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THE CONSUMER FINANCIAL PROTECTION

BUREAU’S SEMIANNUAL REPORT TO CONGRESS

HEARING

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

ON

EXAMINING THE CONSUMER FINANCIAL PROTECTION BUREAU’S SEMIANNUAL REPORT TO CONGRESS, REVIEWING THE BUREAU’S OPERATIONS AND ACTIONS SINCE THE LAST SEMIANNUAL REPORT WAS 

PUBLISHED

JULY 15, 2015

Printed for the use of the Committee on Banking, Housing, and Urban Affairs

(

Available at: http://www.fdsys.gov/


BANKI-41578DSA with DISTILLER
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

RICHARD C. SHELBY, Alabama, Chairman

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

DAVID VITTER, Louisiana 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

JERRY MORAN, Kansas 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana

WILLIAM D. DUHNKE III, Staff Director and Counsel 

MARK POWDEN, Democratic Staff Director

DANA WADE, Deputy Staff Director 

JELENA MCWILLIAMS, Chief Counsel 

BETH ZORC, Senior Counsel 

JOHN V. O’HARA, Senior Counsel for Illicit Finance and National Security Policy 

CHRISTOPHER FORD, Senior Counsel, National Security Policy

LAURA SWANSON, Democratic Deputy Staff Director 

GRAHAM STEELE, Democratic Chief Counsel 

COLIN MCGINNIS, Democratic Policy Director

DAWN RATLIFF, Chief Clerk 

TROY CORNELL, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor

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CONTENTS

WEDNESDAY, JULY 15, 2015

Page

Opening statement of Chairman Shelby ................................................................ 1

Opening statements, comments, or prepared statements of: 

Senator Brown .................................................................................................. 3

WITNESS 

Richard Cordray, Director, Consumer Financial Protection Bureau ................... 4

Prepared statement .......................................................................................... 45

Responses to written questions of: 

Chairman Shelby ....................................................................................... 47

Senator Brown ........................................................................................... 52

Senator Crapo ............................................................................................ 58

Senator Vitter ............................................................................................ 60

Senator Sasse ............................................................................................ 62

Senator Rounds ......................................................................................... 64

Senator Moran ........................................................................................... 66

Senator Menendez ..................................................................................... 67

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Semi-Annual Report of the Consumer Financial Protection Bureau, October 

1, 2014–March 31, 2015 ....................................................................................... 75

(III)


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BANKI-41578DSA with DISTILLER
(1)

THE CONSUMER FINANCIAL PROTECTION BUREAU’S SEMIANNUAL REPORT TO CONGRESS 

WEDNESDAY, JULY 15, 2015

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 10:02 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Richard Shelby, Chairman of the Committee, presiding. 

OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY 

Chairman SHELBY. The Committee will come to order. 

Today the Committee will hear from Richard Cordray, the Director of the Bureau of Consumer Financial Protection. The Bureau 

has grown to over 1,450 employees and has been very active since 

Director Cordray’s last testimony before this Committee. 

Among other things, it has recently expanded enforcement actions to cover telecom companies and broadened its authority over 

the auto finance industry. These actions, like others undertaken by 

the Bureau since its formation, have not been without controversy. 

Many would say that some of them go beyond what Congress envisioned in Dodd-Frank. 

For instance, the Bureau’s regulation of auto lending now involves over 30 nonbank lenders not previously subject to its supervision. This move has been called into question given the specific 

exemption for auto dealers in Dodd-Frank. 

In addition to concerns with recent regulatory actions, issues remain with the Bureau’s lack of accountability. This has been demonstrated by concerns with the Bureau’s budgeting process, including the rising costs of renovation for the CFPB’s new headquarters. 

According to the Federal Reserve Inspector General, the esti- mated cost of actual renovation increased from $40 million in February of 2012 to $145 million in December of 2013. This is over 3 1⁄2

times the initial estimate. The Inspector General also estimated 

that the total cost is now closer to $216 million. The Administration has yet to explain who approved the renovation and what happened to the documentation involved. 

Unfortunately, Congress does not have control over how the Bureau spends its funds because the CFPB operates outside of the appropriations process. Even the Federal Reserve, which funds the 

CFPB from its earnings, does not control the Bureau’s budget. 


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Because Congress cannot tighten the financial reins when budgeting issues arise, the Bureau’s current structure makes meaningful congressional oversight very difficult. 

So-called independence is one reason cited by the authors of 

Dodd-Frank for the Bureau’s structure. But other independent 

agencies, such as the Securities and Exchange Commission, the 

CFTC, the FTC, and the CPSC, are all subject to the appropriations process. Additionally, the Bureau does not even have its own 

Office of Inspector General, relying instead on the Inspector General of the Federal Reserve. 

Some of us have urged the adoption of specific reforms to make 

the Bureau more accountable and more transparent. By putting the 

Bureau through the appropriations process and establishing a 

board of directors, I believe it would resemble other independent 

agencies and provide Congress with the ability to conduct meaningful oversight. 

Unfortunately, calls for reform have been rejected in past Congresses. Therefore, the only remaining oversight tool available to 

Congress is to hold hearings and hope that any concerns expressed 

perhaps would be addressed. 

Director Cordray, it would be like giving you the authority to implement Federal consumer financial laws but withholding the authority to enforce them. I think you would agree that would make 

you highly ineffective as an agency charged with implementing our 

consumer financial laws. 

Congressional oversight of the Bureau is critical now more than 

ever because of the CFPB’s growing reach over the practices of individuals and companies in the financial sector. 

For the time being here, we will conduct hearings and submit respectful requests that may or may not be addressed. I am confident 

that the time will come when we will reassert our constitutional 

prerogative that the supporters of Dodd-Frank sacrificed 5 years 

ago in the name of bureaucratic independence. Only then, I believe, 

will the Bureau be truly accountable to the people’s representatives. 

Senator Brown. 

STATEMENT OF SENATOR SHERROD BROWN 

Senator BROWN. Thank you, Mr. Chairman. 

Director Cordray, welcome back to the Senate Banking Committee. Next week marks, as we know, the 5-year anniversary of 

the Wall Street Reform Act which created the Consumer Financial 

Protection Bureau. The financial crisis, we should never forget—

the worst this country has seen since the Great Depression—exposed many weaknesses in our financial regulatory system. 

One of the most troubling before the crisis was that no one was 

looking out for consumers. Consumers were steered into mortgages 

they could not afford, often with terms that were not disclosed: 

high fees, abusive payment structures, and sudden interest rates 

increases. Five million Americans lost their homes in foreclosure. 

In the home State of the Director and my State alone, half a million homes were foreclosed upon between 2006 and 2011—one-half 

a million homes. 


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At the height of the crisis in 2009, one in three Ohioans with 

mortgages were underwater; one in every six mortgage holders was 

at least 30 days delinquent or in foreclosure. 

Though the banking regulators were supposed to be enforcing 

consumer financial laws, too often they looked elsewhere. A number of industries developed in the shadows with no clear Federal 

oversight. More importantly, no Federal regulator was expressly 

tasked with ensuring that consumers were treated fairly in their 

financial transactions. 

We created the CFPB to fill this void to make sure that never 

again would consumers be an afterthought in our Nation’s financial 

system. The CFPB opened its doors just shy of 4 years ago. In 

these 4 years, the CFPB has proved over and over that its creation 

was one of the big success stories of Wall Street reform. 

As the Chairman speaks of the CFPB’s budget, I think it is im- portant to note that the CFPB has returned $10 billion to the pockets of 17 million consumers. It has fined countless companies for 

egregious consumer abuses, including credit card companies secretly adding on unwanted products, phone companies cramming 

fees onto consumers’ bills, or mortgage servicers and lenders illegally foreclosing on homeowners and servicemembers. 

The agency has served as an important place where consumers 

can turn. Over 650,000 complaints have been filed with the Bureau. The CFPB is to be commended for these successes. The ongoing enforcement actions, though, show us that work is not done. 

Just last week, the CFPB, 47 States, and the District of Columbia 

took action against a bank for illegally robo-signing court documents in selling zombie credit card debt, or debt that had already 

been cleared. Today I will introduce a bill that will address zombie 

debt, along with several of my colleagues in the introduction, and 

I hope that CFPB will continue to address this issue. 

Last week, the Fed published numbers showing that consumer borrowing is at a record high, $3.4 trillion dollars, led by steady increases in student loans, auto loans, and credit card loans. As consumers take on more debt, the opportunity for risky behavior increases. 

I look forward to hearing from Director Cordray on what the 

CFPB views as areas to watch in the consumer market and what 

this agency will do moving forward. I look forward to hearing when 

Director Cordray expects to finalize rules on payday and installment loans, on auto title loans, and prepaid cards, on overdraft and 

debt collection. We have seen in State after State that predatory 

lenders are nimble. As soon as a State passes legislation to rein 

them in, the lenders morph into something else. We saw that in 

Ohio after a ballot issue passed. Six years ago, Ohio enacted a 

short-term lender law with strong bipartisan support. It was shortlived as payday lenders evaded this law by registering as mortgage 

lenders or by adding fees. This creativity at the State level necessitates continued vigilance by the Consumer Bureau, and I hope 

that the CFPB’s rules governing short-term loans close these loopholes. 

Much of the CFPB’s most important work is centered on mortgage regulation. The agency’s ability to repay rules ensure that 

consumers are not trapped in mortgages they cannot afford. The 


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CFPB’s rule to streamline forms will help consumers understand 

what is happening at the table during closing. 

All these actions speak for themselves as to why this agency is 

so, so important to millions of Americans. Yet opponents continue 

to work to undermine the agency by weakening its independence, 

by changing its structure. Lately, there have been attempts to chip 

away at actions the agency has taken on arbitration and small-dollar loans. They have argued the agency should not be able to collect 

data about markets that were formally nontransparent and unregulated. 

I will continue to fight, as so many Members of this Committee 

will, all these attempts to destabilize the CFPB. Our consumers deserve a strong watchdog that can do its job independently, and it 

is our job to make sure that happens. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Thank you, Senator Brown. 

Without objection, at this time I would like to enter into the 

record statements from the Credit Union National Association and 

the National Association of Federal Credit Unions. 

Chairman SHELBY. Director Cordray, welcome to the Committee 

again. Your written testimony will be made part of the record. You 

proceed as you wish. 

STATEMENT OF RICHARD CORDRAY, DIRECTOR, CONSUMER 

FINANCIAL PROTECTION BUREAU 

Mr. CORDRAY. Thank you, Mr. Chairman, Ranking Member 

Brown, Members of the Committee. Thank you all for the opportunity to testify today about our latest semiannual report to Congress. We appreciate your continued oversight and leadership as 

we work together to strengthen our financial system and ensure 

that it serves consumers, responsible businesses, and the long-term 

foundations of the American economy. And I would reiterate, Mr. 

Chairman, that we take very seriously the oversight that we get 

from Congress. These hearings in front of the Senate Banking 

Committee, which are required by law, are important oversight for 

us. We listen carefully to what is said, and we take it to heart as 

we go about our work. 

Next week marks 5 years since the passage of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act, as has been 

noted, and it is 4 years since the Consumer Bureau actually opened 

its doors. As you know, Congress created this agency in response 

to the financial crisis with the purpose and sole focus of protecting 

consumers in the financial marketplace. We understand our responsibility to stand on the side of consumers and ensure that they 

are treated fairly. Through fair rules, consistent oversight, appropriate enforcement of the law, and broad-based consumer engagement, the Consumer Bureau is working to restore people’s trust 

and confidence in the markets they use for everyday financial products and services. 

To date, the Bureau’s enforcement activity has resulted in more 

than $10.1 billion in relief for over 17 million consumers. Our supervisory actions have resulted in financial institutions, correcting 

many sub-par and illegal practices, and providing almost $200 million in redress to over 1.6 million consumers. And we have now 


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handled, as was mentioned, more than 650,000 complaints—a matter that is particularly important to us—from consumers that address all manner of financial products and services. These consumers are your constituents in each of your States. For example, 

one excerpt of a complaint narrative from a servicemember in Alabama reads:

We opened an account . . . We paid as agreed until we became unable to 

pay the full amount . . . We made an agreement to pay a lesser amount 

per month and kept paying via allotment. [The company] got a judgment 

against us while I was training. I was not served with a judgment prior 

to court or after . . . I was informed of it when my wages began to be garnished . . . We have asked repeatedly to have this issue fixed . . . We have 

in total paid this company nearly $25,000 over the past 11 years for a couch 

and loveseat, computer hutch, table and chairs. The furniture has not 

lasted, however the payments and ruin continue . . . We need assistance 

as we have tried every other step possible to fix this without aid.

Another excerpt, from a consumer in my home State of Ohio, and 

the Ranking Member’s home State, reads:

[I] elected and agreed to a Reduced Rate Payment Plan with [a student 

loan servicer]. In addition to being charged incorrect interest rates, my 

monthly payment was incorrectly allocated which is resulting in late fees 

and a delinquency notice. After speaking with . . . customer service representatives and a call time of . . . hours, no resolution had been reached.

These are the stories that motivate us in our work. 

In this, our most recent semiannual report to Congress and the 

President, we describe the Bureau’s efforts to achieve our vital mission on behalf of consumers, including those in your home States 

and mine. During the timeframe covered by the report, we have 

helped secure orders through enforcement actions for millions of 

dollars in relief to consumers who fell victim to various violations 

of consumer financial protection laws, along with over $32 million 

in civil money penalties. For example, we took action against a 

company for illegal debt collections practices that resulted in $2.5 

million in relief for servicemembers. We also stopped an illegal 

kickback scheme for marketing services, which resulted in $11.1 

million in redress for wronged consumers. We worked with the Department of Education to obtain $480 million in debt relief to student loan borrowers who were wronged by Corinthian Colleges, a 

for-profit chain of colleges that violated the law and has since declared bankruptcy. 

During the reporting period, the Bureau also issued a number of 

proposed and final rules. In October 2014, we issued a final rule 

to reduce burdens on industry by promoting more effective privacy 

disclosures from financial institutions to their customers. In November 2014, the Bureau issued a Notice of Proposed Rulemaking 

to provide strong new Federal consumer protections for the first 

time for prepaid cards and accounts that had no such protections. 

In December 2014, the Bureau issued a proposal to clarify various 

provisions of its mortgage servicing rules. In January 2015, the Bureau proposed further changes to some of our mortgage rules to facilitate mortgage lending by small creditors, particularly those in 

rural or underserved areas, community banks, and credit unions. 

This would increase the number of financial institutions able to 

offer certain types of mortgages in rural or underserved areas and 


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help small creditors adjust their business practices to comply with 

the new rules. 

As a data-driven institution, the Consumer Bureau published 

several reports during this reporting period that highlight important topics in consumer finance such as medical debt, arbitration 

agreements, reverse mortgages, and consumer perspectives on credit scores and credit reports. We also released a new ‘‘Know Before 

You Owe’’ mortgage toolkit that will help encourage consumers to 

shop for mortgages and better understand how to go about the important task of buying a home. 

In the years to come, we look forward to continuing to fulfill Congress’ vision of an agency that is dedicated to cultivating a consumer financial marketplace based on transparency, responsible 

practices, sound innovation, and excellent customer service. 

Thank you for the opportunity to testify today, Mr. Chairman. I 

look forward to your questions. 

Chairman SHELBY. Thank you. 

Director Cordray, you have said many times that you are accountable to Congress. However, you get to determine your budget 

and how to spend it. Neither Congress nor the Fed can tell you how 

to allocate taxpayers’ money. Many Members of Congress have expressed strong disapproval of the Bureau’s costly building renovations, which include a waterfall and a four-story glass staircase, 

and now stands at more than 3 1/2 times, it is my understanding, 

the original estimate. 

Has this disapproval by people caused you to change your renovation plans in any way? And if so, tell us what changes you have 

made, if any? 

Mr. CORDRAY. So two answers to that question. 

First, on the overall issue of accountability and oversight, we are 

accountable to this Congress in numerous ways that are in our 

statute. The GAO does a regular audit of our financial statements 

and internal controls each year, which is not common to Federal 

agencies. We are subject to an independent audit also by our statute. We are subject to reviews by our Inspector General, which 

have been vigorous. I am required by law to testify in front of this 

Committee—that is where the Congress put the jurisdiction, which 

is appropriate, and you are vigorous in your oversight—twice a 

year and the House Financial Services Committee twice a year. 

We have numerous other accountability mechanisms as well, and 

like the other banking agencies, we are not subject to the appropriation process. But that is not unique. It would be odd if we as 

a banking regulatory agency were different from the others in that 

respect. 

As to the building project, that has been overhyped and misrepresented. The construction costs have remained essentially static from before we took on this building and the Office of Thrift Supervision had performed an audit that found that the building was 

in disrepair and needed an overhaul if it was going to remain a 

productive Government asset. The construction costs have been 

pretty steady at between $95 and $120 million, approximately. We 

recently awarded the contracts through competitive bidding, and 

they came in thus far under budget. And the GSA is managing the 

program, which feels appropriate to me. They know more about it 


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than I do. And they have felt and have stated that this is an appropriate Government renovation project well within the cost estimates for similar projects. That is my understanding of that issue. 

Chairman SHELBY. Thank you. 

Yesterday, the Bureau announced the settlement of an enforcement action against American Honda Finance Corporation, one of 

the Nation’s largest auto lenders. As part of this settlement, 

Honda, it is my understanding, must substantially reduce or eliminate entirely the ability of auto dealers to raise or lower the finance rate offered to consumers. A recent American Banker article 

quoted from a leaked CFPB memo, stating that the Bureau is seeking to accomplish ‘‘the significant limitation of dealer discretion.’’

Considering that auto dealers were explicitly exempted from the 

CFPB’s jurisdiction in Dodd-Frank, can this be seen as anything 

other than a back-door effort to regulate the auto dealers, which 

were basically exempt from Dodd-Frank? 

Mr. CORDRAY. So three things on that. 

The first is we and the Justice Department—we are not alone in 

enforcing the Equal Credit Opportunity Act. We work together on 

that. We did resolve a matter with Honda yesterday, and it is to 

Honda’s credit—I would commend them. They have taken farreaching steps to constrain the discretionary markup which we 

think has led to discrimination for consumers and the Justice Department thinks has led to discrimination for consumers. But it 

was industry leadership that Honda demonstrated yesterday, and 

I commend them for that. 

Second, in terms of our responsibility here, we have been very 

careful to observe a line that was not necessarily an obvious or logical line that Congress drew, which was to say that the Consumer 

Bureau has jurisdiction over auto lenders, but does not have jurisdiction over auto dealers. That jurisdiction, as I understand, is 

given to the Federal Trade Commission. We feel that means that 

the law has spoken clearly, that we have a responsibility to address 

any sort of issues of discrimination or other violations of the law 

by lenders, but not by dealers. You know, that may be illogical, but 

that is the line we have, and we have taken our responsibility seriously there. And as I say, we have a partner in this work, which 

is the Department of Justice, and we work together to address 

these issues. 

I think that has been appropriate, but I am always willing to 

hear more from Members of this Committee and Members of Congress. We are simply looking to enforce the law and do it accurately 

and appropriately. 

Chairman SHELBY. On March 26th, the Bureau released an outline of its proposed plans to end payday debt traps. Every State, 

it is my understanding, either regulates or outright prohibits payday lending. What analysis did the Bureau conduct of State laws 

and regulations prior to deciding it should preempt their regulations? And if you have it, could you provide that analysis to the 

company? Do you want to comment on it first? 

Mr. CORDRAY. Sure. In our statute, there were four issues that 

were very explicitly given full jurisdiction to the Consumer Bureau: 

mortgage origination, mortgage servicing, payday lending, and


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private student lending. Those were specifically and explicitly 

called out in our statute. 

We have been working on the issue of small-dollar lending for 

several years since we became an agency. We have published two 

extensive white papers that really detail our analysis of this market. They involved scrutiny of upwards of 15 million loans. It was 

the most comprehensive work that has ever been done on this industry. And what we concluded from that was that the problem of 

debt traps, rollovers of loans, was a very significant problem for 

consumers who are in the small-dollar loan market. 

There is a representation that this is a product that people get 

a loan and repay it and they get in and get out and do not end up 

in a trap. And what we found was that well over half the loans are 

repeat loans in sequences of 6, 8, 10, 12 loans where people are living their lives off of 400 or 500 percent interest. That is the issue 

that we are looking at and working to address. It is a very complex 

issue, I will say. We want to preserve access to credit for people 

who need that credit, and we recognize there is a demand for that 

credit. At the same time, we do not want consumers to end up 

harmed by being stuck in a debt trap they cannot get out of and 

harming their finances further. That is the dilemma that we are 

trying to confront there. 

Chairman SHELBY. Thank you. 

Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. Before I begin questions, I would like to comment on recent attempts to undermine the 

Consumer Bureau. 

Last month, the House Appropriations Committee passed a bill 

that kills the CFPB’s independence. Similar attempts have been 

made in the Senate, including the idea that CFPB’s governance 

should be changed to a commission. The argument that CFPB 

would be better led by a commission is clearly designed to cripple 

the Bureau and set up one nomination fight after another. 

We are, I believe, the only Committee in the Senate that has yet 

to hold a hearing on any of our nominees, most of whom were sent 

to the Committee in January. By contrast, in 2007, when Senator 

Tester and I joined this Committee, when we were in the seventh 

year of the Bush administration and the Democrats were in the 

majority in the Senate, this Committee had three nomination hearings and reported out a dozen or so nominees before the August recess. 

We have important jobs open waiting for us to act from a Fed 

nominee to the Treasury Under Secretary for Terrorism and Financial Crimes. Changing the CFPB’s governance would stop the agency in its tracks and again leave consumers without a Federal 

watchdog. And I would again point out with the criticism that we 

hear so frequently of the CFPB on budgets, on buildings, all that, 

that the CFPB has returned over $10 billion to 17 million Americans. 

Now, my questions. I was encouraged, Director, to see the 

CFPB’s release of its study on forced arbitration as we required in 

Wall Street reform. I am concerned, but not surprised, that the Bureau found no evidence that forced arbitration leads to lower prices 

for consumers and that three out of four consumers did not even 


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know they were subject to an arbitration clause. A couple of 

months ago, a number of Members of this Committee sent a letter 

to the Bureau urging swift rulemaking to ban forced arbitration in 

consumer contracts. 

