chief Compliance Officer. “This person should have the training, resources, authority, functional independence, and access to ownership/upper management necessary to achieve all compliance requirements,” advices Karen.
  2. Compliant Compensation Agreement. Ensure that you have a compliant compensation agreement in place that identifies and applies all forms of compensation and all derivations in compensation that could impact final pay. Everything that impacts compensation has to be in writing and has to be reduced to a policy or procedure.
  3. Evaluation of Duties. Make sure that you have evaluated the actual duties of lending personnel: managers, processors, and loan officer assistants in order to avoid claims of unlicensed activities due to the expanded definition of origination.
  4. Review of Marketing Strategies. To the extent they involve Marketing Services Arrangements, joint ventures, or affiliates, review to make sure that not only are the agreements compliant, but also that the manner in which they are being negotiated and implemented will meet the rigorous standards required by the CFPB.
  5. Compliance with 3% Cap on Points and Fees. “In particular you should be clear as to the existence of affiliates under the different standards of the Bank Holding Act of 1956, applying the proper amount of any payments to affiliates to the cap, and properly handling bona fide discount points, and loan level price adjustments,” explains  Mr. Karen.

Mr. Karen makes clear that this list of changes is far from complete. The list of changes is too extensive to summarize in the brief space of a blog, but the five items cited are important and if lenders have not already implemented them, they should do so immediately.

Financial Compliance AttorneyIf you have questions about CFPB Compliance Requirements or other compliance issues in the mortgage banking industry, please contact Mr. Karen at akaren@offitkurman.com. Mr. Karen provides counsel and represents businesses and financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide.  Mr. Karen is a frequent speaker to lenders at state, regional and national conferences for trade associations in the mortgage banking industry.

Offit Kurman Financial Institutions Compliance Practice Group

At Offit Kurman Attorneys At Law, the attorneys in our Financial Institutions Compliance Practice Group offer legal representation and counseling for commercial and corporate transactions, regulatory compliance, government enforcement, public policy and governmental affairs and litigation and arbitration. We continuously monitor legal developments, publish articles and participate in industry and bar association groups on consumer finance issues. In addition, we are active members of various national and local organizations involved in the consumer financial services industry.

To learn more about Offit Kurman’s Financial Institutions Compliance Practice Group and the services offered to businesses and institutions please fill out our contact form. You can also connect with Offit Kurman via FacebookTwitterGoogle+YouTube, and LinkedIn.