What is the Bureau’s thinking on this issue? When can we expect 

to see action? 

Mr. CORDRAY. Thank you, Ranking Member Brown. 

First of all, as to nominees, all I can say is I was very pleased 

to have the opportunity to be confirmed by the Senate in July 2013. 

It took awhile but ultimately was a strong vote, and I really appreciated the care with which the Senate considered that nomination. 

I cannot speak to the others you are talking about. 

On the arbitration report, we did issue an arbitration report. The 

Congress required us to do that as part of the Dodd-Frank Act. 

What they said was—actually, Congress did a couple things that 

were interesting on arbitration in that law. They first said that 

they were going to ban outright any sort of arbitration clauses, predispute arbitration clauses, in any mortgage contracts. This was a 

significant shift away from the permissive attitude to the Federal 

Arbitration Act that had developed over decades. 

They also said—and this is what we are getting to here—that as 

to the rest of consumer financial products and services, they required the Bureau, mandated that the Bureau perform a study and 

a report to Congress on the potential effects of arbitration agreements of that kind. We did that very carefully and deliberately. It 

took us a couple years of work, lots of research, and ultimately a 

significant report that looked into areas that had not been looked 

into before, comparing arbitration in the consumer context with judicial resolutions. 

We did issue that report to Congress earlier this year. What the 

statute then says is, having done that, having performed that task, 

it was then for the Bureau to consider what might be done, consistent with the public interest and consistent with the results of 

that study, to either modify or address pre-dispute arbitration 

agreements for other consumer financial products and services. 

We have determined at this point, having digested our own study 

and gotten a great deal of feedback from industry and others on it, 

that we will be moving ahead with rulemaking in this area, and 

we will be in due course here convening a small business review 

panel as the first step in considering what actions to take. So that 

is where it stands as of this morning. 

Senator BROWN. Thank you. We hear from banks about issues related to coordination of exams with prudential regulators. I know 

the Inspector General recently reported that it has not found duplication of regulators’ oversight responsibilities. I would like you to 

talk for a moment about your examinations. What is the value of 

your examination and supervision authority? What are you doing 

to improve coordination with other agencies of your exams, particularly of smaller institutions, so that—because obviously the exams 

can be costly to them, and we want to make sure there is not duplication. 

Mr. CORDRAY. This is an area of real focus for us and one where 

we have made a tremendous amount of progress over the last several years. If you had asked me that question back in 2012, when 


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we were just undertaking our examination program, we were only 

minimally staffed up. We were probably at about a third of what 

we needed in terms of manpower. The coordination was not as good 

as we would have liked it to be. 

At this point I think the coordination has become quite good—

not perfect but quite good. I would say in particular, on the 

nonbank side, we coordinate with the Conference of State Bank Supervisors who had primary responsibility in that area prior to the 

Consumer Bureau entering the scene, and we have done numerous 

coordinated exams with them, and we share information with them 

back and forth consistently. 

With the other Federal banking agencies, which is also quite important because they have prudential safety and soundness authority, which is very significant, over these institutions and somewhat 

distinct from our consumer protection authority, the law mandates 

that we collaborate. The law mandates that we share drafts of examination reports, which we do back and forth. The law mandates 

that as we go about proposing rules that they have a lot of insight 

and input into those rules, which they have had. And I think that 

has improved enormously. Not to say that I do not still hear isolated instances now and then where it feels to me the coordination 

could be somewhat better, but I think certainly the leadership at 

those agencies—at the Federal Reserve, at the FDIC and the 

OCC—have been very committed to collaborating with the CFPB in 

understanding that we have distinct but related roles that need to 

be integrated so that institutions do not have to face what I would 

regard as a very unfair situation where they are hearing different 

things from different regulators; then they would not know how to 

proceed. I do not think we are hearing that. I tell institutions all 

the time, let us know about your complaints in this regard so we 

can fix them. And, again, I think there has been tremendous 

progress over the last 3 years. 

Senator BROWN. Thank you. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Crapo. 

Senator CRAPO. Thank you, Mr. Chairman. 

Director Cordray, as you know, recently in Congress we have 

been debating the question of whether the NSA should be allowed 

to access telephone records of Americans, and I have been very concerned about the massive data collection that the CFPB has been 

engaged in. 

Last Congress, again, as you know, I asked that the CFPB’s data 

collection program be reviewed by the Government Accountability 

Office, and that GAO report established—and I would just like to 

confirm the facts with you, but that GAO report established, as I 

understand it, that the CFPB has an ongoing collection of up to 

600 million credit cards that are being evaluated, the data is being 

collected on 11 million credit reports, 700,000 auto sales, 29 million 

mortgages, and 5 1⁄2 million private student loans. I actually think 

the numbers are higher than that. But is that in the ballpark of 

the amount of data collection that the agency is engaging in? 

Mr. CORDRAY. I certainly would agree with the figures that are 

set forth in the GAO report. They did a very careful evaluation of 


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us over the better part of a year. We worked closely with them, and 

I have nothing to dispute in that report. 

Senator CRAPO. And as you know, in several places the DoddFrank legislation prohibits the CFPB from collecting personally 

identifiable information. The CFPB claims it is not doing so because it is not collecting certain things, like the name, Social Security number, and address of the person whose credit card data, for 

example, they are collecting. 

Could you tell me what data points the CFPB is not collecting 

on those credit card transactions? 

Mr. CORDRAY. So you mentioned the fact that we have developed 

a credit card database. We are working on a national mortgage 

database, consumer credit panel. In all of those areas, this information, it is really significant to get this because it is often misunderstood. This is de-identified, anonymized information. As you noted, 

the personally identifiable information—name, address, Social Security number, account number—is not typically included in any of 

that material. 

So it is actually pretty uninteresting data from the standpoint of, 

say, you or I being concerned about our privacy. Instead, what it 

does is it gives us a sense of patterns of consumer protection, consumer abuse, consumer service in the industry. That is what we 

are looking for. It is like a GDP or an unemployment rate analysis. 

It is not about what you or I do in our daily lives. I am not interested in that. I do not have any interest in that. 

Senator CRAPO. And you and I have had this conversation before. 

Mr. CORDRAY. Yes. 

Senator CRAPO. One of the concerns that I have is that it is easy 

to say that data has been anonymized. 

Mr. CORDRAY. Yes. 

Senator CRAPO. It is also relatively easy to de-anonymize it. A recent study by the Massachusetts Institute of Technology found that 

just the dates and locations of four purchases are enough to identify about 90 percent of the people in a credit card data set. 

So are you telling me that the information the CFPB collects cannot be de-anonymized? 

Mr. CORDRAY. So it is not easy to do that. It would take a lot 

of time and effort to do that. I do not see that it would be worth 

anybody’s while to try to do that. Certainly I have no interest in 

that. I do not think anybody at the Bureau does. 

Personally identifiable information within the Federal Government agency is only a problem to us doing our work. It creates all 

kinds of issues, and we try to avoid it as much as possible so to 

avoid making extra work for ourselves on those issues. 

Senator CRAPO. With regard to scope, just to get clear on the 

scope, my understanding is that you are collecting data on somewhere above 80, maybe even up to 90 percent of all credit cards. 

Is that correct? 

Mr. CORDRAY. In that one—all the other areas, we do sampling. 

In that one we do not simply because industry has told us it is 

more efficient and less costly for them to simply do a data dump 

than to have to organize a representative sample. And this is consistent with other agencies’ treatment of the same issues. 


BANKI-41578DSA with DISTILLER
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Senator CRAPO. Well, because of time, I am going to move on. I 

want to continue this conversation with you——

Mr. CORDRAY. That is fine, yes. 

Senator CRAPO.——because I do believe that the protection for 

Americans is not adequate. 

Mr. CORDRAY. I am happy to speak to you personally further, 

and your staff, in your office, wherever you would like, about this. 

Senator CRAPO. The last question I want to get into with you is 

the Paperwork Reduction Act was designed, among other things, to 

ensure the greatest possible public benefit from and maximize the 

utility of information created, collected, maintained, used, shared, 

and disseminated by the Federal Government, and to improve the 

quality and use of Federal information, decisionmaking, and so 

forth. 

It is my understanding that each of the 1022 orders issued to 

date by the CFPB, which is its orders to collect this data, has been 

sent to fewer than nine companies to avoid the review of the request by the Office of Management and Budget. Could you tell me, 

how many times has the CFPB utilized the exception for reviewing 

data requests by sending 1022 requests to fewer than ten companies? 

Mr. CORDRAY. We have utilized it several times, and we have 

also gone through the full process several times. That is one way 

of characterizing what we have done. Another way of characterizing it is, as we are seeking data, if we can limit the number of 

institutions so that we do not have to burden other institutions, I 

assume that is what you would like us to do. It is another version 

of sampling, right? So rather than seeking the data from hundreds 

of institutions, if we can get a representative sample and it is fewer 

than nine, that is easier for us. But, also, it is easier for institutions, and——

Senator CRAPO. Well, could you clarify for me—and since my 

time is up, maybe you could do it in a written response. I would 

like to know the exact data rather than several times this way and 

several times that way. 

Mr. CORDRAY. Sure. 

Senator CRAPO. I would like to know, out of all of the data requests you have made, how many have avoided the OMB review? 

Mr. CORDRAY. Fair enough. We will get you that, yes. 

Senator CRAPO. All right. Thank you. 

Chairman SHELBY. Senator Reed. 

Senator REED. Well, thank you very much, Mr. Chairman, and 

thank you, Director Cordray. I am told today is Military Consumer 

Protection Day, so it is fitting that you should be here. And I think 

one of the—I will speak personally. One of the prouder achievements in the Dodd-Frank Act was the Office of Servicemember Affairs, which is in your organization, led by Holly Petraeus. So 

thank you for all you are doing to help protect our servicemen and 

-women. 

The basic legal protection for these young Americans is the 

Servicemembers Civil Relief Act that goes back to the Civil War. 

Enforcement is scattered about. The Department of Justice has 

civil authority, civil actions. Banking regulators can go in and correct, but the enforcement is really lax. And I think you pointed out 


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last week, when you did a report which indicated that 

servicemembers continue to report difficulty obtaining their 

Servicemembers Civil Relief Act protection of 6 percent on loans, 

the law going back a long time ago is that if you have prior existing 

debt and you entered the Armed Services, it is capped at 6 percent, 

and they are not getting that, particularly student loans. That was 

the focus of your report. 

Mr. CORDRAY. Yes. 

Senator REED. And I have put legislation in to give authority for 

enforcement to the CFPB, just as background. 

Now, if Congress were to enact this legislation, how would the 

CFPB be equipped to better protect servicemembers from financial 

harm? 

Mr. CORDRAY. I just think it stands to reason, Senator, if there 

are more cops on the beat to protect our troops in terms of potential abuses or problems in financial products and services, which 

for them are just a distraction from their ability to focus on their 

job, which is defending and protecting all of us, that would be a 

helpful thing. 

I note that the Congress a couple years ago—and I think it was 

under your urging—did provide enforcement authority to the Consumer Bureau under the Military Lending Act. I thought that was 

a positive step forward. 

What we do is we work with partners, particularly the Department of Justice, who has been active in this area. But, again, they 

only have so many resources. We only have so many resources. If 

there is ever an area where we should be training and focusing our 

resources on the problem, it is making sure that our 

servicemembers are treated appropriately and fairly in the financial marketplace so they do not have to worry about those problems. 

Senator REED. Thank you very much. And you made reference to 

the Military Lending Act. That was passed in the fiscal year 2007 

National Defense Act, and it gives you authority, but it puts the 

burden on the Department of Defense to create the framework, the 

rules and regulations. And they are trying to do that again. They 

had a series of regulations that were well intentioned but did not 

really fully address some of the problems that face servicemen and 

-women. 

Can you briefly explain how these members remain vulnerable 

today in anticipation, we hope, of rules that will be forthcoming? 

Mr. CORDRAY. Yes, and I particularly appreciate that you have 

had a very constant and sharp focus on these issues and have seen 

to it that progress moves along in this area. And I think we are 

very close to having a new set of Military Lending Act rules, and 

I commend the Department of Defense for the speed with which 

they have recognized the importance of working on this problem. 

The difficulty is that the Military Lending Act, as you say, 

passed in 2007, there was originally a set of rules meant to implement it, but they were too narrow, and they were too easily circumvented. It is very much the problem that Senator Brown pointed out earlier of people being able to swim around some of the otherwise well-intentioned rules, and you still can see Web site after 

Web site of online lenders offering loans to servicemembers at


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triple-digit percentages and some of them 400, 500, 600 percent. 

And they are, gallingly, perfectly legal under the current set of 

rules, which is why Congress, as I understand it, has directed that 

this be redone. 

The Department of Defense has taken that very seriously and, 

again, acted with great speed in addressing it, and I believe that 

very shortly we are going to have a new set of rules, and 

servicemembers will have new, important protections that they 

probably should have had several years ago. 

Senator REED. Well, thank you very much. Again, you know, we 

are all, rightfully, appreciative of the service that these men and 

women render to the country, and we say that repeatedly. But if 

their rights cannot be adequately protected, then the rhetoric is 

nice, but it is better to have the access to the rules and protections. 

So I thank you for that. 

Mr. CORDRAY. And I saw in preparing for the testimony today 

that a number of Members of this Committee can speak to this personally from their own experience of service. So I think it is quite 

important. 

Senator REED. Thank you very much. 

Chairman SHELBY. Senator Vitter. 

Senator VITTER. Thank you, Mr. Chairman, and thank you, Mr. 

Cordray. 

Like a lot of Members and a lot of citizens, I am really concerned 

about the vast amounts of data that CFPB collects on all citizens 

related to financial transactions. I have a proposal to allow any citizen to see what personally identifiable data the CFPB has collected on them at least once a year. Would you support that concept? 

Mr. CORDRAY. So, in general, our approach to this issue is we are 

not interested in personally identifiable data where we can at all 

avoid it because it only causes problems for us as an agency in our 

work. The data that we are collecting to be able to monitor the 

credit card market, the mortgage market, issues where you all will 

ask us from time to time whether laws have gone too far, whether 

they have gone far enough, how can we possibly answer those questions if we do not have data on the marketplace? 

Now, that is very different from me wanting data on what Senator Vitter does in individual transactions or what Richard 

Cordray——

Senator VITTER. You do collect personally identifiable data, do 

you not? 

Mr. CORDRAY. We have some personally identifiable data in two 

respects in particular: consumer response where consumers actually give us their data so that we can work on their complaint, the 

same way constituents go to your office and give you personal 

data——

Senator VITTER. Apart from complaints where you collect significant personally identifiable data? 

Mr. CORDRAY. And then the second——

Senator VITTER. You do not? 

Mr. CORDRAY. Except in a limited number of cases, we do not. 

Senator VITTER. You do not collect any of that? 

Mr. CORDRAY. We have no reason to do that, and the credit——


BANKI-41578DSA with DISTILLER
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Senator VITTER. So you do not collect any of that? 

Mr. CORDRAY. For example, our credit card data, we take—we do 

not have name, we do not have address, we do not have Social Security number, we do not have account number. We are not interested in that. We are interested in the pattern of what goes on in 

the market. 

Senator VITTER. Do you collect it before you scrub it? 

Mr. CORDRAY. We ask for the data to be scrubbed before it comes 

to us wherever possible. 

Senator VITTER. Who gets it and who scrubs it? 

Mr. CORDRAY. It depends on which database we are talking 

about. I would be happy to have a full briefing for you on this. 

Senator VITTER. So somebody involved in the process has that. 

Mr. CORDRAY. Well, typically it is scrubbed before it comes to the 

agency. So private companies have all this data. They care very 

much what you and I do in our personal transactions, and they are 

always marketing to us on that. I mean, that is where the focus 

should be. We typically do not have that data. We are trying to 

monitor markets as a whole. It is a big difference and a big distinction, and it is often misunderstood and misstated by people. So that 

is what I would say to that. 

Senator VITTER. So what about these databases, the one-time collection of 100,000 to 500,000 deposit advance accounts that contain 

deposit account and transaction-level data? Did you all never collect that? 

Mr. CORDRAY. So we have had particular collections from industry in order to work on particular reports. Again, we are typically 

not interested in transaction-level data or individual transactions. 

Senator VITTER. So what I just referenced did include transaction-level data? 

Mr. CORDRAY. Again, a number of different collections over different times. If you would like us to have people come to your office 

and speak very specifically about anything in particular you want 

to know more about, happy to do it. 

Senator VITTER. OK. 

Mr. CORDRAY. I do not think you will find it problematic, but I 

want you to be able to work it through. If you do see something 

problematic, I want to know about it because if it is a problem in 

your mind, it is a problem in my mind. 

Senator VITTER. Well, there are big problems in my mind, and 

I have seen personally identifiable, transaction-related data that 

have been collected. However——

Mr. CORDRAY. You say you have seen that? How have you seen 

that? 

Senator VITTER. I have read about at least three specific databases that you all have collected that contain that, number one. 

Number two——

Mr. CORDRAY. Give us a chance to come and brief you, and we 

can speak to the——

Senator VITTER. OK. Number two, there is all sorts of data you 

collect that involve that information at least before it gets to you. 

So, in any case, however large or small, in your opinion, this universe is, would you support citizens being able to see what data is 

being collected by or because of regulations of CFPB? 


BANKI-41578DSA with DISTILLER
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Mr. CORDRAY. So that sounds good in the abstract, but typically 

the data that we are collecting, we would not even be able to identify individuals, because you and I do not want us to know that, 

and we do not know it. And, therefore, in most instances we could 

not even answer that question. 

Senator VITTER. Well, then what I am describing would not 

apply. It would only apply to what I am describing. Would you support citizens having access to that to understand what is being collected? 

Mr. CORDRAY. Again, I would be glad to talk to you further about 

that. If it is consumer response information, they gave us the data 

so we could work their problem, the same way they do to your constituent services arms of your offices. If it is an enforcement or a 

supervisory action to get relief to people, we need to know who 

should get the relief and work with the institutions to accomplish 

that. 

In terms of our general data gathering, we typically do not know 

it, and, therefore, we could not tell an individual anything about 

their data because we do not even know whose data it is. And that 

is the way you should want it, and that is the way I want it. 

Senator VITTER. Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Menendez. 

Senator MENENDEZ. Well, thank you, Mr. Chairman. 

With the fifth anniversary of the Wall Street Reform Act this 

month, there has been a lot of discussion about what the law did 

well, where there might be room for improvement, and what challenges still remain on the financial landscape. And as we look back, 

I think without question that establishing the Consumer Financial 

Protection Bureau has been one of the cornerstone achievements of 

the law. Families now have an independent cop on the beat on 

their side to identify and stop predatory and deceptive practices. 

And the CFPB provides both consumers and policymakers with better information and research about financial products, risks, and 

trends of the market. 

Now, I fought hard for the CFPB’s creation as a Member of the 

Committee, as well as many of the protections it is charged with 

enforcing, such as strong mortgage servicing rules to stop foreclosure abuses and protections to end abusive and deceptive credit 

card practices. And I also fought hard for many of the Wall Street 

Reform Act’s financial stability and corporate governance improvements. And while the law is not perfect and some important challenges remain, the last 5 years have shown that, overall, there is 

a lot it got right. 

Director Cordray, the CFPB has been at the forefront of many 

of these gains, which is a testament to the work that you, Senator 

Warren, and the CFPB staff have put in to stand up the agency 

from scratch and continue its positive development. So I want to 

commend you for being a force for good. 

There are two areas that I would like to get into in my questions. 

One is about mortgage servicers’ evasion of the dual-tracking protections and some of the credit card reforms that I fought for in the 

2009 Credit CARD Act, and I want to talk to you about those. 

I am pleased that the Bureau has made these a priority. While 

our economy and housing market continue to recover from the


BANKI-41578DSA with DISTILLER
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crisis, there are still many parts of the country struggling with 

mortgage debt and foreclosure, including my home State of New 

Jersey, which has the highest rate in the country of homes currently in foreclosure. 

Now, despite the CFPB’s new rules, many homeowners behind on 

their mortgages continue to face obstacles to obtain modifications 

that can help. For example, until mortgage servicers mark applications as ‘‘Complete,’’ homeowners are not eligible for dual-tracking 

protections, which prohibit a servicer from moving forward with a 

foreclosure while the homeowner is pursuing loss mitigation. While 

homeowners scramble to pull together document after document, 

they accumulate additional fees and burdens that make them even 

more likely to default. Some servicers request documents on a 

piecemeal basis and repeatedly request the same documents, making prompt and effective loss mitigation a pipe dream for distressed 

homeowners. 

Do you have concerns that servicers are intentionally obstructing 

the loss mitigation process to favor foreclosure? And if so, what 

more can be done to correct misaligned incentives and protect consumers? 

Mr. CORDRAY. We do and I do have concerns about that, and for 

me they go back to when I was a State treasurer and county treasurer at the local level in Ohio and saw the difficulties that mortgage servicing problems were creating for individual homeowners 

who really did not deserve to have that heaped on top of financial 

distress. 

When we created our new mortgage servicing rules, which went 

into effect in January of 2014, we looked closely at those issues 

which we knew were pain points for consumers—we hear about it 

on our consumer complaint line frequently—and worked to address 

them. We have had further work that we are doing both in enforcement actions—we have had several enforcement actions against 

mortgage servicers where this has been part of the problem and 

part of the answers in orders that we had to impose, and also in 

supervisory work that we are doing with institutions that we highlighted in our supervisory highlights last edition so that all of industry could know again that this is a focus for us. It is a problem 

that has been persisting for years, and it is one that they need to 

clean up. 

It is a complex problem, and as you noted, different States have 

different situations that they are in with underwater homeowners 

or with foreclosure processes that differ dramatically from judicial 

to nonjudicial foreclosure States. But this has been pretty much a 

constant across the country. 

Senator MENENDEZ. Well, I would like to follow up with you——

Mr. CORDRAY. That is fine. 

Senator MENENDEZ.——because there are many cases of this. 

Mr. CORDRAY. That is fine. 

Senator MENENDEZ. Finally, with the 2009 Credit CARD Act, we 

are pleased to see that an independent evaluation 4 years later 

shows that the Act’s reforms are saving American consumers almost $21 billion per year. In 2013, the Bureau released its own report on the CARD Act that found similar successes, but also


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identified market practices that are a concern for consumers. Can 

you give us an update in that regard? 

Mr. CORDRAY. I can. I will tell you that—and I go back to the 

State level where we saw the kinds of complaints people were making about credit cards. This is 2005–06, before the CARD Act, before the financial crisis. That market is considerably better today 

than it was 10 years ago, and I would say there are three reasons 

for that, and I want to give credit where it is due. I think the 

CARD Act and the Federal Reserve rules have made an enormous 

difference in correcting problems in late fees, universal default, 

other issues. Some of the real problems have been cleaned up. 

Second, credit card companies themselves have done a better job 

on customer service. You can see it in the J.D. Power surveys. The 

net promotion score index, which they have used in handling credit 

card calls from customers, has been an enormous shift, putting financial incentives behind the way people handle those calls so that 

they are more consistent with what the customer is looking for 

rather than just trying to get them off the phone. I want to give 

the companies credit for that. I would ask them to think about 

using net promotion score index principles across their customer 

service in all of their financial products. That would be a good 

thing. They know how to do it. They should do it. 

The third thing is consumers themselves. Coming out of the financial crisis, consumers have been more responsible about thinking about how to approach their credit card debt, whether to maintain long-term revolving credit card debt, what the interest rates 

are on that. People have been paying down debt. And I think when 

you are a consumer who is having a better experience in managing 

your own debt, you are going to have a better experience with your 

company, and you are going to have a better experience with the 

marketplace. That to me has been one of the success stories. 

There are still issues that we are concerned about and we are 

looking at. Deferred interest is an issue of some concern for us. 

How the rewards programs are advertised, we just want to be careful about that. And the credit card add-ons obviously have been a 

point of particular focus for us through enforcement actions, and I 

think much of that has been cleaned up. But I would say the credit 

card industry is a hopeful sign for me that the financial institutions, when they come under pressure from Congress and others, 

and also when they understand the importance of doing it themselves, have the ability to clean up their act. And I would urge 

them to consider what they have done there and how they could 

do it elsewhere. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Scott. 

Senator SCOTT. Thank you, Mr. Chairman. Good morning. 

Mr. CORDRAY. Good morning. 

Senator SCOTT. As I am sure you are probably aware, South 

Carolina has become an automotive giant in the sector of transportation. I am very proud of my State’s progress. Whether it is BMW, 

Volvo, Mercedes, Continental Tires, Bridgestone, Michelin, Sage 

Automotive, we certainly have seen a lot of jobs created by these 

manufacturers that depend on dealers in South Carolina and 

around the country being able to sell cars. 


BANKI-41578DSA with DISTILLER
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That is why I am particularly concerned by the CFPB’s 2013 bulletin on indirect auto lending, which imposes one-size-fits-all, cookie-cutter regulations on lenders and dealers. As Chairman Shelby 

has already stated, CFPB has no jurisdiction over auto dealers, but 

it seems that your Bureau is regulating heavily the relationship between lenders and dealers. 

My concern, however, I am not as concerned about the dealers 

or the lenders. I am really concerned about the consumers in South 

Carolina, and whether it is Greenville or Charleston, who will now 

perhaps pay a higher price for their vehicles because of the Government’s involvement in trying to make things better. 

Director Cordray, eliminating the ability for lenders and dealers 

to compete for a customer’s business will mean that the customer, 

simply the customer, ultimately pays a higher interest rate. How 

do we explain back at home that CFPB’s involvement effectively 

forces some South Carolinians shopping for vehicles to pay a higher 

interest rate on a car note? And how does that provide greater consumer protection? 

Mr. CORDRAY. So a couple things, Senator, and thank you for 

that question. 

First of all, just understand my background, too, is I come from 

a strong automotive State. Talk to Senator Portman, talk to Senator Brown. You know, GM, Ford, Chrysler, Honda have been very 

significant presences in that State. When I was the Ohio Attorney 

General, we had to deal with significant challenges in the automotive industry resulting from the financial crisis, first with 

Chrysler and then the General Motors bankruptcies, which were 

tremendously burdensome for everybody involved, but ultimately 

came to a good result—the result being that we understand the importance of employment in that industry, pensions and health care 

for people who work in that field, and its importance to our economy. 

I am the Director of the Consumer Financial Protection Bureau. 

The last thing I want is to do things that hamstring important 

markets like auto lending, mortgage lending, and the like. And if 

I do that, it will be to the detriment of my agency and to the American public. And so I am very concerned about this. 

In the last several years, we have had the hottest auto market. 

I believe in the history of this country. And that is at the same 

time that the Consumer Bureau was gathering its wings and coming into existence. I am pleased about that because I think consumers benefit when they have access to automotive transportation. Probably in your area as in mine, if you do not have the 

ability to get around through a car or truck, you are really in a lot 

of trouble in your life. So that is important. 

Having said that, we also believe strongly that people should not 

be subject to higher prices or onerous terms based on their ethnic, 

racial, or gender background. And the Justice Department feels 

strongly about that as well, and they are our partner in this work. 

The bulletin that you described was actually a bulletin that was 

a pretty straightforward restatement of the law—it was not a 

change in the law—several years ago which simply stated that if 

you are a lender and you have an automotive lending program, you 

are subject to the Equal Credit Opportunity Act—that is a


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undeniable proposition—and you need to think carefully about 

what your program is. 

Senator SCOTT. Director Cordray, thank you. I hate to interrupt 

you. 

Mr. CORDRAY. That is fine. 

Senator SCOTT. However, I need to go to another question. But 

I will say that there is legislation being promulgated or working its 

way through the House with a large number of the CPC members 

on this specific topic. So I would suggest that perhaps the members 

of the CPC and myself and others as well are very concerned about 

discrimination, and perhaps your approach to the indirect lending 

market is inconsistent with the outcome that I think you sincerely 

desire to achieve. 

My other question in some of the time that I have remaining is 

on our conversation before we started the panel as it relates to the 

TILA and the RESPA and heading toward TREA. I think Senator 

Donnelly and myself both submitted a letter back in May asking 

for a grace period or some time so that those good actors in the 

mortgage business who are trying to transition to the new forms 

would have more time than October to have less liability exposure 

as they move to the new forms. I would love to hear your response 

as we talked about earlier. 

Mr. CORDRAY. Thank you for that. We have heard a tremendous 

amount from Members of Congress on both sides of Capitol Hill 

about TILA–RESPA, what we call our ‘‘Know Before You Owe’’ 

mortgage rule, which is something Congress required us to do. Just 

as a reminder, it is in the law. I am required to do this. And it is 

a good thing. It takes a regime that has grown up historically that 

did not make a lot of sense where the consumer had to get two different forms at the application stage from two different Government agencies—HUD and the Federal Reserve—and then two different forms at the closing stage. Very confusing to consumers: 

‘‘Why am I getting two forms? How do they differ? What am I supposed to take from that?’’ It was impenetrable. 

We were supposed to reduce that to one form at each stage, 

which we have done in this rule, and that is a good thing. And everybody recognizes that is a good thing. There is still pain always 

in any kind of transition. 

So that requirement was in the law 5 years ago when it was 

passed. We worked on this very carefully over time, did a lot of 

consumer testing, very transparent about it. We finalized the rule 

in November of 2013. We gave a 21-month implementation date, a 

long implementation date, in response to what we heard from industry. 

Nonetheless, as we get toward the end of it, some people are not 

ready. We heard from you and others back in the spring, and it is 

an example of the oversight, Mr. Chairman, you talked about. 

When we get congressional oversight, I take it seriously. I do not 

regard myself as able to blow off concerns that people raise to me. 

If you are raising a concern on behalf of your constituents, they are 

the people I am trying to serve as well. 

So we did in the end—and it was due to an error on our part, 

in part, but we did back up the implementation date further out 

of the summer sales season, which was important to a number of 


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people. It is now under consideration to put that in October. A lot 

of people do not like a date of something like January because 

when we did our first round of mortgage rules and we were under 

a requirement of timeframes from Congress, it was January, and 

there are so many systems changes that they do or systems freezes 

that they do at the end of the year that that is actually inconvenient for people. 

The other thing we said, in specific response to your question, 

was that we went out and worked with the other agencies to get 

an agreement, which we have, that the early examination of this 

will be diagnostic and corrective. We do not think people are out 

there trying to exploit consumers on something like this. They are 

just going to be trying to get it right. And so for the first period, 

which may last many months, as we and other agencies look at 

this, if we see errors, we will point out what they are and how they 

should be corrected. We will not be looking to be punitive toward 

people. We have said that explicitly. I will say it again on the 

record here today to you. That is how it will be. 

I can tell you that is what we said about the mortgage rules 2 

years ago, and that is how it has been, and nobody has said otherwise or complained. And we have taken that to heart here as well. 

So happy to talk further about it, but I think we have been trying to give a fair amount of leeway here while at the same time 

moving forward with an important change that is good for consumers and will help them be able to understand this transaction 

better. 

Senator SCOTT. Thank you. 

Chairman SHELBY. Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. Thank you and 

Ranking Member Brown for having this hearing, and thank you for 

being here today, Richard. I appreciate what you are doing. And I 

also want to say, as Senator Scott did, we appreciate the extension 

you gave the TILA–RESPA. You did respond to a letter that I and 

many on this Committee have signed, with Senator Donnelly. 

I want to talk a little bit about Native Americans. It is a little 

different ball game there than in other parts of the country because 

of the issues of sovereignty and the issues of consultation. You 

know well, because we have talked about it before, I have had some 

Montana tribes that have been very unhappy with the consultation 

process. 

To be fair, I have also heard from an Oklahoma bank that 

thought that you are doing good things. 

So the question comes up: Is the consultation process—is there 

a policy on what you do and how you do it that applies to every 

tribe across the country? And if that is true, can you give me an 

idea what it is? 

Mr. CORDRAY. Yes. We—in fact, in response to the back-and-forth 

that you and I had had on this subject, and others from that area 

of the country in particular—but other parts of the country may 

have a tribe or two as well—we did put together a policy on consultation, and we formalized that and shared it and got input on 

it from the leading tribal organization. We have since then been 

asked to put together an MOU that would be more specific about 


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some of the aspects of how this works, so we are working with the 

tribes on developing an MOU. 

I do not want to have to get into having individual consultations 

to individual tribes because my understanding is there are more 

than 500 of them across the country. 

Senator TESTER. There are. 

Mr. CORDRAY. But we are trying to deal with them as a group. 

They are very concerned about the small-dollar lending, potential 

regulations there. We have had two distinct consultations with 

them on that subject at their request at this point and had a considerable amount of input from them. And, of course, we are open—

I want to emphasize this. We try to be as an agency very accessible 

to people at all times to be able to come and see us and tell us 

what they are concerned about and what they think. I always feel 

like that improves our work if we know it, and it does not help me 

not to know it. 

Senator TESTER. I agree. 

Mr. CORDRAY. So I would say that, too. 

But I think we have been trying to be very fulsome in our approach to this, and I know you have emphasized that to me again 

and again. Happy to hear further from you as we go. 

Senator TESTER. Yeah, and we will try to help where we can 

help. I appreciate that. 

Earlier this year, the Bureau proposed several changes to facilitate mortgage lending in rural America. And while I still think 

there are a few things that we can keep working on, I am certainly 

appreciative of what the Bureau did and made some positive 

changes, one of which was expanding the definition of rural States; 

and now under those proposed changes, almost the entire State of 

Montana is considered rural—which is correct, by the way. 

So my question is: Outside of Montana, are you still hearing from 

folks who think they are in rural areas that the CFPB has not defined very well? 

Mr. CORDRAY. By the way, I still recall meeting in your office in 

which you impressed upon me that I thought—I said that I understand something about rural from parts of Ohio which are quite 

rural. And you said, ‘‘I do not think you really know what rural 

means in Montana.’’ And you gave me a little schooling on that, 

and that led in part to our thinking about how to expand this definition. 

To go back, the Federal Reserve first proposed a definition of 

rural under this rule before we came into being as an agency, and 

their definition would have covered about 2.2 percent of the American population, which was plausible but somewhat narrow. We 

looked at it, and we decided that it was too narrow. I looked at 

some maps of Ohio at the time. We came out with a different definition that was more like 9.9 percent of the population, so about 

quintupled it. And even after that, then people showed me maps 

of Ohio county by county, and Senator Brown and I could do this 

in our sleep. There were a whole bunch of counties that were clearly rural in my mind from what I know about them but were not 

covered under our definition. So we felt the need to go back in and 

do it again. 


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One of the things about the Bureau that I appreciate among the 

strong team there is we want to get it right, and if we did not get 

it right, we are typically not going to pretend like we did and just 

say we cannot change it. We are going to try to fix it. So we now 

have a definition of rural that is much broader, as you say, includes almost your entire State, covers about 22 percent of the 

American population. Whether it is too broad or not, I do not know, 

but it feels appropriate to me. We have had disagreements within 

the agency over it, but we are working to finalize rules on that, 

which we should do by the end of summer. And I think that for 

the most part they have been fairly well received, although once we 

hear from people, as they see how they work, we will think some 

more about it. 

Senator TESTER. OK. One last point, and you do not have to answer this. I just want to make the point. I was very concerned before this hearing about the information you are collecting. And because of the data breach at OPM, the concern with it, maybe this 

database will be breachable, too. I would say I was very encouraged 

by the fact you are not collecting Social Security numbers, names, 

addresses, account numbers. 

Mr. CORDRAY. Right. 

Senator TESTER. I think we have to be careful as policymakers, 

if we were to pass a bill that tells you to release any personally 

identifiable data, that you would have to go back and put names 

and addresses and Social Security numbers to that data, which 

would take a ton of time and would make me very concerned about 

what is going on here. 

Mr. CORDRAY. I really would not like to have to do that. 

Senator TESTER. Yes. Thank you very much. Thank you, Richard, 

and thank you, Mr. Chairman. 

Chairman SHELBY. Senator Kirk. 

Senator KIRK. Director, I want to raise the issue, which several 

people have raised on a bipartisan level, of the cost of your building. From what I understand from your Inspector General, the 

total cost of this building, which used to be used by the Office of 

Thrift Supervision, is $216 million all in. This is a leased facility 

which you have gutted, and you are putting in a two-story waterfall and a glass staircase. 

If you look at the number of employees in your Bureau, it is 

1,459. That would lead to a per employee cost of headquartering 

them in Washington, DC, of $148,046 per employee. I would say 

that is a little—since this building was way OK with the Office of 

Thrift Supervision, how come you need $216 million in upgrades of 

what they already had? 

Mr. CORDRAY. So several things. Number one——

Senator KIRK. Let me just follow up. How does a two-story waterfall help you do your job? 

Mr. CORDRAY. Well, on that one in particular, I would say I do 

not begin to see how it helps us do our job, and probably we will 

not end up with a waterfall in this building, although any two-bit 

shopping mall in America you can probably find a waterfall in it 

somewhere, and I think that has been very overstated by people. 

But, in any event, the Office of Thrift Supervision, which had 

this building before it went defunct in the Dodd-Frank Act, had


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already recognized and—had done an audit and recognized that the 

building was in deep need of fundamental repairs. We are talking 

about useful——

Senator KIRK. Let me just interrupt a little bit and follow on the 

line of Senator Tester by saying, as Ohio Attorney General, you 

certainly would be able to pick up the issue of the bulk collection 

that you are doing against the American people. As someone who 

was a reservist in the intelligence community for over 20 years, 

have you taken the specific action—I would ask you again: Have 

you taken the specific action to take members of Congress out of 

your data collection and members of the Supreme Court out of your 

data collection? Do you see the issue on separation of powers? 

Mr. CORDRAY. So you have now kind of piled up two questions 

on me that I have not yet had a chance to answer. I would like to 

go back to the building first, if I may. 

The Office of Thrift Supervision recognized that systems were 

reaching the end of their useful life——

Senator KIRK. If you would get back to my secondary question, 

have you made sure that you have not collected the credit card 

data of Supreme Court Justices? I will take——

Mr. CORDRAY. We have not collected credit card data on any 

Member of Congress or any Supreme Court Justice. I would note 

there would be no purpose for me to do so. But I do not consider 

that issue as more important than the privacy of individual consumers across the country where we are typically not collecting 

their data either. 

Senator KIRK. Have you made sure that you have not collected 

Supreme Court Justice information? 

Mr. CORDRAY. Why on Earth would I do that? 

Senator KIRK. Because of the separation of powers. 

Mr. CORDRAY. But why would I be collecting Supreme Court Justice data? Why would I——

Senator KIRK. I would assume that this scandal is a bit like the 

NSA scandal, that you have vacuumed up too much, that it gives 

you too much power. 

Mr. CORDRAY. I cannot really even follow the question here. 

Senator KIRK. I think any first-year law student would pick this 

up, a separation-of-powers argument. It gives you the ability to 

abuse this power and intimidate the Court. 

Mr. CORDRAY. So—intimidate the Court. I do not really follow 

that at all. We are not doing anything—you are hypothesizing—nor 

would I want to do that, nor would it make any sense for me to 

do that. All it would do is discredit my agency. 

Senator KIRK. I think Senator Tester also picked up on the issue. 

If you are collecting all this data, the only purpose of collecting 

data is to be able to access it. And the problem is, as you collect 

this——

Mr. CORDRAY. Not so. For private sector, the purpose of collecting 

this information——

Senator KIRK. My question——

Mr. CORDRAY.——is to access it. For us it is to monitor markets. 

Senator KIRK. Does the Chinese intelligence service have it before you do, now that we have seen on the order of 10 or 200


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million people compromised by OPM? The problem is we do not 

even trust you to keep this secure. 

Mr. CORDRAY. I can see that you do not trust me. I think you 

are setting out a set of hypotheticals that have nothing to do with 

anything we are doing. I would be happy to have our staff brief you 

more to give you comfort on that score. 

Do you want me to go back to the building, or are we just never 

going to answer that question? 

Senator KIRK. Well, I would ask, why is $148,000 per employee 

absolutely necessary to your mission? 

Mr. CORDRAY. OK. Those numbers are off. 

Senator KIRK. They are actually the numbers of your Inspector 

General. 

Mr. CORDRAY. Look, they are talking about things like other 

rents; they are talking about other services. The construction costs 

have remained actually fairly consistently constant. We have now 

let those contracts, and they are coming in under budget. And they 

are fairly consistent with what the OTS first opined was necessary 

6 or 7 years ago before the CFPB even existed. So I think this is, 

again, vastly overdone. That is my view. But I am happy to talk 

further with you about it. 

Senator KIRK. I would gently suggest that you probably ought to 

scrub the picture you are not collecting intel on members of the Supreme Court or the Congress. 

Mr. CORDRAY. I will tell you what. I will be glad to take a look 

at that. I cannot imagine we are doing that. And if we were doing 

that——

Senator KIRK. I think that would reassure us all——

Mr. CORDRAY. OK. 

Senator KIRK.——make sure that the Chinese do not have it before you do. 

Mr. CORDRAY. OK. We will look to give you reassurance on that 

point. 

Senator KIRK. Thank you. 

Chairman SHELBY. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. 

So since it has opened its doors 4 years ago, the CFPB has had 

a consumer complaint hotline where consumers can call in, they 

can go online, they can lodge a complaint about a financial product 

or service. And that is what consumers have been doing. They come 

in and they complain about sketchy fees on a checking account, errors on a credit report, harassment by a debt collector. 

The agency then sends those complaints on to the company, who 

then has some time to respond to both the consumer and the 

CFPB, and to try to resolve the issue. 

Now, the agency has received more than 650,000 complaints 

through the hotline. Could you give us a sense, Director Cordray—

just a ballpark figure is fine—about how many of those complaints 

were resolved to the consumer’s satisfaction and how much consumers have recovered financially through this process? 

Mr. CORDRAY. Yeah, and I will say the arc of consumer complaints continues to increase in terms of volume, and I believe that 

is simply a function of there is still a lot of lack of visibility. People 

do not necessarily know what the CFPB is, and they will know 


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more over time, I hope. And I hope they will see that we are providing value to them. That is what we aim to do. 

I think we had something like 700-some credit card complaints 

in our first month, and we are now up to about 25,000 complaints 

per month across the entire range of financial services. 

What happens then is we give the consumer a chance to tell us 

whether they were satisfied with the resolution of their complaint 

or, if not, what they continue to be concerned about, and we then 

prioritize issues for further investigation or perhaps enforcement 

action or supervisory activity. And the institutions know that, and 

I think that pushes them to be more thoughtful about how they try 

to resolve those complaints in the first instance. And I do not know 

the exact numbers on this, but it may be 20 percent of consumers 

continue to feel they have a dispute once we have worked through 

our process, and then we have, as I say, further steps that we can 

take. 

In terms of how much resolution there has been for consumers, 

it has been many millions of dollars. It is hard to know exactly for 

sure. They do not always tell us how the matter was resolved, although many of them come back to our ‘‘Tell Your Story’’ line and 

tell us, you know, often with real gratitude, that they did get a resolution, and they could not get a resolution for months and months 

and months, but after speaking to us and us working it, they got 

one promptly. And that really thrills us when we hear that. 

But the other thing is there is a lot of nonmonetary relief people 

get from those complaints. Getting something fixed on their credit 

report can loom very large for them and is hard to quantify. 

Senator WARREN. Yes, although I take it it certainly does have 

financial ramifications to get your credit report fixed. 

Mr. CORDRAY. Absolutely. And maybe they can get a mortgage 

then that they could not always get. 

Senator WARREN. Yes. 

Mr. CORDRAY. That may be worth thousands of dollars to them. 

It is hard to quantify. Debt collection issues are a constant source 

of irritation for consumers—the wrong debt or they are not the 

right person or whatever, and they cannot get people to stop calling 

their home. I do not know how to put a price on that, but getting 

12 calls a day or calls in the workplace and it is not the right person or whatever it is, us being able to stop that looms large for people. 

And another point you have made to me is it is sometimes easier 

to quantify—it is always easier to quantify the amount of relief we 

give back to people for things that happened to them before today, 

and we cannot easily quantify the benefit to them of things that 

will not happen to them tomorrow because of changes made today. 

You know, those go on into the future and accumulate extensively 

over time. We do not have any way of putting a price tag on that, 

but I have got to think it is very significant. 

Senator WARREN. Great. So you have created this Web site. We 

are getting roughly about 25,000 people a month who come on the 

Web site——

Mr. CORDRAY. And rising. 

Senator WARREN. And rising. 

Mr. CORDRAY. Web site or phone. 


BANKI-41578DSA with DISTILLER
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Senator WARREN. Or phone, and gets some resolution. We say it 

looks like roughly about 80 percent get some kind of resolution 

here. So the agency also just recently went live with this consumer 

complaint database, and here you have a collection of thousands of 

narratives from real consumers about problems they are having 

with financial products or with companies, and it is all sortable 

now online. So it is possible to go online and see it by product, by 

date, by where the consumer lives. For example, just this morning 

I went to the database and looked for all the complaints from Massachusetts about mortgages. So it is a powerful way to see what 

kinds of issues are cropping up in the communities that all of us 

represent. 

Now, I know it has only been online for just a few weeks, but 

I wondered if you could describe how you think this will help improve the market for financial products. 

Mr. CORDRAY. So the database has actually been online longer, 

although it was really broken into very generic categories which I 

think were less insightful for people than hearing in the consumer’s own words what the problem was as they saw it. I think 

that is incredibly important. We have described the narrative as 

really the heart and soul of the complaint. 

I mean, for me to make a complaint and then have it be categorized as somehow ‘‘debt collection,’’ ‘‘wrong amount,’’ one of a 

number of complaints, and that is all you know about it, it is just 

not nearly as insightful as to be able to hear exactly ‘‘what happened to me,’’ ‘‘the calls I got at home,’’ ‘‘the effect on my life.’’ It 

is just tangible. It is real. It is the difference between statistics and 

actual stories, and to me that is very significant. 

The database, I think, is really causing institutions to have to 

compete on customer service, which is a good thing. And the good 

ones are competing very well on customer service, and others are 

having to improve, and that is a kind of pressure that I think is 

a positive pressure. 

I will also mention that there are many Members of Congress, 

many Members of this Committee, who are now referring complaints over to us when they come to their office, and we encourage 

you to do that. We are supposedly the experts, and we are happy 

to work those complaints, and then you can see and keep track of 

how they go. We want every American who has a problem to potentially know to come to us and see if we can get it resolved for them. 

We cannot always, but we are always going to try. 

Senator WARREN. Well, I really appreciate that, and I see this as 

a prime example of how Government can take small steps that will 

have a very positive impact on the market. There is now a bit more 

accountability for companies that mistreat or just plain cheat their 

customers. On the other hand, there is some public acknowledgment for the companies who treat their customers well and resolve 

their complaints quickly. 

Mr. Chairman, if I can, I just want to slip in one little followup to the point that Senator Brown made earlier. 

Chairman SHELBY. Go ahead. 

Senator WARREN. And that is about forced

arbitration clauses. As Senator Brown highlighted, the report that 

the CFPB recently released contains some damning findings about 


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how forced arbitration clauses fundamentally tilt the process 

against consumers and keep them from effectively fighting back 

even when they have been cheated. 

Now, it is clear that the biggest banks and some of their Republican friends in the House of Representatives see the writing on the 

wall here, and that is that a rule is coming. So they are pushing 

legislation that would force the CFPB to redo the report before you 

issue any new rules. I think this is a stall tactic, plain and simple. 

The report took 3 years and 728 pages to complete. It carefully documents a wide range of problems. It is thorough and extensive. 

I just want to ask you very briefly, because the Chairman is indulging and I am over time here, but can we get on the record the 

steps the agency took to ensure that this study was complete and 

accurate, including soliciting and considering comments from the financial services industry? 

Mr. CORDRAY. Sure. First of all, we did a request for information 

at the very outset to ask people how we should go about doing the 

study, so we really broadly solicited people’s thoughts and heard a 

lot from both industry and different kinds of markets, and also 

from consumer groups and others, and we erred toward the side of 

being very comprehensive about what they told us we should do in 

the study and trying to do as much of it as we possibly could. 

We found that in many areas this was breaking brand-new 

ground. There was not necessarily data easily accumulated on that. 

We did go to the American Arbitration Association and were able 

to get significant data about the arbitration process, which really 

shed light on that and people had not had that before. 

We looked at a number of different ways of trying to get judicial 

resolutions of similar matters. We were helped in part because 

there was some class actions involving certain institutions who at 

one point had stopped doing their arbitration agreements, so you 

could actually see what the before and after was. Did it actually 

save consumers money for them to have this forced arbitration 

process? And we were able to map that and discern that. We looked 

at enforcement actions as another means of affecting the marketplace, and people talked more about our consumer complaint process as a new element here. 

It was a very comprehensive report. I honestly do not think we 

could think of a single thing we could have done that we did not 

do. We are always happy to hear more. And we have had tremendous input all along, and now since we have given roundtables and 

other opportunities to digest the report, talk to us about it, and 

that is an ongoing process. And as we now embark on a rulemaking 

process, there will be small business review panels. We have found 

that useful. And there will be notice-and-comment process on that. 

Everybody will have their say. We will listen to it all, digest it as 

best we can, and do what we are supposed to do as Congress told 

us to do: act in the public interest consistent with the results of 

that report to determine what to do about this. 

Senator WARREN. Thank you, and thank you, Mr. Chairman, for 

your indulgence on this. I really appreciate it. It is an important 

issue. 

Chairman SHELBY. Thank you, Senator. 

Senator Rounds. 


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Senator ROUNDS. Thank you, Mr. Chairman. 

Director Cordray, earlier several of the other Members of the 

panel requested information concerning the collection of data. Probably the reason why it is really an item of real interest is because 

of OPM and the loss of the data there. A lot of our employees have 

come in, and they have been very concerned about the loss of their 

personal data. So I think when we talk about the collection process 

that you use and that you utilized to collect the data that you want 

to do the market analysis with, I think the question comes to really 

are the organizations that are required to submit data to you, are 

they submitting from them through perhaps a third party that 

scrubs it? Or are they providing data to you that has been scrubbed 

by the organization itself? Are you aware of how that works in 

terms of how you actually scrub the data or how it gets scrubbed 

to begin with? 

Mr. CORDRAY. I am generally aware of it, and we have people 

who are very carefully focused on that, and it depends on the data 

collection. Some of it is negotiating with industry because that is 

who we are getting the data from—they have all this data, by the 

way. They know everything you are doing. They know everything 

I am doing. They use it to market to us. I do not myself object to 

that. Some privacy folks do. It can be positive, it can be negative. 

But, you know, there are repositories of data that are much more 

troublesome than anything we have. 

Where we can get the data on a sampling basis and ask specifically for certain fields and not for other fields, then it comes to us 

in that form. The credit card database I believe is vetted through 

Experian, which is a credit reporting—one of the leading credit reporting companies that scrubs the data before it comes to us and 

removes certain fields. 

We are trying very hard to make sure our employees do not have 

access to personally identifiable information. That only causes me 

trouble in our work. And let me just say the OPM breaches, they 

affect my employees as well as your employees, and we are very 

sensitive to that. And it is something that we are now dealing with 

to make sure employees know what their rights are, what is available to them, and I am sure you are, too. The notion we would contribute to that ourselves is not something we ever want to happen. 

Senator ROUNDS. What it did, though, was it brought to light the 

fact that when we collect data, we have an additional obligation to 

protect that data. 

Mr. CORDRAY. I think that is right. 

Senator ROUNDS. What I was curious about is whether you actually received the data and then scrubbed it or if it was delivered 

to you by a third party who would then have that responsibility. 

It sounds like what you have indicated is that in the case of some 

of the larger bulk data amounts, it is being scrubbed by a third 

party before it gets to you. 

Mr. CORDRAY. A credit reporting agency that has access to all 

this kind of data, anyway, typically. But I would be happy to have 

our folks come and present to you on each individual thing just 

to—I want you to have comfort on this. I think we are trying to 

be very careful about it. I want you to know that we are trying to 

be very careful about it. I read and see the stories about the NSA. 


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I am an American citizen. I have the same concerns that I think 

you do about that. I think that is very distinct from what we are 

talking about here. But I am happy to have our folks come and 

spend some time giving——

Senator ROUNDS. Thank you. 

Mr. CORDRAY.——And if you remain concerned, to know your 

concerns. 

Senator ROUNDS. I think that is a good way to leave it, and we 

will request that. 

Mr. CORDRAY. All right. 

Senator ROUNDS. Let me just move on to rural appraisals. I am 

from South Dakota. We have had challenges. I am not sure how 

deep into this you have gotten personally, but rural appraisals 

have been really tough to get. I am not sure how they are in a lot 

of the more urban areas, but in rural South Dakota, trying to get 

an appraisal has been very difficult. Two things. 

Number one, I know that you tried to set it up so that we could 

identify rural locations, and I am asking, is there another way in 

which we can get a third or a fourth look at it? Because we have 

got some communities in western South Dakota that are clearly 

rural in nature, but they are not identified that way. Is there a 

process in place today where we can get the challenge set up to get 

them placed in the appropriate category? 

Mr. CORDRAY. When we first opened our doors, we had a number 

of mortgage rules we were required to do by law, and one of them 

had to do with appraisals, and another one was an interagency rule 

with the Federal Reserve on appraisals. And I have always been 

somewhat concerned as to whether we got that right. One of the 

big issues, as you are describing—and I am familiar with it—is in 

rural areas there are just fewer comparables. 

Senator ROUNDS. Correct. 

Mr. CORDRAY. It is more difficult. Appraisers might have to come 

from a greater distance, so they are not as accessible. So just barriers to being able to make rural transactions. 

I think we have been working at trying to alleviate that, but I 

would encourage you to continue to press on that. You are pressing 

on it with me here, so I will be taking it back. We will talk to the 

Federal Reserve about it, if there is more relief we can give on 

that, because it is a peculiar circumstance of the few and far between areas, and we want people to be able to get mortgages there 

just as they can in the dense areas of the country. 

Senator ROUNDS. I think it is two different things. Number one, 

it is the appraisals themselves and what is expected of them, and 

comps with regard to rural areas, which in many cases do not exist. 

And along with that, I think you are seeing legislation proposed 

right now that would actually create the ability for some of the 

banks who are literally holding those mortgages because they cannot qualify on the secondary market. They are holding them inside. 

And yet we want to make sure that those are still considered an 

appropriate asset for those banks that end up doing that. 

If I could, Mr. Chairman, I have just got one more question. I 

know when you work through the qualified—or the consolidated 

statements, and the goal was to perhaps simplify some of it. Last 

year, as I was moving around South Dakota, one of my community 


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bankers said, look, I just got a copy of the most recent release or 

the qualification statement. And he said the new disclosure statement as proposed is 164 pages. That was the PDF. 

Now, the only reason why I bring this up is if that is actually 

the case and if he is accurate in his definition and his explanation——

Mr. CORDRAY. He is not, but——

Senator ROUNDS. OK. 

Mr. CORDRAY. Yeah. 

Senator ROUNDS. Look, we have got to have disclosures that people will actually read. 

Mr. CORDRAY. So, look, that is not correct. What he was talking 

about is the regulation, the rule that actually implemented these 

forms is lengthy. I wish it were not, but it is lengthy. But the actual forms themselves, they are not 164 pages. I mean, that would 

be ridiculous. They are shorter than they were before when you 

had the two forms. They are not as short as my friend over here, 

Senator Warren, really wanted it to be—one page at the application stage, one page at the closing stage. We were not able to 

achieve that. But I think it is five pages and three pages. 

Senator ROUNDS. We might find something that we agree on. 

Mr. CORDRAY. Yeah, well, so, look, if Congress legislates, Congress legislates. But we are at five and three pages. It is the key 

information. To me it is the executive summary of the whole transaction, and we are looking to try to do electronic closings and push 

the industry in that direction, which is where they want to go anyway, so that a lot of the paper gets taken off and you can really 

focus on the key form here. 

We have tested those forms with consumers, and they have found 

them to be much easier and more accessible and more understandable. That is the key thing for us. Whether it is two pages or three 

pages, you know, might matter in some sense in the abstract, but 

these are not lengthy forms. They are meant to be key summarized 

forms, and that is what we are doing. 

Again, on the rural and underserved, I would be glad to hear 

more from you. I heard a lot from Senator Johnson when he was 

Chair of this Committee about South Dakota, and I hear from Senator Tester and others about Western States that are—the population is more spread out. We have been working to give more latitude toward community banks and credit unions to portfolio mortgages in their own portfolio and have them be given all the protections of the rule. I think we are getting to a good place on that, 

but we will hear more from them as we go. And what I would say 

there is——

Senator ROUNDS. My time is up, and the Chairman has been 

very kind——

Mr. CORDRAY. Community banks are increasing their market 

share in the mortgage market, which I am glad of, and it is a good 

thing. 

Senator ROUNDS. Thank you, sir. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Warner. 


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Senator WARNER. Thank you, Mr. Chairman. Director Cordray, 

great to see you again. I have got two or three areas I want to 

touch on. I will try to be brief. 

One, when we started to see all the hacking, obviously I have 

huge concerns about OPM as well, and I am hopeful that Acting 

Director Cobert, who I have had a couple conversations, is going to 

move aggressively. But one of the areas that when we started seeing this on the private sector side early on in terms of credit card 

and debit card hacking was generally an area that I was not even 

that familiar with of the differential consumer protections between 

credit cards and debit cards. 

Mr. CORDRAY. Yes. 

Senator WARNER. And, you know, I know as—and I think particularly about so many young people using debit cards rather than 

credit cards. I know they have different business models, but how 

do we kind of lean in this a little bit to make sure at least consumers—one, Senator Kirk and I have got some legislation that 

would try to harmonize the protections for consumers. But would 

you speak to that for a moment, how we kind of better inform particularly our—as a parent of daughters that use debit cards rather 

than credit cards all the time, how we equalize these protections? 

Mr. CORDRAY. I will, and actually this is interesting because 

some of the regulation grows up through sort of historical circumstances that do not necessarily make logical sense. So credit 

card protections were developed at a different time and for different purposes than debit card protections. And, by the way, another example of this is prepaid cards, which is yet another card 

people have in their wallet, that currently have no consumer protections. Most people are unaware of that, and that is why we have 

been working to get that rule finalized so that we cover that gap. 

But what you are saying is credit cards and debit cards, I think 

they started out as being seen as very distinct. You know, credit 

cards were about credit and a way to get away from just store 

cards and give you credit generally. But debit cards were seen as 

having to do with ATMs and other things. They have kind of 

merged more together as just payment mechanisms, and I think 

people often now may pull out one card or the other and not think 

that carefully about them, although some people are quite careful. 

But there are differential protections. I believe that the fraud protection on a credit card is $50 limit of exposure, and on debit cards 

I believe it is $500. 

Senator WARNER. Right, it is much——

Mr. CORDRAY. That may have made more sense when debit cards 

were really only about the ATM and you might be taking out a fair 

amount of cash. I do not know if it makes sense today. It is something that I would invite Congress to think about, and you may 

have guidance for us on that. Whether we could fix it ourselves or 

we would have to have a statutory fix, I am not clear on that. 

Senator WARNER. And, Mr. Chairman, I would just say that this 

is an area where I have found even within the industry I think 

there is some interest in harmonization, and at least folks ought 

to know that there are very different protections. 

Let me move to another subject. One of the areas that I have 

spent some time on in the last 8 or 9 months is looking at this


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dramatic growth in the gig economy or the sharing economy or the 

on-demand economy, particularly amongst Millennials. There are 

good sides and bad sides to that. Obviously, there is a lot of freedom that comes with these kind of new work environments. For 

some folks it is quite lucrative to cobble together these different 

revenue sources. There are a whole host of questions around the 

fact that there is a lack of a social safety net in terms of unemployment, workmen’s comp, and disability, areas not necessarily from 

your purview but something I think we will have to work through, 

maybe not with a top-down solution but with public, private, optin, and opt-out models. But one area that, Richard, would really 

fall in your area is we have been starting to hear, as more and 

more—there are some estimates that as much as a third of the 

workforce falls at least somewhere along this continuum of contingent workers. But as we think about qualifying for mortgages within QM, we have got some concerns—or we have heard some concerns that this emerging new kind of 1099 or contingent workforce, 

you know, the traditional banking system does not record their income in an appropriate way so their ability to qualify for QMs are 

somewhat undermined. My understanding is that Appendix Q is 

the section within QM that includes guidance for verifying and documenting borrower income. 

Is this an area that you have taken a look at? If not, I understand because there is not a lot of policymakers taking a look at 

it. But it far and away is the fastest growing sector of our economy, 

and we ought to get ahead of it a little bit. 

Mr. CORDRAY. Anytime anybody asks a question that includes 

the phrase ‘‘Appendix Q,’’ I know they are commendably in the 

weeds. 

Senator WARNER. Well, let me acknowledge on the front end that 

I did not know about Appendix Q until my staff——

Mr. CORDRAY. All right. But, in any event, the point you raise 

is a very interesting one and a good one, and it is something that 

I have become increasingly aware of and concerned about. So there 

are different aspects of this—I would say several aspects. 

We are moving to an economy in which we have fewer full-time, 

full-salary employees in the old model, just as we have moved over 

time away from defined benefit pension systems to defined contribution pension systems. This is happening. Interestingly, I read 

that the health care law is actually pro-liberty as a piece of legislation in the sense that it does not cause people to have to be stuck 

in a job to get their health care. They can actually consider being 

an independent contractor or other things and still now get health 

care. 

But I would say several things. It does create more complications 

for people qualifying for a mortgage because it is harder to document their income. Their income may be more fluctuating. But, I 

mean, you start adding up who are intermittent employees, who 

are contract employees, who are temporary employees, who are 

seasonal employees, you know, it is a huge portion of the American 

population. So I think we need to look again at our mortgage rules 

in light of that. It is not an easy thing to figure out how to handle, 

but it is something we need to go back and think more about. 


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I would also say that from a standpoint of wealth and retirement 

accumulation for Americans, this is going to be increasingly a big 

problem because pension plans and even 401(k) contributions tend 

to be limited, even in companies that have multiple types of 

workforces, to the full-time, full-salary people. And everybody else 

does not have access to the ability to put away savings for retirement or get a match by an employer, and we are going to have to 

think hard about what we do about that. Treasury is developing a 

myRA account that may be an example in this area. I think Illinois 

just did something legislatively. It is something we need to think 

about because, otherwise, people are going to be possibly falling behind in income disparity, but also very much falling behind in 

wealth and retirement disparity. 

Senator WARNER. Thank you, Mr. Chairman. I would love to 

work with you on that. 

Mr. CORDRAY. Yes. 

Chairman SHELBY. Thank you. 

Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman. Mr. Cordray, 

thanks for being here. 

In our office, we talked a little bit about QM, and I know we 

were all working on this issue way back when in the bad old days 

when so much was happening. We were all concerned about a 5-

percent risk sharing, if you remember. That was where everybody’s 

focus was and trying to figure out a way to get that right. 

One of the things that we have looked at in legislation is dealing 

with qualified mortgages, and there seems to be this focus to only 

deal with it at community banks, only smaller institutions. And I 

guess if you look at a qualified mortgage that is held on portfolio, 

that means the institution is keeping 100 percent of the risk. And 

I guess I have wondered why we have tried to differentiate, if you 

will, between smaller institutions holding qualified mortgages but 

larger institutions being unable to do so. And I know we have 

talked a little bit about it, but I just wondered if you might address 

that. And I have one other question. 

Mr. CORDRAY. That is fine, and, obviously, we do not have as 

much time to talk about it today as we did, and I am happy to talk 

about it more with you. 

We generally are trying to find ways to continue to encourage 

community banks and credit unions to do mortgage lending because if you look at the data going through the crisis, they had 

lower defaults than anyone else. They are the most responsible 

lenders we have, and the more lending they do in accordance with 

their traditional underwriting models, the better it is for consumers, the better it is for our economy. So that is why we have 

focused portfolio provisions to benefit them. 

I am concerned about it at upper levels because I do not—the 

logic of it, you know, may or may not attain at larger levels. But 

we had—just experientially I am aware we had a number of institutions that did a lot of portfolio lending and that blew up, did not 

get it right: Washington Mutual, Countrywide, AmeriQuest, some 

of these companies that really threatened the economy because 

they made such a mess of things, and they were doing portfolio 

lending. So portfolio lending is not always a cure-all in terms of I 


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am bearing the risk so I am responsible about it, although it feels 

to me that community banks and credit unions who have borne the 

risk have been highly responsible about it, and we are looking to 

encourage them. And as I say, I am pleased to see that the community banks’ share of mortgage lending seems to be on the increase. 

That is good for America, I think. 

Senator CORKER. So it just seems to me that—and I agree with 

much of what you just said. But it seems to me, on the portfolio 

lending component, there is something different than just stopping 

it at $2 billion or whatever, and then people just going whole slog 

into it at certain levels. There ought to be some——

Mr. CORDRAY. Maybe. 

Senator CORKER. There ought to be something that is different 

than just that stark line, and I think we ought to try to explore 

that together. 

On manufactured housing, look, I live in a State here we have 

a lot of people that have difficulty affording housing. Senator 

Brown lives in a State where there are a lot of people that have 

difficulty affording housing. Many of us are in the same—I know 

Senator Cotton does. No offense. But the fact is that, you know, for 

some of the lower-income citizens that we represent, manufactured 

housing is an outlet. I know Senator Brown and I sponsored legislation back in 2012 that actually was more expansive than what 

was in the Shelby bill this time. And yet we have these rules that 

are in place that really make it difficult. I mean, you and I talked 

about the fact that on a smaller loan, a $20,000 loan or a $30,000 

or $40,000 loan, the costs that are associated with doing that up 

front end up bumping up against some of the regulations we have. 

And I just wondered if you might address that, and at least address the fact that you understand that is a problem, and I am 

wondering if we might collectively generate a solution for that. 

Mr. CORDRAY. So, to me, the problem I am concerned about—and 

it is a very real problem, and it is not limited to manufactured 

housing. It is that as you go to the lower end of the spectrum in 

terms of the size of loans, the smaller the loan, there is still a certain amount of costs that have to be incurred in order to make that 

loan. And so, you know, at a loan that is $200,000, $300,000, 

$400,000, I guess in California maybe $800,000, the costs are 

spread over a big base. At $25,000 or $50,000—a lot of houses in 

my States are of that kind, and manufactured homes, very much 

of that kind—the costs start to get larger. 

The law as it now currently exists and that we implemented does 

provide for that, and it says under $100,000, the 3-percent points 

and fees cap can rise to 4 and then to 5, and at lower levels to be 

a hard dollar amount. Whether those numbers are set exactly at 

the right spot is a point worthy of attention. Again, that is not specific to manufactured housing, but manufactured housing falls very 

much at that end of the spectrum. And I want to know that people 

at the lower end of the cost spectrum can get access to mortgages 

and are not blocked from that by something in the Administration 

or just costs of this. Just as automobile lending actually is going 

farther down the spectrum, people need their cars, and to me that 

is a good thing. 


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So I am happy to talk further about it. We have been trying to 

look at the data on manufactured housing to understand. People 

have been raising this problem. Is it really a problem or is not really a problem? What we do see is that every month of last year from 

the Census Bureau survey data, manufactured housing lending 

was up from the month the year before. And some of the leading 

manufactured housing manufacturers are quite profitable. So I do 

not know what to make of some of the concerns people are raising 

to me, but I will say that this issue of costs on a smaller loan I 

think is a universal issue and problem and one that maybe we 

should be thinking further about whether the thresholds are exactly right. 

Senator CORKER. Mr. Chairman, thank you for the time, and I 

would just close by saying I appreciate you looking at that data. 

And I understand that in a growing economy you are likely to see 

more people doing these types of things. We have seen some data 

that shows that numbers of these people are unable to be served, 

and they are ending up paying more for rental housing than they 

could be paying for actually purchasing, again, a lower-cost home 

of either type, whether it is conventional or manufactured. So I 

hope we will continue——

Mr. CORDRAY. That does not sound optimal from anybody’s 

standpoint. 

Senator CORKER. I agree. Thank you. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

At the risk of going down this rabbit hole one more time, I just 

want to kind of begin with where we are with data collection, because I have listened and I think in some ways I feel like we are 

ships passing through the night here and not really hearing. 

You do not require the transfer of personally identified information other than to do consumer services based on a complaint. Is 

that what I am hearing? 

Mr. CORDRAY. That is generally correct, although in enforcement 

and supervision matters where we are going to be getting money 

back to consumers, we ultimately will need to have information to 

get the money back to consumers. 

Senator HEITKAMP. These would not be individual complaints. 

This would be kind of a broad, sweeping kind of investigation 

where you then would require individual information? 

Mr. CORDRAY. So, for example—and I could name names of institutions, but they are public, where we had credit card add-on matters, ultimately we have to get money back to consumers. 

Senator HEITKAMP. Right. 

Mr. CORDRAY. Now, either we can work with the institution to 

do that, or we may have to pull the data ourselves. 

Senator HEITKAMP. I think my point is, in terms of your data collection, the only way you would have personally identified data 

would be if it were necessary to serve the consumer either in a 

broad complaint or an individual complaint. 

Mr. CORDRAY. I believe that is generally correct. And there is 

typically no purpose for me having it otherwise. It just gets in my 

way and my team’s way in terms of doing our work. 


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Senator HEITKAMP. OK. And do institutions send you a bulk 

amount of data that actually has that information with it requiring 

you to scrub it, or do you always get information that has been 

scrubbed and where Social Security numbers and personally identified information has been removed? 

Mr. CORDRAY. So on that, what I would like to do is have our 

staff come and brief your staff on all of our data collections——

Senator HEITKAMP. I think there is enough interest here that 

maybe just a report back to the Committee would be very helpful. 

Mr. CORDRAY. That is fine. OK. We can do that. That is typically 

our aim, and I believe it is true in all circumstances. But I am always hesitant to say ‘‘all’’ without making sure my staff tells me 

that that is correct. 

Senator HEITKAMP. And I want to make one final point on this, 

which is interesting to me, and that is, where we are deeply concerned about what you have, we should be equally deeply concerned about the cybersecurity of the information where it resides, 

which is with the companies that you access every day. And so they 

are going to have—any breach of their data is much more damaging than access to your data that is being used for market analysis. 

Mr. CORDRAY. Sure. Target, Home Depot, I mean, that is account 

information, Social Security numbers, those kinds of things, very 

problematic. 

Senator HEITKAMP. I think another thing that would be helpful—

and, obviously, we have found great response from your agency on 

what is rural and what is not. We think that you probably have 

made the right decisions in North Dakota. But I am curious as to 

the percentage of land mass in this country that you have determined is, in fact, rural. So if you could get that to me, that would 

be great. 

Also, I would reiterate Senator Tester’s concern about consultation and would be interested in follow-up on consultation with 

tribes as well. 

Mr. CORDRAY. OK. 

Senator HEITKAMP. That is part of the overall scheme in a government-to-government relationship. We need all agencies to appreciate what that means. 

Mr. CORDRAY. And I know you have got me promising to come 

visit you, so we will make sure that we do that. 

Senator HEITKAMP. I know. I was going to mention that. 

Mr. CORDRAY. OK. 

Senator HEITKAMP. And I do have to say that where we can disagree, I think your personal integrity is unimpeachable. 

Mr. CORDRAY. Thank you. 

Senator HEITKAMP. And I think you are doing a very difficult job, 

Director. 

Mr. CORDRAY. I hope that is the case. 

Senator HEITKAMP. And I want to thank you for your service. 

Someone with your credentials having, I believe, clerked for the Supreme Court at one point, with your great academic background, 

is someone who is extraordinarily valuable, and I, of course, am 

partial to past AGs, so we are all good. 

Mr. CORDRAY. That is very kind of you. Thank you. 


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Senator HEITKAMP. I want to reiterate some of the points that 

you have been hearing about where we are at with the people we 

are trying to protect. And I think what we are all trying to get at 

is how do you balance protecting the consumer against access to 

necessary credit, whether it is small-dollar lending, whether it is 

in manufactured housing, whether it is just access to rural communities or Native American communities to the market. I think there 

is a balance there, and I know I have told you frequently my story. 

I was probably one of the first people who got beat up by trying 

to shut down payday lending and predatory lending, and I learned 

something in that process, which is, you know, sometimes people 

need diapers and sometimes they need gas and they have a flat tire 

and they cannot fix it. And these are folks that are living on the 

margin. So I understand the need to protect people, but I also understand the need to have some form of small-dollar, short-term 

lending. 

What do you think those products—and this will be my last question. What do you think those products should look like? And how 

do we achieve that balance? And how do you as the Director, you 

know, address the concerns that we have—which is let us give people access to credit, it helps build their credit, it helps build America, but let us also protect them. And that is a tough balance with 

this population. 

Mr. CORDRAY. It really is. And, by the way, we first saw this 

issue with our mortgage rules where we—in the Dodd-Frank Act 

they passed certain things that we were required to do on mortgages at a time when the mortgage market was all overheated and 

quite irresponsible and the underwriting had deteriorated. And by 

the time we came to actually write the rules, things had crashed, 

the mortgage market was now frigid, credit was very tight. It was 

a hugely different situation. 

And so as we wrote those rules, we really became very keenly 

aware, face to face with this problem of how do you balance protections, which we want, with access to credit, which we do not want 

to choke off. And that is something we tried to balance in the mortgage rules, and I think we did pretty well with it, but it is something we are constantly monitoring and trying to think about. 

The same thing now in these small-dollar rules. We know people 

have a demand for small-dollar credit. They have had it for over 

100 years, and they get that demand served in various ways, and 

some products are more responsible and some are less responsible, 

but people have a demand. And we cannot choke off a supply to 

them, but at the same time, we are concerned about this issue of 

the debt trap, people ending up thinking they are getting in and 

getting out, but many of them end up rolling over and getting stuck 

at a very high cost over a long period of time. And that is the issue 

we are trying to address. 

Now, whether the industry business model relies on that to subsidize the single-demand loans, I am not entirely clear on that. 

They say they do not, but maybe they do. It is something we are 

trying to figure out as we are working on these rules. 

But I have the same objective in mind that you describe. People 

need to have access to money, and not everybody has an uncle or 

a sister or mother-in-law that they can go to for $300 or $500, and 


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if they have done it once or twice, they may not be able to go to 

it a third time. And so we get that. At the same time, we do not 

want people to end up in products that harm them further. 

I do not know that I am the right person to say what all the 

right products are. What we are trying to identify is that there are 

certain wrong products that we want to try to rein in a bit while 

still leaving access to credit. That is the right answer in that marketplace. How to get there, though, is a complex, as you say, difficult issue, and I am hopeful, and we are working hard to try to 

understand enough to get it right. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

Chairman SHELBY. I think Senator Heitkamp raised a real important issue, and we have talked about this before, Mr. Cordray. 

We do not want to drive the small, marginal consumer underground where there is no regulation, because that is what we have 

had before. And I believe that goes right to the thrust of her question. You know, how do we do this without overregulating this? 

And how do we have access to some type of credit for—because 

there will be credit. It is a question of is it going to be legal or illegal. 

Now we have Senator Cotton coming up. We can have that Ivy 

League debate with Mr. Cordray that you referred to. Senator Cotton? 

Senator COTTON. Thank you, Mr. Chairman. Thank you, Director, for appearing before us. 

I want to return to a topic that Senator Corker touched upon: affordable housing. Census and HUD indicates that there may not be 

a single county in this country that currently has enough affordable housing. This is particularly acute in the kind of rural State 

that I represent or rural county where I live. There are not a lot 

of new single-family homes being built. There is not a large stock 

of multi-family rental units, which is why many families find manufactured housing to be the most affordable option they have, as 

Senator Corker described. They end up paying less on a mortgage 

for a manufactured home than they would pay for a very limited 

supply of rental stock. 

As you describe, there is a basic math problem. It takes a certain 

amount of time and resources to process any loan, whether the loan 

is $40,000 or $400,000 or $4 million. And over a bigger loan, that 

cost is spread out across a bigger base and, therefore, the percentage costs do not appear to be as high. Over a smaller loan, like you 

have for manufactured housing, it is a much smaller base to spread 

out, so it appears to be much higher, even though that is the preference of the consumer, and you have many financial institutions 

who are willing to make those loans. 

You have regulatory flexibility under the Dodd-Frank Act, under 

Section 1431, to address this, to raise those percentage rates, yet 

you have not used that yet. Could you explain why you have not 

used that and maybe if you are looking ahead to using it to grant 

some relief for these families and lenders? 

Mr. CORDRAY. Yes, we did consider this, and pretty carefully, 

with a lot of input at the time we adopted our mortgage rules, our 

big set of mortgage rules, in 2013. And this issue was raised, and 

the 3 percent was not seen as appropriate for loans under 


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$100,000. And it went to 4 at certain levels; it went to 5 at lower 

levels; and it went to a dollar figure at the lowest levels. 

Now, that was an effort to try to address the issue that you are 

raising that I see as a very legitimate issue. Whether we have got 

those numbers right, whether we should reconsider them and think 

further about them, just as we have reconsidered and thought further about the rural and underserved issue, is a fair point, and it 

is one that I will take back from this hearing. 

I do remain concerned that credit at the lower dollar end of the 

spectrum is tight. It is tight. It is tight for people who also often 

have lower credit scores and more difficult to access the credit. I 

do not want to try to pretend to redo underwriting that is being 

done by these institutions on that. But whether those numbers are 

set at the right level, whether $100,000 is the right level are things 

that I am not entirely clear on. I think we should be looking at it 

some more. You should be looking at it some more. We should have 

a fruitful discourse on whether there maybe should be changes 

there. 

Senator COTTON. Well, thank you for that, and you referenced in 

your answers to Senator Corker that you have seen some encouraging data, which I have seen as well. I do think that is, though, 

limited to the sale of new manufactured housing. I believe that——

Mr. CORDRAY. I see, as opposed to used——

Senator COTTON. So, yes, there is still a robust market also for 

refinancing and for secondary sales. Manufactured housing obviously does not have the same lifetime that single-family housing 

does, but oftentimes families need manufactured housing at a time 

in their life when they are going through a lot of change, when 

they are newly married, when they have new children. They are 

also going through economic change, hopefully getting higher 

wages, moving up the economic ladder, and ready to move into a 

different kind of home when there is another family who would be 

willing to buy their manufactured home. 

Director, I would like to turn to another question now. Last year, 

you brought an enforcement action against a mortgage lender, 

PHH. You did not file a lawsuit. You went in front of an administrative law judge, and that judge ruled for the CFPB and issued 

a judgment of $6.4 million. You overturned that judgment and imposed a fine of $109 million. Could you explain your thinking, both 

why you pursued an administrative law judge as opposed to an Article III court? And then what evidence and thinking went into 

your decision to overturn your own ALJ and impose a fine 17 times 

his initial judgment? 

Mr. CORDRAY. Yes. So the use of an administrative law judge as 

opposed to a court under the statute is a discretionary decision. We 

have used administrative law judges fairly sparingly, except for 

consent orders. We have been in court, and we are in court in 

many, many matters. One difference is that the ALJ route can be 

faster and can be more streamlined. You know, whether that is a 

good or bad thing is often in the eye of the beholder. That happened to be the approach that was used in this particular matter. 

As for the decision, that decision is published, and the reasons 

for it are set out on their face. I think it was like maybe a 36-page 

decision, so it is lengthy. The particular point that you are getting 


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at had to do with whether under the law—and this is not an obvious point, and the administrative law judge saw it one way; I saw 

it another way. Maybe a court will see it a different way. We will 

see. Under the law, whether if you violate the RESPA statute, is 

the right relief only contracts that violated the RESPA statute 

after a certain date? Or is it payments made after a certain date 

on contracts that violated the RESPA statute before that date? It 

has to do with the limitations period here. 

Not an obvious point, but it is a point that, once you decide it 

one way or the other, makes this huge difference in this matter in 

terms of the amount of relief. That is the sole reason for it. I 

thought the law pretty clearly was one way. Others may see it differently. But we tried to come to the right result as we understood 

the law. 

Senator COTTON. Thank you for that explanation, Director. You 

are right that the implication of my question and the concern I am 

driving at is not necessarily even about that specific decision, but 

just about the structure of decisionmaking, not only within your 

own Bureau but within independent agencies as a whole. Your own 

Bureau has certain features that exacerbate the problem, the fact 

that your budget is not subject to annual appropriations and that 

you are single Director as opposed to a five-member commission. 

This is not a reflection on you or any future Director. These are 

concerns I have about the nature of this Bureau. Madison said in 

Federalist No. 47 that, ‘‘The accumulation of all powers, legislative, 

executive, and judiciary, in the same hands . . . may justly be pronounced the definition of tyranny.’’

So independent of your judgment in this single case or in any 

other cases, or future Directors’ judgments, I am going to continue 

to have these concerns about——

Mr. CORDRAY. That is fine, and having said that, I am here in 

front of you consistently and happy to be speaking to you anytime. 

I regard that legislative oversight as very meaningful and very vigorous. That decision is subject to appeal. It is being appealed to a 

court. I hope that they will see the case the same way I did and 

think that I did things right. If they disagree, they will tell us so, 

and we will comply and abide by that ruling. So we are subject to 

judicial review in that respect as well. 

Senator COTTON. And we are glad to have you here, and we are 

glad to have judicial review, but original fact finders without life 

tenure and salary protections are different from fact finders at 

agencies and bureaus, not just yours. 

Mr. CORDRAY. True, although State court judges are not subject 

to life tenure as well. 

Senator COTTON. Or regulators issuing rules that provide standards of conduct under which the force of law can impose penalties 

who are not elected are different from people up here making 

those, and we have to answer to people that we serve back home 

for the wisdom of those rules. 

Mr. CORDRAY. Fair enough. 

Senator COTTON. Not a specific commentary on a particular case 

or any particular thing you have done, but I have real reservations 

about the structure of this Bureau. 

Chairman SHELBY. Senator Merkley. 


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Senator MERKLEY. Thank you very much, Mr. Chairman, and 

thank you, Director Cordray, for your testimony. But I want to 

thank you in particular for your leadership of finally having a 

watchdog fighting for consumers and fairness in financial transactions. 

In your testimony, you note that the Bureau enforcement activi- ties resulted in more than $10.1 billion in relief for 17 million consumers. Is it my understanding this is specific funds that come 

from addressing predatory practices that has been returned to 17 

million families across America? 

Mr. CORDRAY. Yeah, and it takes different forms. Some of it is 

direct restitution. Some of it is uncompensated victims that get 

compensated out of a civil penalty fund. Some of it is, say, mortgage relief. Some of it is debt that they otherwise would be required to pay and might be subject to further costs and court proceedings that is forgiven and wiped from the books. But, yes, it is 

meaningful relief for American consumers. 

And the other point that Senator Warren has made to me that 

is worth making, which is every time we then correct practices, the 

same things do not happen going forward, and you can expect that 

the same money is being saved each year in the future, but it is 

very hard to quantify that. 

Senator MERKLEY. It is hard to quantify, but every time a consumer gets a fair mortgage loan rather than a predatory one, a 

great deal of help has been created in terms of a wealth-building 

enterprise versus a wealth-stripping one, and your agency is critical to that. 

I wanted to turn to the subject of payday loans. You are now engaged specifically in laying out a policy framework, not yet a draft 

regulation, and taking feedback on it. In Oregon, we proceeded to 

establish a pretty rigorous framework, reestablishing a usury cap 

on the full range of loans—consumer loans, title loans, payday 

loans—because we had seen the migration from one area to another where States had tried to tackle the 500 percent interest rate 

in payday loans. 

But we see aggressive outreach by payday loan companies to solicit people online and to do so outside the framework of State law. 

And in that regard, about once a week I get a text message like 

this one that came the other day: ‘‘Dylan’’—I do not know who 

Dylan is, but whoever Dylan is, he is one click away from a predatory payday loan. ‘‘Dylan, do you need some extra dollars? Bad 

credit is OK. Approved in 4 minutes. Click here.’’

Now, I am absolutely convinced this is not a payday lender operating under State law. It is probably offshore, as most online payday lenders are. And the challenge is that with the ability to reach 

out to folks through text messages in this case—I also receive 

phone calls for Dylan. If Dylan is out there anywhere and wants 

his phone messages, well, please contact me. So folks then respond 

to this and say, ‘‘OK, great. This is convenient. I do not have to 

go down to the brick and mortar payday loan store.’’ And, by the 

way, we still have those stores in Oregon, even though they now 

operate at 36 percent interest rate. They are still providing credit 

as they have in every State that has cracked down on the 500 percent interest rate. So citizens still have access to credit when they 


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need it at a fair rate, but they are getting ensnared by these online 

solicitations. 

The reason this works is because these companies are able to use 

electronic fund transfers or remotely generated checks to essentially access accounts, and once they have the number of the account of the individual, they simply reach in and grab the money, 

even though their loan is in violation of the law. How are we going 

to stop this? 

Mr. CORDRAY. First of all, you may need a better spam filter on 

your phone, although maybe you are picking up some good intel 

this way. 

Second, the online lending is a particularly acute problem for any 

enforcement regime. I saw it as Attorney General in Ohio. I hear 

about it from our colleagues at the Justice Department who battle 

with it and help us especially when we are trying to deal with 

something that is international in scope. Like a scam we dealt with 

earlier this year, some of the folks were based in Kansas City, but 

they were incorporated in Turks and Caicos. I do not even know 

where that is, someplace in the Pacific maybe. Maybe it is in the 

Caribbean. I do not know. 

Chairman SHELBY. The Caribbean. 

Mr. CORDRAY. The Caribbean? All right. In any event, the enforcement of that is quite difficult but important. 

Also, one might have thought that online lending would end up 

being more efficient because you would not have to have the brick 

and mortar. But the default rates are so high, they are paying lead 

generators $300 to $400 to acquire customers. What does that tell 

you about a customer they are acquiring if they think it is worth 

paying $300 to $400 to get that fish on the line for then the lending 

they are going to do to them, particularly in small-dollar loans? It 

is going to be astronomic interest rates, and they are—540 percent, 

720 percent, even more. And that is a major concern. 

In terms of the small-dollar lending rules that we are working 

on now, that is a big piece of it. The account access where they can 

just take the money directly from your account creates all kinds of 

risks. That was the case with that Kansas City outfit. They were 

called the Hydra Group that we shut down earlier last year. These 

are things we are wrestling with because the account access particularly creates vulnerability for consumers and can cause them to 

be trapped in these loans, and they may or may not appreciate 

what is happening when it is in the fine print. 

So it is something we are trying to think very carefully about, 

but we are aware of and very sensitive and concerned about the 

same problem that I think you just described as we are trying to 

work through these issues. 

Senator MERKLEY. Well, thank you for your efforts to wrestle 

with this issue. It matters a lot to a family whether or not they 

acquire a payday loan in Oregon under a 36 percent interest rate 

cap or whether they respond to the text message or the phone call 

and end up with a 500 percent interest loan from a group that is 

operating with no accountability and reaches in and takes money 

without authorization. There has to be a solution to this. I have 

suggested several in my Stopping Abuse and Fraud Electronic 

Lending Act, the SAFE Act, in 2013. I continue to look for a way 


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for fair lending to happen to help families succeed and to stop these 

predatory practices. And I know that is the business you are in, 

and you are doing an excellent job of it, and thank you for the work 

you do. 

Mr. CORDRAY. Thank you. 

Chairman SHELBY. Thank you, Senator Merkley. 

Director Cordray, thank you for appearing again before the 

Banking Committee, and we appreciate your testimony and your 

frankness. 

Mr. CORDRAY. Thank you, Mr. Chairman. 

Chairman SHELBY. The Committee is adjourned. 

[Whereupon, at 12:10 p.m., the hearing was adjourned.] 

[Prepared statement, responses to written questions, and additional material supplied for the record follow:] 


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PREPARED STATEMENT OF RICHARD CORDRAY

DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU

JULY 15, 2015

Chairman Shelby, Ranking Member Brown, and Members of the Committee—

thank you for the opportunity to testify today about our latest Semi-Annual Report 

to Congress. We appreciate your continued oversight and leadership as we work together to strengthen our financial system and ensure that it serves consumers, responsible businesses, and the long-term foundations of the American economy. 

Next week marks 5 years since the passage of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act and 4 years since the Consumer Bureau opened its 

doors. As you know, Congress created this agency in response to the financial crisis 

with the purpose and sole focus of protecting consumers in the financial marketplace. We understand our responsibility to stand on the side of consumers and ensure they are treated fairly. Through fair rules, consistent oversight, appropriate enforcement of the law, and broad-based consumer engagement, the Consumer Bureau 

is working to restore people’s trust and confidence in the markets they use for everyday financial products and services. 

To date, the Bureau’s enforcement activity has resulted in more than $10.1 billion 

in relief for over 17 million consumers. Our supervisory actions have resulted in financial institutions providing more than $178 million in redress to over 1.6 million 

consumers. And we have now handled more than 650,000 complaints from consumers addressing all manner of financial products and services. These consumers 

are your constituents in each of your States. For example, one excerpt of a complaint narrative from a servicemember in Alabama reads:

We opened an account . . . We paid as agreed until we became unable to 

pay the full amount . . . We made an agreement to pay a lesser amount 

per month and kept paying via allotment. [The company] got a judgment 

against us while I was training. I was not served with a judgment prior 

to court or after . . . I was informed of it when my wages began to be garnished . . . We have asked repeatedly to have this issue fixed . . . We have 

in total paid this company nearly $25,000 over the past 11 years for a couch 

and loveseat, computer hutch, table and chairs. The furniture has not 

lasted, however the payments and ruin continue . . . We need assistance 

as we have tried every other step possible to fix this without aid.

Another excerpt, from a consumer in my home State of Ohio, reads:

[I] elected and agreed to a Reduced Rate Payment Plan with [a student 

loan servicer]. In addition to being charged incorrect interest rates, my 

monthly payment was incorrectly allocated which is resulting in late fees 

and a delinquency notice. After speaking with . . . customer service representatives and a call time of . . . hours, no resolution had been reached.

In this, our most recent Semi-Annual Report to Congress and the President, we 

describe the Bureau’s efforts to achieve our vital mission on behalf of consumers, 

including those in your home States and mine. During the timeframe covered by the 

report, we have helped secure orders through enforcement actions for more than $19 

million in relief to consumers who fell victim to various violations of consumer financial protection laws, along with over $32 million in civil money penalties. For 

example, we took action against a company for illegal debt collections practices resulting in $2.5 million in relief for servicemembers. We also stopped an illegal kickback scheme for marketing services, which resulted in $11.1 million in redress for 

wronged consumers. We also worked with the Department of Education to obtain 

$480 million in debt relief to student loan borrowers who were wronged by Corinthian Colleges, a for-profit chain of colleges that violated the law and has since declared bankruptcy. 

During the reporting period, the Bureau also issued a number of proposed and 

final rules. In October 2014, we issued a final rule to reduce burdens on industry 

by promoting more effective privacy disclosures from financial institutions to their 

customers. In November 2014, the Bureau issued a Notice of Proposed Rulemaking 

to provide strong new Federal consumer protections for prepaid cards and accounts. 

In December 2014, the Bureau issued a proposal to clarify various provisions of its 

mortgage servicing rules. In January 2015, the Bureau proposed further changes to 

some of our mortgage rules to facilitate mortgage lending by small creditors, particularly in rural or underserved areas. This would increase the number of financial 

institutions able to offer certain types of mortgages in rural or underserved areas, 


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and help small creditors adjust their business practices to comply with the new 

rules. 

As a data-driven institution, the Consumer Bureau published several reports during this reporting period that highlight important topics in consumer finance such 

as medical debt, arbitration agreements, reverse mortgages, and consumer perspectives on credit scores and credit reports. We also released a new ‘‘Know Before You 

Owe’’ mortgage toolkit that will help encourage consumers to shop for mortgages 

and better understand how to go about buying a home. 

In the years to come, we look forward to continuing to fulfill Congress’s vision of 

an agency that is dedicated to cultivating a consumer financial marketplace based 

on transparency, responsible practices, sound innovation, and excellent customer 

service. 

Thank you for the opportunity to testify today. I look forward to your questions. 


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1Office of Inspector General, Board of Governors of the Federal Reserve System, Consumer 

Financial Protection Bureau, CFPB Report: 2015–FMIC–C–012, ‘‘CFPB Headquarters Construction Costs Appear Reasonable and Controls Are Designed Appropriately,’ July 21, 2015 available 

at: http://oig.federalreserve.gov/reports/cfpb-headquarters-construction-costs-jul2015.htm.

RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN SHELBY 

FROM RICHARD CORDRAY 

Q.1. During the hearing, I expressed concerns with the Bureau’s 

costly headquarters renovations. These concerns are not new. For 

example, during the June 2014 semiannual hearing, Senator 

Coburn asked you whether the renovations could ‘‘be done for less,’’ 

and you replied ‘‘that is fair, and I am responsible to you for that, 

and this is meaningful oversight.’’ However, when I asked whether 

congressional disapproval led you to change your renovations plans 

in any way, you defended the project but did not answer the question.

a. Has congressional disapproval led you to change your renovation plans in any way since your last semiannual testimony 

before this Committee?

b. If so, please provide a detailed explanation on each change, including estimated cost savings resulting from such changes.

c. If no changes have been made, please explain why.

A.1. As a result of congressional oversight, the Office of the Inspector General of the Consumer Financial Protection Bureau reviewed 

and evaluated the Bureau’s headquarters renovation project, including an audit of renovation expenses. The Inspector General released the audit report in August 2015 stating, ‘‘We determined 

that construction costs appear reasonable based on comparisons to 

an independent cost estimate and the costs of two comparable 

building renovations identified by the U.S. General Services Administration (GSA). We also determined that potential renovation 

costs are below the amount previously budgeted and obligated for 

the renovation.’’1

As with all expenditures and major investments, the Bureau is 

committed to cost-effective management of our resources. The Bureau is working with the GSA to ensure the headquarters renovation is completed in a manner that minimizes cost while maximizing the value of the investment. For example, the Bureau’s renovation process will include a value engineering process. 

Value engineering is an approach used to analyze the functions 

of building systems, equipment, facilities, and services for the purpose of designing and building systems that functionally perform as 

needed—meeting all reliability, quality, and safety requirements—

while minimizing the life cycle costs (i.e., costs incurred over the 

next 10–50 years for installation, maintenance and replacement) 

imposed on the building’s owner and operator. The approach takes 

into account short-term and long-term expenses and performance to 


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2 Available at http://files.consumerfinance.gov/f/201304lcfpblpayday-dap-whitepaper.pdf. 3 Available at http://files.consumerfinance.gov/f/201403lcfpblreportlpayday-lending.pdf. 4 Available at http://files.consumerfinance.gov/f/201503lcfpbloutline-of-the-proposals-fromsmall-business-review-panel.pdf.

ensure the building will last, while identifying opportunities to do 

so as cost effectively as possible. 

For this project, the GSA brought in a third-party value engineering consultant who will hire experts from various trades (mechanical, electrical, etc.,) to analyze the current design and provide 

recommendations to the team for system, equipment, and other 

material substitutions that are representative of the above criteria 

to maximize value while minimizing lifecycle costs. We held a 

workshop in September, and the Bureau hopes to have value engineering changes and the associated cost savings estimates completed this spring.

Q.2. During the hearing, I asked what analysis the Bureau has 

conducted of State laws and regulations prior to publishing its proposal to regulate payday lending. While you provided a broad overview of the Bureau’s work on payday lending, you did not answer 

this question.

• What analysis has the Bureau conducted of State laws and 

regulations prior to publishing the proposal?

• Please provide a copy of the analysis conducted of State laws 

and regulations that relate to payday lending, including explanations and any related assessments as to why such State laws 

and regulations are insufficient.

A.2. The Bureau continues to carefully consider existing State laws 

and regulations, as we have throughout our research and development of options to address potential consumer harm. In April 2013 

the Bureau released a report entitled, Payday Loans and Deposit 

Advance Products: A White Paper of Initial Data Findings,2 which 

references how variations in State laws may impact how products 

are structured. In March 2014 the Bureau released, Data Point: 

Payday Lending,3 which presents findings on the impact of State 

laws and regulations on loan rollover rates. In addition, in March 

2015, the Bureau published the Outline of Proposals Under Consideration and Alternatives Considered.4 as part of the Small Business 

Review Panel process, which also includes analysis relative to State 

laws and regulations. Moreover, the Bureau has met with representatives of State and local governments from around the country to hear directly about their experiences related to payday lending regulations and impact. 

Q.3.a. In a 2013 bulletin posted on its Web site, the Bureau stated 

that the compensation policies of some auto lenders lead to the 

‘‘significant risk’’ of illegal pricing disparities on the basis of race. 

In September of 2014, the CFPB published a report explaining its 

methodology for measuring racial disparities in the auto lending 

market. The Bureau uses a proxy method called Bayesian Improved 

Surname Geocoding to estimate the race of different borrowers 

based on last names and zip codes. In November 2014, Charles Rivers Associates published a study demonstrating that the CFPB’s 

methodology was substantially flawed. For example, the study 


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5 Available at http://files.consumerfinance.gov/f/201409lcfpblreportlproxy-methodology.pdf.

found that only 24 percent of African Americans were correctly 

identified by the methodology employed by the CFPB. 

Is the Bureau still using this methodology?

A.3.a. Yes. On September 17, 2014, the Bureau published a white 

paper, entitled Using Publicly Available Information to Proxy for 

Unidentified Race and Ethnicity,5 that details the methodology the 

Bureau uses to calculate the probability that an individual is of a 

specific race and ethnicity based on his or her last name and place 

of residence. The Bureau’s analysis demonstrates that its proxy is 

more accurate at approximating the overall reported distribution of 

race and ethnicity than other available methods using publicly 

available data. The Bureau’s proxy assigns an individual probability of inclusion in a prohibited basis group based on both geography and surname, whereas other proxies use geography or surname alone in predicting individual applicants’ reported race and 

ethnicity. 

The Bureau and the paper you cite both agree that there are racial and ethnic disparities in pricing resulting from discretionary 

dealer markup and compensation policies, and that a proxy can be 

used to estimate both pricing disparities and the number of consumers potentially harmed. The disagreement is regarding how 

many borrowers were harmed and by how much. 

The Bureau’s approach is designed to arrive at the best estimate 

of the total number of harmed borrowers and to accurately identify 

the full scope of harm. The Bureau makes final determinations regarding discriminatory outcomes and their scope in consultation 

with individual lenders, and carefully considers every argument 

lenders make about alternative ways to identify the number of 

banned borrowers and the amount of harm. In some instances, the 

Bureau has adopted changes and reduced our estimates in response to specific alternatives offered by individual lenders with regard to their specific loan portfolios. 

As we stated in our white paper, the Bureau is committed to continuing our dialogue with other Federal agencies, lenders, advocates, and researchers regarding the Bureau’s methodology, the importance of fair lending compliance, and the use of proxies when 

self-reported race and ethnicity is unavailable. We expect the methodology will continue to evolve as enhancements are identified that 

further increase accuracy and performance.

Q.3.b. What, if anything, has the Bureau done to address the 

issues raised by the Charles Rivers Associates study?

A.3.b. The paper you reference does not undermine either the importance of the Bureau’s anti-discrimination work in indirect auto 

lending or the Bureau’s confidence in its use of the Bayesian Improved Surname Geocoding (BISG) methodology. That paper does 

not provide reassurance that the fair lending risk presented by discretionary dealer markup is less significant than the Bureau—and 

other regulators and consumer advocates—believe. Rather, the 

paper takes issue with the manner in which its authors think the 

Bureau is assessing that risk, using the BISG methodology, in 

order to determine whether violations have occurred. The authors 


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do not reject the use of a BISG methodology itself, they simply offer 

a variety of recommendations based on their beliefs regarding the 

Bureau’s use of the BISG proxy. These beliefs reflect a potential 

misunderstanding of how the Bureau conducts its analysis, which 

is based on the specific business practices of individual lenders. 

The paper you cite presumes the Bureau applies the same analysis to all lenders, in all contexts, including recommending statistical controls the Bureau should use in every case, regardless of 

whether those controls apply to an individual lender’s business 

model. At the Bureau, each supervisory examination or enforcement investigation is based on the particular facts presented. In 

analyzing lending data for statistical disparities on a prohibited 

basis, examination teams typically construct regression models 

based on the particular institution’s specific policies and practices, 

which vary from institution to institution and may also vary by 

product and channel. For this reason, for each institution subject 

to review, examination teams may construct multiple regression 

models by including controls that reflect the institution’s various 

policies, practices, products, and channels, as well as any additional factors identified by the examination team or the institution. 

The Bureau engages with individual lenders to better understand 

their policies and products. As such, the Bureau has considered, on 

a case-by-case basis, many of the controls and recommendations 

listed in the paper you cite. Many of the controls and recommendations are already incorporated into our analysis, both to test the 

robustness of the results and to anticipate (and respond to) lender 

concerns. This process is an ongoing dialogue between specific institutions and the Bureau. 

Once the Bureau has found disparities in outcomes by race, ethnicity, or another prohibited basis under the Equal Credit Opportunity Act for a particular lender, the Bureau will consider whether 

these disparities result from legitimate business needs that are actually incorporated in the lender’s pricing policies and practices. 

Where lenders have demonstrated this, the Bureau has incorporated controls into our analysis, and as a result the disparities 

may be reduced or eliminated altogether. However, where lenders 

simply offer up controls without justification or proof that these 

factors in fact reflect legitimate business needs and are actually incorporated into decisions about discretionary markup, it is not appropriate for the Bureau to include these factors in our analysis. 

That determination is one that the Bureau will make on a case-bycase basis and based on actual evidence.

Q.4. At the hearing, when asked about the Bureau’s March 2015 

report on arbitration, you stated, ‘‘It was a very comprehensive report. I honestly do not think we could think of a single thing we 

could have done that we did not do.’’ The arbitration report submitted to Congress by the Bureau states, ‘‘Although a relatively 

large number of empirical studies have examined employment and 

securities arbitration, relatively few such studies have examined 

consumer arbitration in detail.’’

a. Did the Bureau study arbitration in areas outside of consumer 

products in which the use of arbitration is more developed, 

such as the FINRA arbitration system?


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6 Available at http://files.consumerfinance.gov/f/201503lcfpblarbitration-study-report-tocongress-2015.pdf. 7 Available at http://files.consumerfinance.gov/f/201312lcfpblarbitration-study-preliminary-results.pdf. 8See, e.g., Financial Industry Regulatory Authority Press Release, Board Decision Finds 

Charles Schwab & Co. Violated FINRA Rules by Adding Waiver Provisions in Customer Agreements Prohibiting Customers From Participating in Class Actions; Reverses FINRA Hearing 

Panel Decision (April 24, 2014), https://www.finra.org/newsroom/2014/board-decision-findscharles-schwab-co-violated-finra-rules-adding-waiver-provisions.

b. If not, please explain why not and provide a list of other arbitration systems that the Bureau believes would be useful in 

understanding the costs and benefits of arbitration relative to 

other forms of dispute resolution.

c. If so, what conclusions were drawn, and how did such analysis 

inform the Bureau’s study of arbitration in consumer financial 

disputes? Also, please provide a list of other arbitration systems that the Bureau evaluated during the course of its study.

A.4. In conducting the study, the Bureau reviewed scholarship and 

associated data relating to arbitration in areas outside of consumer 

products, such as the arbitration of employment claims and the Financial Industry Regulatory Authority (FINRA) arbitration system. 

(See for example §§ 3.2, 4.9, 5.3, 5.6.12, and 10 of the Arbitration 

Study,6 as well as §4.7 of the preliminary results released in December 2013).7

The Bureau ultimately did not include an empirical comparison 

of these systems in the Bureau’s March 2015 report on arbitration 

for several reasons. Congress’s direction to the Bureau, set forth in 

Section 1028(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, was that the study address pre-dispute arbitration, ‘‘in connection with the offering or providing of consumer 

financial products or services.’’ In addition to the statutory instruction, the Bureau determined that employment and FINRA arbitration disputes are qualitatively different than arbitration disputes 

concerning consumer financial products and services. As the Bureau found in the March report, most pre-dispute arbitration agreements relating to consumer financial products and services prohibit 

consumers from seeking relief in class action litigation. This is not 

the case with FINRA disputes, where FINRA rules prohibit the arbitration of class action claims.8 Similarly, claims in employment 

and FINRA arbitration disputes can involve claims worth tens or 

even hundreds of thousands of dollars. Consumer financial claims, 

by contrast, are typically significantly smaller. However, the Bureau did include several empirical analyses regarding other forms 

of dispute resolution involving claims relating to consumer financial products and services, such as class action litigation in Federal 

and State court, as well as small claims courts. 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM RICHARD CORDRAY 

Housing/OM 

Q.1. Director Cordray, the Semiannual Report showed that 20 percent of consumer complaints received by the Bureau were about 

mortgages. With the largest percentage of first-time home buyers 

since 2009 entering the market this year, how do the Bureau’s 


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‘‘know before you owe’’ initiatives and ability-to-repay rule inform 

and protect those borrowers?

A.1. Home buyers now benefit from important protections that did 

not exist in Federal law before the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (Dodd-Frank Act). Two essential new 

protections, mandated by the Dodd-Frank Act and implemented by 

the Consumer Financial Protection Bureau, include the Ability-toRepay rule and the ‘‘Know Before You Owe’’ mortgage disclosures. 

Ability-to-Repay 

The Ability-to-Repay rule informs and protects consumers by requiring that creditors make reasonable and good faith determinations that borrowers have the financial ability to repay the loan. 

Prior to the rule, consumers throughout the United States experienced unprecedented foreclosure rates. At least some of those foreclosures likely were the result of inadequate underwriting of loan 

applicants. The ability-to-repay requirement is an important bulwark to prevent a recurrence of problematic lending practices that 

gave rise to the crisis. 

The Ability-to-Repay rule also helps maintain borrowers’ access 

to responsible, affordable mortgages by creating a presumption of 

compliance with the rule when creditors make ‘‘qualified mortgages’’ that meet certain reasonable, prescribed underwriting 

standards and do not contain certain risky features. Despite arguments that these straightforward and commonsense requirements 

would have deleterious effects on the mortgage market, we have 

seen no evidence that the availability of responsible, affordable 

mortgage credit has been reduced as a result of these requirements. 

Know-Before-You-Owe Mortgage Disclosures 

The new mortgage disclosures provide information that the consumer needs to understand the costs and terms of the mortgage, 

and these disclosures do so in a simpler and more easily understood manner than the previous disclosures. In developing the new 

mortgage disclosures, the Bureau conducted extensive qualitative 

and quantitative testing, including over 10 rounds of qualitative 

testing to test prototypes and a large scale quantitative study to 

validate the effectiveness of the Bureau’s new disclosures and evaluating their performance compared to the previous disclosures. The 

study showed that the ‘‘Know Before You Owe’’ disclosures had on 

average statistically significant better performance than the previous disclosures. This advantage was consistent, regardless of the 

level of consumer sophistication, the complexity of the loan product, 

or whether the loan had a fixed rate or an adjustable rate. 

The validation study also showed that new mortgage disclosures 

also outperformed the previous disclosures in ways that are essential to a consumer’s ability to shop for and understand a mortgage 

loan. For example, when consumers used the disclosures to compare two competing loan offers, the new mortgage disclosures outperformed the previous disclosures by about 24 percentage points. 

For understanding a single loan’s projected costs and terms, the 

difference was about 10 percentage points for the initial disclosures 

received upon an application; about 17 percentage points when conVerDate 0ct 09 2002 15:53 Dec 20, 2016 Jkt 000000 PO 00000 Frm 00056 Fmt 6604 Sfmt 6604 L:\HE3E8B~1\07-15T~1\HEARING\97399.TXT SHERYL

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1 Available at http:/lwww.consumerfinance.gov/owning-a-home/. 2 Available at http://files.consumerfinance.gov/f/201503lcfpblyour-home-loan-toolkitweb.pdf.

sumers compared those early disclosures to the later disclosures 

they receive before closing; and about 29 percentage-points in understanding the final loan terms and costs using only the closing 

disclosures. 

Participants in the study were also asked to select between two 

loans using the application disclosures, and then asked in an openended question to provide reasons for their selection. In response 

to the open-ended question, participants using the ‘‘Know Before 

You Owe’’ integrated disclosures on average provided a greater 

total number of reasons for their selection of a particular loan, and 

this difference was statistically significant and consistent across 

the variables of the study. This result suggests that participants 

using the new disclosures could better articulate and explain the 

reasoning behind their choice. 

In addition to the ability-to-repay and ‘‘Know Before You Owe’’ 

mortgage disclosure rules, the Bureau has accomplished other important work to inform and protect consumers looking to buy a 

home or refinance their mortgage. For example, after conducting a 

study, the Bureau recently completed a pilot program concerning 

eClosings, which the Bureau believes may help consumers understand their mortgages even better in the future. The Bureau also 

has developed a suite of materials to help educate consumers about 

mortgages and the process of obtaining one. The materials, called 

‘‘Owning a Home,’’ are publicly available on the Bureau’s Web 

site.1 The Bureau also has posted a series of questions on its 

‘‘AskCFPB’’ Web site, where home buyers can get answers to common questions about buying a home and getting a mortgage. The 

Bureau has issued a revised settlement cost or special information 

booklet, ‘‘Your Home Loan Toolkit,’’2 to be used in conjunction with 

the new mortgage disclosures. The Toolkit is available in both 

English and Spanish. The Toolkit was developed through several 

rounds of consumer feedback. The Bureau believes it will provide 

significant benefits to first-time home buyers and other consumers 

purchasing a home. 

The Bureau understands that, for many consumers, purchasing 

a home represents the largest financial transaction of their lives. 

The Bureau will continue to actively seek out ways to help consumers obtain the information they need to shop for and succeed 

at obtaining the best mortgage that fits their needs. Notably, home 

purchase mortgage applications were up 22 percent year-over-year 

in October after our rule had taken effect. 

Small Lender 

Q.2. Director Cordray, in January the Bureau proposed several 

changes to the Qualified Mortgage rule’s ‘‘small lender’’ definition. 

We’ve heard a lot about the need for relief for small lenders. 

Can you discuss how these changes will benefit small lenders? 

More generally, what has the Bureau done to streamline regulations, particularly as they relate to small lenders?

A.2. The proposal finalized in September would expand the definitions of ‘‘small creditor’’ and ‘‘rural area’’ and thereby increase the 


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number of small creditors that are eligible for regulatory exemptions and that are able to offer certain types of mortgages. These 

changes will also help creditors adjust their business practices in 

the event they grow to exceed the small creditor thresholds. Instead of having an abrupt end to small creditor status on January 

1 of the year after first exceeding the small creditor criteria, creditors could continue to operate as small creditors for mortgage applications they receive through the first quarter of that year, providing additional time to adjust systems and train staff. 

There are a variety of special provisions and exemptions in the 

Bureau’s rules that affect small creditors, including small creditors 

that operate predominantly in rural or underserved areas (notwithstanding changes made by the Fixing America’s Surface Transportation Act (P.L. 114–94)).

• A provision in the Ability-to-Repay rule extends Qualified 

Mortgage status to loans that small creditors hold in their own 

portfolios, even if a consumer’s debt-to-income ratio exceeds 43 

percent and without requiring the use of Appendix Q.

• A Qualified Mortgage made by a small creditor also provides 

a higher annual percentage rate (APR) threshold for a safe 

harbor from ability-to-repay claims. A small creditor has a safe 

harbor if the mortgage’s APR does not exceed the applicable 

Average Prime Offer Rate (APOR) by 3.5 or more percentage 

points. In contrast, general Qualified Mortgage loans provide 

safe harbors if their APRs do not exceed the applicable APOR 

by 1.5 or more percentage points.

• Small creditors operating predominantly in rural or underserved areas can originate Qualified Mortgages and high-cost 

mortgages with balloon payments even though balloon payments are otherwise not allowed on such mortgages.

• Small creditors operating predominantly in rural or underserved areas are not required to establish escrow accounts for 

higher-priced mortgage loans.

The Bureau continues to believe that responsible lending by community banks and credit unions did not cause the financial crisis, 

and our mortgage rules reflect the fact that small institutions play 

a vital role in many communities and anecdotal evidence suggests 

that smaller lenders’ loans performed better than larger lenders 

loans through the crisis. 

Credit Reporting/Zombie Debt 

Q.3. Earlier I mentioned the CFPB’s action last week on debt collection. I have heard that millions of Americans are faced with 

‘‘zombie debt,’’ or debt that continues to negatively impact their 

credit reports after it has been paid off or discharged in bankruptcy. 

Can you discuss how this happens? Aren’t financial institutions 

required under the Fair Credit Reporting Act to ensure that debt 

is reported to CRAs accurately?

A.3. ‘‘Zombie debt’’ occurs when credit reports are not properly updated to reflect that a debt has been paid off or discharged in bankruptcy. Negative information remains on a consumer report for a 


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period of time because creditors consider a consumer’s past payment behavior to be predictive of a consumer’s future payment behavior. While debts that have been paid off or discharged in bankruptcy can continue to appear on credit reports, the reports should 

also indicate that they have been discharged in bankruptcy or paid 

off. 

The Bureau is aware of allegations that some financial institutions have failed to report accurately the status of certain accounts 

that have been discharged in bankruptcy, in violation of Federal 

bankruptcy law. For example, several large banks currently face 

lawsuits accusing them of deliberately failing to update accounts to 

reflect that they have been discharged. 

Under the Fair Credit Reporting Act (FCRA}, consumer reporting 

agencies are required to follow reasonable procedures to assure 

maximum possible accuracy of the information they report. A financial institution that regularly furnishes information to a consumer reporting agency has a variety of obligations under the 

FCRA and Regulation V, including the obligation to correct and update information that it has determined is incomplete or inaccurate. As part of its supervision program, the Bureau conducts examinations of the furnishing practices of many of the largest creditor and debt collector furnishers. Although the Bureau cannot 

comment on whether specific practices violate the law, the Bureau 

will take appropriate action, including enforcement action, in cases 

where it concludes that there is a statutory or regulatory violation. 

Credit Reporting/Specialty CRAs 

Q.4. We have heard repeatedly that credit reporting is a major 

issue for many consumers, with 1 in 5 Americans facing an error 

on his or her credit reports. This is particularly concerning due to 

the importance of credit scores on consumers’ ability to access credit and, increasingly, employment or housing. Nearly 50 million people saw their scores fall by more than 20 points during the crisis. 

Many of us are aware of the big 3 credit reporting bureaus, and 

I understand the Bureau has begun examining those 3 and 27 

other companies in this market. However, the Bureau has also 

noted that there are approximately 400 consumer reporting agencies in the country, some of which are known as ‘‘specialty consumer reporting agencies.’’

What do these specialty CRAs do? Does the CFPB have authority 

to supervise these companies?

A.4. There are numerous specialty consumer reporting agencies, 

some of which may also qualify as a ‘‘nationwide specialty consumer reporting agency,’’ as defined in Section 1681a(x) of the 

FCRA. In general, specialty consumer reporting agencies collect 

and share information about a consumer’s history using a specific 

product or service and other transactions with certain types of 

businesses. The information specialty consumer reporting agencies 

collect, which may also include public records on bankruptcies, 

liens, arrests and convictions, depends on the agency and its specialty industry. Specialty consumer reporting agencies may collect 

information and produce reports on your history of:


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3For more information, see http://www.consumerfinance.gov/askcfpb/1819/do-bouncedchecks-and-overdrafts-go-my-credit-report.html. 4For more information, see http://www.consumerfinance.gov/askcfpb/1815/could-late-rentpayments-or-problems-landlord-be-my-credit-report.html. 5For more information, see http://www.consumerfinance.gov/askcfpb/1821/do-auto-andhomeowners-insurance-companies-share-my-information-about-claims-and-policies.html. 6For more information, see http://www.consumerfinance.gov/askcfpb/1817/does-my-historypaying-utility-bills-telephone-cable-electricity-or-water-go-my-credit-report.html. 7For more information, see http://www.consumerfinance.gov/askcfpb/1823/ive-been-lookingiob-what-do-employers-see-when-they-do-credit-checks-and-background-checks.html. 8For more information, see http://www.consumerfinance.gov/askcfpb/1837/how-can-i-findout-whats-my-medical-payment-history.html. 9 Available at http://files.consumerfinance.gov/f/201505lcfpbldata-point-credit-invisi

bles.pdf.

• Opening or using bank accounts (including account abuse or 

fraud);3

• Apartment rental payments;4

• Car insurance claims;5

• Homeowners and renters insurance claims;

• Payday lending;

• Utility payments;6

• Phone bill payments;

• Employment;7 and 

• Medical records or payments.8

Under the Bureau’s larger participant rule for consumer reporting agencies, the Bureau has supervision authority over entities engaging in or offering consumer financial products or services only 

if they (or their parent company) have more than $7 million in annual receipts from consumer reporting activities. The Bureau also 

has other tools it can use to help consumers with specialty consumer reporting agencies that don’t fall within the Bureau’s supervision authority. If appropriate, the Bureau can take enforcement 

actions. The Bureau can also engage in consumer education about 

specialty consumer reporting agencies, which it has done numerous 

times. 

Credit Reporting/Credit Invisibility 

Q.5. In May, the consumer agency published a report that 26 million Americans are ‘‘credit invisible,’’ and that 1 in 10 adults do not 

have any credit history with a nationwide consumer reporting 

agency. 

Can you discuss the impact of not having a credit score on access 

to credit?

A.5. As reported in the Bureau’s recent release Data Point: Credit 

Invisibles,9 26 million adults in the United States do not have a 

credit record maintained by one of the Nationwide Credit Reporting 

Agencies (NCRAs) and an additional 19 million adults have NCRA 

credit records that could not be scored by a widely used commercially available credit scoring model. Because credit scores are 

widely used in underwriting and pricing credit to assess the creditworthiness of applicants, these consumers may face substantially 

reduced access to credit. Without the information about creditworthiness that credit scores provide, lenders may deny loan applicants outright, require more collateral or co-signers, or charge 

higher interest rates. As a result, many of these consumers may 


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10 Available at http://files.consumerfinance.gov/f/201410lcfpblreportlannual-report-of-thestudent-loan-ombudsman.pdf.

have to rely more heavily on ‘‘nontraditional’’ sources of credit, 

such as payday lenders or pawnshops, which either do not require 

credit checks or use credit history information from non-NCRA 

sources to assess creditworthiness. Since these nontraditional 

sources of credit generally do not report information to the NCRAs, 

borrowing from these sources does not help establish a credit history at the NCRAs and thus may prolong the problems associated 

with having an unscored credit record. 

Student Loans 

Q.6. The student loan market stands at $1.3 trillion, with many 

predicting a long drag on our economy due to this debt. 

What are the top complaints that you hear from consumers about 

student loans?

A.6. As noted in the 2014 Annual Report of the CFPB Student 

Loan Ombudsman,10 the single most common issue reported by private student loan borrowers is the inability to negotiate alternative 

repayment options with lenders and servicers when facing distress. 

A substantial share of private student loan borrowers graduated in 

a time of extremely challenging labor market conditions and found 

the economic landscape meaningfully different than when they first 

made the decision to borrow. Although the labor market has recovered since the recession, job prospects for many young graduates 

remain limited. One recent analysis estimated that more than one 

in four recent college graduates was either unemployed or underemployed. While market participants have addressed some of the 

root causes of consumer complaints, the lack of availability of 

transparent loan modification options and complicated enrollment 

procedures persist as pain points in the market. 

As noted in the 2014 Report, the most common broad category 

of complaints the Bureau receives from borrowers with private student loans generally relates to the student loan repayment process, 

identified in our intake form as ‘‘dealing with [a] lender or 

servicer,’’ and broadly defined by consumers as problems related to 

‘‘making payments, getting information about [a] loan, managing 

[an] account.’’ Consumers submitting complaints about these issues 

comprised 57 percent of all private student loan complaints received by the Bureau between October 1, 2013 and September 30, 

2014. 

In May 2015, the Bureau, in coordination with leaders from the 

Department of the Treasury, launched a public inquiry into student 

loan servicing practices. In support of this initiative, the Bureau 

published a notice in the Federal Register soliciting input on potential solutions to improve the delivery of service to student loan borrowers in repayment. 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR CRAPO 

FROM RICHARD CORDRAY 

Q.1. Last month, the CFPB sent a data collection request under its 

section 1022 market monitoring authority to a number of financial 


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institutions seeking input on consumer use of deposit advance 

products. I have been told that the request sought information 

about specific transfers from consumer accounts and requires these 

institutions to scan customer accounts line by line for their financial behavior dating back years. According to market participants, 

this could involve hundreds of thousands, if not millions, of customer’s transaction level data to the CFPB. 

How many 1022(c)(4) orders under the CFPB’s market monitoring authority have been issued to date and what is the process 

for a recipient of an order to challenge or limit the breadth of the 

order?

A.1. As of October 31, 2015, the Consumer Financial Protection Bureau has issued eight mandatory orders under the Bureau’s 

1022(c)(4) market monitoring authority. The Bureau’s practice is to 

consult with financial institutions in advance of issuing 1022(c)(4) 

orders to minimize compliance burden. Although there is no formal 

process to challenge an order, the Bureau welcomes input from recipients, even after they receive the orders. When appropriate, the 

Bureau also sends voluntary requests for information to financial 

institutions.

Q.2.a. The Paperwork Reduction Act was designed, among other 

things, to ‘‘ensure the greatest possible public benefit from and 

maximize the utility of information created, collected, maintained, 

used, shared and disseminated by or for the Federal Government’’ 

and to ‘‘improve the quality and use of Federal information to 

strengthen decisionmaking, accountability, and openness in Government and society.’’ It is my understanding that each of the 1022 

orders issued to date was sent to fewer than 9 companies, which 

effectively avoids the review of the request by the Office of Management and Budget and circumvents the opportunity for public 

comment on the information request. 

How many times has CFPB utilized the exception for reviewing 

data requests by sending 1022 request to fewer than 10 companies?

A.2.a. To date, all of our mandatory 1022 orders have been for onetime collections to help understand a particular financial product, 

market, or business practice. When researching financial markets 

to protect consumers, the Bureau consistently works to reduce burden on industry by working with existing available data where possible. Bureau staff supplements existing data by requesting new 

data when necessary, and then works in those cases to minimize 

how many firms we request data from. As of October 31, 2015, the 

Bureau has issued six mandatory 1022 orders to fewer than 10 

companies. Most of these orders involved 3 to 5 companies.

Q.2.b. Given the CFPB’s use of the exemption by only sending the 

request to fewer than 10 companies, how is the public informed 

about their transaction level data being sent to the CFPB and what 

privacy protections do they have?

A.2.b. The Bureau is interested in how consumer financial markets 

behave rather than individual consumers’ transactions. In general, 

the Bureau studies market behavior by observing aggregated information or anonymized account level statistics. In compliance with 

section 1022(c)(4)(C) of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act, the Bureau does not use its market monVerDate 0ct 09 2002 15:53 Dec 20, 2016 Jkt 000000 PO 00000 Frm 00062 Fmt 6604 Sfmt 6604 L:\HE3E8B~1\07-15T~1\HEARING\97399.TXT SHERYL

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1 Available at http://files.consumerfinance.gov/f/201l304lcfpblpayday-dap-white

paper.pdf.

itoring authority to obtain data from covered persons or service 

providers for purposes of gathering or analyzing consumers’ personally identifiable financial information. 

In April 2013, the Bureau released a study, Payday Loans and 

Deposit Advance Products: A White Paper of Initial Data Findings.1

The Bureau believes deposit advance products as currently structured raise serious consumer protection concerns related to the sustained use of a high-cost product. This concern has been echoed by 

the other banking regulators. To further study this market, the Bureau recently issued a one-time 1022(c)(4) order for additional aggregate data from five financial institutions. 

Your first question refers to this recent 1022 order for aggregate 

data. The Bureau will receive no individual account or transaction 

history as a result of this request. For this request, the Bureau will 

only receive aggregate statistics about groups of accounts. 

In the limited cases where the Bureau does receive personally 

identifiable information, the Bureau reduces the privacy risk of information it maintains by redacting and restricting access to personally identifiable information, providing training to personnel on 

the appropriate use and disclosure of that information, and maintaining the information in secure environments in accordance with 

applicable law. To inform the public about situations in which the 

Bureau does collect individual-level data, the Bureau complies with 

the Privacy Act requirements and publishes System of Record Notices (SORNs) in the Federal Register and on our public Web site. 

The Bureau publishes privacy impact assessments on our public 

Web site as well.

Q.3. Data security is a growing concern and the breaches at the Office of Personal Management highlights the importance of privacy 

concerns and the sensitive data that is collected. In the case of 

OPM we are now being told that more than 21 million Social Security numbers, 1.1 million fingerprint records, and 19.7 million 

forms with data like someone’s mental-health history were stolen 

as part of the breach. 

Has CFPB detected any attempts to breach its systems and, if 

so, what is the frequency/number of attempts to gain unauthorized 

access to CFPB systems?

A.3. The Bureau has designed and implemented layers of proven 

defense mechanisms and safeguards for its systems and data. This 

work is continuously refined to keep pace with emerging threats, 

tactics, and techniques. The Bureau coordinates with other agencies and cross-sector groups to maintain awareness of and improve 

defenses against individuals and organizations that might attempt 

an attack. The Bureau’s adherence to security practices such as 

monitoring, patching, building security into new services, and requiring end-user training reduces the likelihood that any attempt 

to gain unauthorized access would succeed. 

As of December 11, 2015, the Bureau has confirmed 34 attempts 

to gain unauthorized access. Incident analysis of these attempts did 

not identify any leakage or breach of sensitive data. The Bureau 


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continuously monitors its network and investigates any anomalies 

or issues. 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR VITTER 

FROM RICHARD CORDRAY 

Q.1. Mr. Cordray, as you know, the Dodd-Frank law requires your 

Bureau to reach out to small businesses and solicit their input 

prior to drafting regulations. The purpose of that requirement is for 

the Bureau to benefit from the experience of small business owners 

prior to writing a Federal regulation. This exercise is designed to 

prevent unintended negative consequences on the small business 

community. As you know your agency recently conducted a Small 

Business Advocacy Review for an upcoming rule on the small dollar 

lending industry. The panel offered an essential opportunity for 

small businesses impacted by a proposed rule to voice their concerns about it, which your agency must fully consider and incorporate into the final rule. 

Can you explain what changes you made to this rule based on 

the feedback from small businesses? How do you expect these 

changes to benefit the numerous small businesses that might be affected by your upcoming rule? Why are you keeping that report secret and not making it public? Isn’t this another example of how 

the CFPB does not operate in an open and transparent fashion, unlike the standard you impose on regulated entities?

A.1. Under the Regulatory Flexibility Act (RFA), the Consumer Financial Protection Bureau (Bureau) is required to convene a Small 

Business Review Panel when it is considering a proposed rule that 

could have a significant economic impact on a substantial number 

of small entities. In April, the Bureau convened such a panel with 

the Small Business Administration Office of Advocacy and Office of 

Information and Regulatory Affairs in the Office of Management 

and Budget to obtain feedback from small businesses about the 

proposals under consideration for payday, vehicle title, and similar 

loans. Through the Small Business Review Panel process, the Bureau received important feedback from small businesses about the 

potential economic impact of the proposals. The Bureau is carefully 

considering this feedback as we refine the proposals to develop a 

proposed rule. The Bureau will make public the Panel’s report in 

its entirety when we publish a Notice of Proposed Rulemaking.

Q.2. It is my understanding that those small business owners who 

volunteered their time to help the CFPB come up with workable 

consumer protections were frustrated that the CFPB could not answer how the Bureau’s approach would work with State consumer 

protection laws. 

Will you re-start the required Dodd-Frank small business process 

once you are able to tell the small business owners how your regulatory approach will work with State laws?

A.2. The Bureau’s proposals under consideration for payday, vehicle title, and similar loans, if implemented, would establish a Federal baseline for regulation of these markets. The Federal rules 

would coexist with stricter consumer protection laws and regulations at the State and local level and States would continue to regVerDate 0ct 09 2002 15:53 Dec 20, 2016 Jkt 000000 PO 00000 Frm 00064 Fmt 6604 Sfmt 6604 L:\HE3E8B~1\07-15T~1\HEARING\97399.TXT SHERYL

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ulate aspects of the market that are not impacted by the Bureau’s 

rule. The Bureau continues to carefully analyze the ways in which 

State regulation of this market would be affected by the Bureau’s 

proposals. We continue to receive and consider feedback from small 

businesses, other industry participants, consumers, State government officials, and other interested parties on this and all parts of 

the proposals under consideration and will do so throughout the 

rulemaking process.

Q.3. It has been estimated that the proposed rules to the payday 

lending industry will result in 70 percent of small dollar lending 

operators out of business. I do not see how any small business can 

survive the overwhelming loss of revenue that even you predict. I 

am sure you recognize that hard working Americans have their life 

savings invested in these business, which are completely lawful in 

the States in which they exist.

• Do you believe the regulations you have proposed will have a 

disproportionate impact on small businesses?

• Will you take into account the cost of compliance when creating your rule?

• What alternatives have you considered to these Rule Proposals 

that might avoid this destruction of small businesses and loss 

of millions of dollars of capital investment and hundreds of 

thousands of jobs?

• Will you be comfortable with only large payday lenders dominating the market?

A.3. The Bureau expects that the proposals under consideration for 

payday, vehicle title, and certain other similar loans would have a 

significant economic impact on a substantial number of small entities. Therefore, in accordance with the RFA, the Bureau convened 

a Small Business Review Panel to obtain feedback from small entities and consider these impacts. Under the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, the Bureau is also required 

to consider the potential benefits and costs of a potential rule to 

consumers and covered persons of a potential rule. As part of this 

assessment, we consider the cost of compliance with the potential 

regulation. As not in the Outline of Proposals Under Consideration 

and Alternatives Considered released in March 2015, the Bureau is 

considering numerous alternatives to components of the regulatory 

framework. Some of these alternatives may have a greater or lesser 

impact on small businesses. 

Throughout the rulemaking process, the Bureau seeks feedback 

from small businesses and other industry participants. In developing the proposed rule on payday, vehicle title, and certain other 

similar loans, the Bureau is carefully considering the feedback provided by small businesses and the findings of the Small Business 

Review Panel. Following publication of a Notice of Proposed Rulemaking, we hope to receive robust public comment, including from 

small businesses, about the potential impacts and costs associated 

with the proposal and any alternatives. The Bureau will then carefully consider such comments and consider ways to reduce the burden associated with compliance, while still fulfilling the purpose of 

the rulemaking. 


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1 Among other things, the Bureau asked: ‘‘How should the CFPB define GPR cards in the context of Regulation E? Should certain prepaid products not be included in this definition, such 

as cards that may serve a limited purpose (e.g., university cards or health spending cards)? Why 

or why not?’’ 77 FR 30923 (May 24, 2012). 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR SASSE 

FROM RICHARD CORDRAY 

Q.1. The CFPB has proposed a rule on prepaid debit cards that 

also applies to digital wallets, despite the fact that these products 

have a different function and a different structure. For prepaid 

debit cards, a customer loads money onto a prepaid card and is 

charged a fee if they exceed the balance. A digital wallet helps consumers make purchases online, by helping them access other payment options. Fees are generally not charged on digital wallets. 

Why is the CFPB treating these dissimilar products the same way?

A.1. The Consumer Financial Protection Bureau (Bureau) believes 

it is appropriate to cast a wide net in including products within the 

proposed definition of prepaid account in its prepaid rulemaking. 

The Bureau crafted the definition of prepaid account after reviewing the comments received on its May 2012 Advance Notice of Proposed Rulemaking 1 (ANPR) on general purpose reloadable cards 

and conducting significant outreach to aid its understanding of the 

scope and diversity of the prepaid product marketplace, including 

digital wallets. The Bureau received a wide range of comments on 

the ANPR as to what types of products its proposed rule should 

cover. Industry commenters disagreed, for example, over whether 

the Bureau should limit its proposed rule to products represented 

by physical cards or whether it should also include other types of 

prepaid products such as those that are entirely online (and might 

use a barcode or QR code displayed on a mobile device such as a 

smart phone or other online means to interact with a payment network). 

Some commenters specifically urged the Bureau to distinguish 

between digital wallets that simply store payment credentials for 

other accounts and both cards and noncard products that store 

funds themselves. 

The Bureau’s proposed definition of ‘‘prepaid accounts’’ would encompass only those digital wallets that are capable of storing 

funds. With such digital wallets, a consumer can maintain a balance in the wallet account through transfers from sources such as 

the consumer’s own bank account or a transfer received from another user of the digital wallet system—in other words, the consumer loads money into the digital wallet account in the same way 

that a consumer might load funds onto a prepaid card. To the extent that a digital wallet merely stores payment credentials (e.g.,

a consumer’s bank account or payment card information), rather 

than storing the funds themselves, the digital wallet would not be 

considered a prepaid account under the proposed rule. 

The Bureau received extensive feedback from commenters on the 

scope of the proposed definition of prepaid accounts and is continuing to evaluate the appropriate scope for a final rule.

Q.2. Customers must link their bank account or a credit card to 

use their digital wallet, because the wallet is merely an ‘‘agent’’ to 

facilitate a payment. But, the CFPB’s Prepaid Rule prohibits linkVerDate 0ct 09 2002 15:53 Dec 20, 2016 Jkt 000000 PO 00000 Frm 00066 Fmt 6604 Sfmt 6604 L:\HE3E8B~1\07-15T~1\HEARING\97399.TXT SHERYL

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2http://files.consumerfinance.gov/f/201507lcfpblconsumer-protection-principles.pdf.

ing credit products to prepaid accounts. Given that the digital wallet’s purpose is to merely facilitate payments, should the prohibition of ‘‘linking’’ apply to digital wallets? If so, how does the CFPB 

expect that digital wallets will work under the rule?

A.2. The Bureau’s prepaid accounts proposal covers virtual wallet 

products that, among other things, are capable of storing funds. 

The Bureau understands that consumers can fund digital wallets 

in a variety of ways, including, in some cases, by linking the wallet 

to a consumer’s existing credit card. The Bureau is also aware that 

digital wallet issuers may provide consumers with the option to 

link their digital wallet to a line of credit provided by the issuer 

or its financial institution partner. The credit portions of the Bureau’s proposal do not prohibit these methods of linking credit 

products to digital wallets. Under the proposal, overdraft services 

and credit features offered on prepaid accounts would be subject to 

provisions within the Truth in Lending Act and Regulation Z that 

govern open-end credit and credit cards, as well as provisions in 

Regulation E. This proposal would ensure greater consistency of 

treatment even where the linked type of credit would otherwise be 

subject to different regulations. 

As the Bureau reviews the many comments received on the prepaid proposal, the Bureau is continuing to examine whether revisions to its proposed approach to overdraft and credit features on 

prepaid accounts would be appropriate.

Q.3. Last week, the CFPB released its ‘‘Guiding Principles for Faster Payment Networks.’’ At the same time, the Federal Reserve has 

established a ‘‘Faster Payments Task Force’’ and a ‘‘Safer Payments Task Force.’’ These task forces are working on issues that 

affect the broader payments industry. How does the CFPB plan on 

working with the Federal Reserve to ensure that efforts to protect 

consumers do not harm innovation?

A.3. The Bureau published Consumer Protection Principles: CFPB’s 

Vision of Consumer Protection in New Faster Payment Systems 2 to 

inform and spur, rather than harm, innovation. The Bureau recognizes, based in part on discussions with industry stakeholders, that 

system developers can best and most efficiently ensure consumer 

protection in new payment systems during system 

conceptualization and design. Thus, the principles are intended to 

ensure consumer interests remain top of mind throughout system 

development and to facilitate the integration of consumer interests 

into these developing systems. 

Bureau staff works closely with Federal Reserve counterparts in 

this vein. Bureau staff participates in the Federal Reserve’s Secure 

Payments Task Force and on the Steering Committee of the Federal Reserve’s Faster Payments Task Force. In this capacity, the 

Bureau has assisted the Federal Reserve and its task forces in the 

ongoing development of a broader set of new payment system objectives that will further inform and hopefully accelerate industry innovation. More generally, as a member of the Steering Committee 

for the Faster Payments Task Force, Bureau staff helps to cultivate 

input from a broad set of industry stakeholders and develop a 


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1 79 FR 77102 (Dec. 23, 2013). 

2 EFTA section 913, 15 U.S.C. 1693k(2); see also 12 CFR 1005.10(e)(2) (implementing this provision in Regulation E). 

shared understanding of consumer needs and vulnerabilities, technological and other concerns, and market opportunities. Bureau 

staff also meets frequently outside of the task force with Federal 

Reserve staff and representatives of various industry stakeholders. 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR ROUNDS 

FROM RICHARD CORDRAY 

Q.1. According to the U.S. Treasury, it costs $1.03 to issue a paper 

check and only 10.5 cents to issue an electronic payment. 

Currently, however the CFPB is proposing that agencies that 

provide government benefit cards include a statement at the top of 

a required disclosure that reads ‘‘You do not have to get your payments on this prepaid card. Ask about other ways to get your payments.’’

This statement appears designed to drive people away from government benefit cards and a payment system that will cost taxpayers 10 times as much as a prepaid card.

• Before the CFPB proposed this language, did the Bureau calculate how much these proposed disclosures would cost taxpayers?

• If so, how much? If not, why not?

A.1. The proposed disclosure statement and underlying regulatory 

provisions in the Consumer Financial Protection Bureau’s rulemaking on prepaid accounts 1 were not intended to discourage use 

of government benefit cards or to mandate disbursement of government benefits via paper check. Accordingly, the Bureau did not conduct the type of analysis you describe. Rather, as explained in the 

proposal, the statement was designed to inform consumers of their 

rights under the Electronic Fund Transfer Act, given that Congress 

expressly prohibited any person from requiring a consumer to establish an account for receipt of electronic fund transfers with a 

particular financial institution as a condition of employment or receipt of a government benefit.2 For instance, where a government 

institution chooses to deliver benefits by direct deposit, recipient 

have a right to decide which financial institution will receive the 

direct deposits on their behalf. 

The Bureau believes that informing consumers that they have a 

statutory right to choose something other than a government-selected payment product will ensure that consumers can benefit 

from market competition for their business, including potentially a 

prepaid card from another financial provider. The Bureau is considering all feedback on the proposed language and conducting additional consumer testing on the best way to convey this information.

Q.2. The CFPB has been collecting detailed information on over 

millions of credit card accounts including the credit card users balances, the account holder’s other relationships with the issuing 

bank, and the account holder’s income, FICO score, and payment 

history. 


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The CFPB has claimed that this data is anonymous, but when 

asked if it could be reverse-engineered to reveal individual identities, you said the answer was ‘‘complicated.’’

• Should the CFPB’s credit card database be hacked, will the 

Bureau notify any individual consumers or Congress of that 

breach?

A.2. The Bureau is conscious of the many, and variety of, threats 

to information security and the associated privacy risks. As threats 

become more sophisticated, it is not possible to suggest that any 

system or particular dataset is unhackable or could never be reverse-engineered, though we take all precautions to prevent the 

type of hack you reference. Due to the Bureau’s awareness of the 

complicated nature of security threats and privacy concerns, the 

credit card information you reference consists solely of de-identified 

records and does not include information that directly identifies individuals, such as name, address, or account number. The information also does not contain purchase level information. The Bureau 

cannot identify and thus cannot contact individuals associated with 

the data. Therefore, unauthorized access of the information you reference would grant visibility only to de-identified information. 

The Bureau’s information security and privacy programs continue to evolve to keep pace with emerging threats. The Bureau 

strives to refine and automate risk management, continuous monitoring, analysis, and response capabilities. Our efforts include ongoing refinements to the Bureau’s internal processes and risk assessment methodology, performing proactive or ‘red-team’ assessments of systems, and implementing dynamic technologies and 

services to better detect vulnerabilities and respond to threats. The 

Bureau is committed to reducing the information security and privacy risks of any information it maintains by restricting access as 

necessary, providing training to personnel on the appropriate use 

and disclosure of information, and maintaining information in secure environments in accordance with applicable law.

Q.3. I have heard repeatedly from small community bankers in 

South Dakota that the CFPB’s new rules and red tape are making 

it harder and harder for them to make loans to their customers. 

These banks aren’t predatory lenders and they certainly didn’t 

cause the financial crisis.

• To give these small banks some relief, can you list three regulations small banks have to comply with that you think are duplicative and that the CFPB can cut to reduce their compliance 

burden?

A.3. Congress, in mandating rules to address the abuses that lead 

up to the financial crisis, recognized the important role that small 

banks play in providing access to credit in their communities. The 

Bureau has adjusted its rules in several places to reduce burden 

on small banks. For example, the Bureau’s 2013 mortgage rules 

provide small creditors with a broader safe harbor from ability-torepay liability. The 2013 rules also provide a safe harbor for small 

lenders operating in predominantly rural or underserved areas, 

which allow these lenders to continue to offer balloon loans to


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3These actions were taken prior to the enactment of the Fixing America’s Surface Transportation Act (P.L. 114–94). 4These actions were taken prior to the enactment of the Fixing America’s Surface Transportation Act (P.L. 114–94). 1http://team.cfpb.local/wiki/images/f/f3/2015-07-21lCFPBlSupervisionlandlEnforcementlFactsheet.pdf, October 2015. 

consumers. 3 In response to feedback about the 2013 rules from 

small lenders, the Bureau finalized a change to the criteria for 

what constitutes a small creditor, so that more small lenders can 

get the broader safe harbor from ability-to-repay liability. The Bureau will also allow more lenders to qualify as serving rural or underserved areas, which would allow more small lenders to continue 

offering balloon loans that they have traditionally offered without 

adversely impacting consumers. Similarly, the Bureau has exempted small mortgage servicers from several provisions of the Bureau’s 

2013 mortgage servicing rules. We also modified the provisions on 

annual privacy notices to reduce the burdens on smaller institutions.4

RESPONSE TO WRITTEN QUESTIONS OF SENATOR MORAN 

FROM RICHARD CORDRAY 

Q.1. Director Cordray, the first goal identified in the CFPB’s strategic plan is to prevent financial harm to consumers while promoting good practices that benefit them. I have heard anecdotes 

from financial market participants and industry groups that 

CFPB’s enforcement actions often attempt to remedy so-called consumer harm that is only theoretical, when no actual financial harm 

to consumers took place. Should not the CFPB’s enforcement actions be focused on cases where real financial harm occurred rather 

than merely supposed harm?

A.1. The Consumer Financial Protection Bureau’s enforcement 

work is indeed focused on remedying real consumer harm. We also 

seek to level the playing field and ensure that those institutions operating legally are able to enjoy a market that is fair. The Bureau’s 

Office of Enforcement has obtained $11 billion in relief for over 25 

million consumers.1

For example, we have taken action against a company for illegal debt collection practices resulting in $2.5 million in relief for 

servicemembers. We have stopped an illegal kickback scheme for 

marketing services, which resulted in $11.1 million in redress for 

wronged consumers. The Bureau worked with the Department of 

Education to obtain $480 million in debt relief to student loan borrowers who were wronged by a for-profit chain of colleges that violated the law and has since declared bankruptcy. The Bureau has 

also worked with the Department of Justice to settle a historic redlining case against a company engaging in discriminatory practices. 

Remedying real consumer harm to servicemembers, students, older 

Americans, targeted and vulnerable populations, and any consumers throughout the country is central to our mission.

Q.2. The CFPB’s enforcement actions seem focused on the largest 

participants in financial markets, even though those are the companies likely to devote the most resources to training, quality control and compliance. In fact, the Bureau’s press releases often boast 


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of having taken action against ‘‘one of the largest’’ in a particular 

market. Doesn’t the Bureau’s focus on a company’s market share 

risk that those who actually engage in the most egregious practices 

go overlooked if they are not large enough to generate a headline?

A.2. As noted above, the Bureau takes a number of factors into 

consideration in our enforcement work. Since its creation, the Bureau has taken numerous actions against entities and individuals 

within its jurisdiction that have harmed consumers through illegal 

actions in the financial marketplace. Our actions have addressed 

the conduct of some of the largest players in given markets, as well 

as smaller companies and individuals engaged in violations of the 

law. Through our enforcement work, we seek to level the playing 

field and ensure that those institutions operating legally are able 

to enjoy a market that is fair. 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ 

FROM RICHARD CORDRAY 

Q.1. As we discussed, I’m concerned with reports that mortgage 

servicers may be taking steps to evade the CFPB’s protections 

against ‘‘dual tracking’’ by unfairly subjecting distressed homeowners to prolonged documentation collection processes. By keeping 

a homeowner’s application from being marked ‘‘complete,’’ a 

servicer may prevent the homeowner from becoming eligible for the 

protections, which prohibit the servicer from moving forward with 

a foreclosure while the homeowner is pursuing loss mitigation.

• Do you have concerns that servicers are intentionally obstructing the loss mitigation process to favor foreclosure? And if so, 

what must be done to correct misaligned incentives and protect 

consumers?

• Why aren’t servicers able to identify, shortly after receiving an 

application for loss mitigation, any additional required documents and provide a clear list to borrowers? It seems like it 

should be fairly straightforward. Either the homeowners have 

provided the necessary paperwork or they haven’t. And if not, 

the servicer should be able to provide a final and comprehensive list of what’s missing in a timely fashion.

• What else can be done to streamline the process for loss mitigation?

A.1. The Consumer Financial Protection Bureau (Bureau) shares 

your concerns about the difficulties that consumers face when submitting an application for loss mitigation assistance. The Bureau 

continues to receive a high volume of complaints about problems 

with loss mitigation and dual tracking through consumer complaints and from our engagement with external stakeholders. 

These complaints help inform our risk-based identification of mortgage servicers for supervisory exams and, in some cases, enforcement investigations. 

The Bureau is actively engaged with this issue, and several offices across the agency are involved. Ensuring servicer compliance 

with the loss mitigation rules that became effective in January of 

2014 remains a high priority for the Bureau’s Offices of Supervision and Enforcement, while monitoring the effectiveness of those 


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1 Available at http://files.consumerfinance.gov/f/201506lcfpblsupervisory-highlights.pdf. 2 Available at http://www.consumerfinance.gov/guidance/supervision/manual/#suphigh

lights. 3 Available at https://www.federalregister.gov/articles/2014/12/15/2014-28167/amendments-to-the-2013-mortgage-rules-under-the-real-estate-settlement-procedures-act-regulation-x.

rules and considering clarifications and corrections to improve the 

consumer experience is a high priority for the Offices of Research, 

Markets, and Regulations. 

During supervisory examinations of mortgage servicers, the Bureau has prioritized the evaluation of servicer loss mitigation operations. When the Bureau identifies violations, we require corrective 

actions and, in some cases, consumer redress. While the results of 

individual exams are confidential, the Bureau routinely publishes 

highlights of exam findings that describe findings and outcomes in 

our Supervisory Highlights reports. 

In the Summer 2015 edition of Supervisory Highlights,1 the Office of Supervision described instances where at least one servicer 

sent borrowers loss mitigation acknowledgment notices requesting 

documents, sometimes dozens in number, that were inapplicable to 

the borrowers’ circumstances and which the servicer did not actually need to evaluate the borrower for loss mitigation. Additionally, 

examiners found that at least one servicer requested documents already submitted by the borrower. Those servicers were cited for 

violating Regulation X and ordered to revise their acknowledgment 

notices to State the specific additional documents actually required 

to complete a loss mitigation application. The Bureau examiners 

also found that one or more servicers failed to send any loss mitigation acknowledgment notices because of a sustained processing 

platform failure. This finding was cited both as a violation of Regulation X and also as an unfair practice. The Bureau directed one 

or more servicers to fix the servicing platform problems and to compensate consumers for interest and fees incurred and for any additional harm. 

Other editions of Supervisory Highlights, available on the Bureau’s Web site,2 detail additional supervisory findings and actions 

related to mortgage servicing examinations, including compliance 

with mortgage loss mitigation rules. 

In addition to our supervisory activity, in some cases, the Bureau’s Office of Enforcement may bring a public enforcement action 

depending on several factors. In one recent case, a financial institution was ordered to pay $1.5 million in restitution to consumers for, 

among other violations, failing to honor trial modifications on loans 

transferred from other servicers and requiring those customers to 

essentially reapply. The financial institution was also ordered to 

pay a $100,000 civil money penalty and to implement corrective actions to prevent future violations. 

The Bureau’s Office of Regulations works closely with the Offices 

of Supervision and Enforcement as well as external stakeholders to 

monitor the effectiveness of existing mortgage servicing rules and 

as necessary, propose changes or clarifications. In November 2014, 

the Bureau issued a proposed mortgage servicing rule 3 that includes key changes to the loss mitigation application process. 

Among other things, the proposed changes would: 


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4 Available at http://files.consumerfinance.gov/f/201506lcfpblmid-year-update-on-studentloan-complaints.pdf.

• Require servicers to comply with the loss mitigation requirements more than once in the life of a loan for borrowers who 

brought their loans current since the last application;

• Require servicers to promptly provide a written notice once a 

complete loss mitigation application is received;

• Prohibit servicers from denying loss mitigation assistance solely because they are waiting to receive information that is not 

within the borrower’s control, such as an appraisal or investor 

approval; and

• Allow servicers to offer a short-term repayment plan without 

requiring borrowers to submit a11 of the information required 

for a complete application.

The Bureau is currently reviewing the comments that it received 

in response to the proposed rule and plans to issue a final rule in 

2016. The Bureau will continue to pursue this work with the goal 

of further minimizing consumer harm and, as you suggest, better 

aligning servicer incentives.

Q.2. The last time you were before this Committee, you and I discussed several issues regarding student loan co-signers. As the 

CFPB has reported, more than 90 percent of private student loans 

today have a co-signer, often a parent or grandparent, who can 

help the student qualify for the loan or obtain better terms. 

The CFPB has described a whole host of problems facing consumers in this area—including a lack of clear information about cosigner obligations; unfair obstacles to obtaining co-signer releases 

from lenders who offer them; and automatic defaults if a co-signers 

dies or becomes disabled, even if the student continues to make all 

payments on the loan. 

These practices are inexcusable, and can take advantage of families during times of tragedy and hardship. Students and their families deserve clear rules of the road and lenders who hold up their 

side of the bargain.

• I believe legislative action is needed—and I thank your staff 

for the technical assistance they have provided on a bill that 

I intend to introduce in the near future. In the meantime, 

what steps can the CFPB take using its existing authorities?

• And are we seeing any voluntary responses from lenders to improve their practices?

A.2. As you note, in June 2015, the Bureau Student Loan Ombudsman published a report identifying a range of problems specific to 

co-signed private student loans, including potential barriers to obtaining the ‘‘co-signer release’’ benefit advertised by many private 

student lenders.4 These issues continue to be of significant concern 

to the Bureau. 

In addition to accepting complaints from individual borrowers 

with student loans, the Bureau maintains a student loan servicing 

supervision program, publishes consumer education materials for 

student loan borrowers, including offerings specific to borrowers 


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5 Available at http://www2.ed.gov/policy/highered/reg/hearulemaking/2014/pii2-cfpb-presentation.pdf.

with co-signed loans, and monitors the market for new and emerging risks. 

The Bureau Student Loan Ombudsman’s report raised concerns 

that student lenders and servicers may not be making even the 

most modest investments to improve their processes to ensure appropriate levels of customer service. The Bureau intends to continue to monitor this marketplace closely using all appropriate 

tools to ensure that borrowers are treated fairly.

Q.3.a. As the CFPB has reported, we’re seeing a growing number 

of colleges and universities in our country partnering with financial 

companies to market and provide school-sponsored debit and prepaid accounts to students. These cards are often co-branded with 

the school’s logo, tied to a student’s identification card, and used 

to deliver financial aid balances, all of which have a strong effects 

of steering a student toward the product. 

Students and their parents place their trust in a school to choose 

cost-effective options. But in reality, many of these agreements are 

negotiated not with students’ best interests in mind, but with the 

goal of increasing the bank’s bottom line and providing kickbacks 

and deal-sweeteners to revenue-strapped schools. 

The Department of Education recently proposed rules to address 

some of these issues, which I was pleased to see—particularly with 

respect to predatory and abusive fees and stronger disclosures to 

students and their families.

• I know the CFPB has also been focused on this area. To what 

extent is the CFPB coordinating with the Department of Education on the rule proposal and other actions in this area?

A.3.a. The Bureau helps to make consumer finance markets work 

by making rules more effective, by consistently and fairly enforcing 

those rules, and by empowering consumers to take more control 

over their economic lives. The Department of Education is empowered by Congress through the Higher Education Act to protect the 

integrity of the Federal student aid programs. This authority includes, but is not limited to, ensuring aid dollars are delivered to 

students to pay for educational expenses with minimal fees. 

The Bureau presented to the Department of Education’s negotiated rulemaking panel, which was established to create new rules 

on cash management. The Bureau’s presentation addressed initial 

findings of the Bureau’s inquiry into student banking, including potential conflicts of interest that exist when financial institutions 

partner with schools to market financial products.5

Additionally, the Bureau has provided feedback to the extent the 

Department of Education has sought technical assistance.

Q.3.b. Beyond the Department of Education’s proposal, is the 

CFPB planning any further actions of its own to improve consumer 

protections for campus financial products?

A.3.b. As part of the Bureau’s ongoing inquiry into student banking on campus, in early 2015, the Bureau launched an initiative on 

Safe Student Banking, requesting feedback from the public on a 

Safe Student Account Scorecard designed to help colleges better 


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avoid promoting campus financial products with tricks and traps. 

Due to the influence schools may have on the financial products 

students choose, the Bureau is working to empower students with 

the information they need to negotiate safe and affordable products 

that are in students’ best interests.

Q.4. My State of New Jersey holds the unfortunate title of having 

the highest rate in the Nation of so-called ‘‘zombie’’ foreclosures. As 

you know, zombie foreclosures occur when banks start a foreclosure 

action—typically sending the homeowners multiple foreclosure notices—but then, because of the low value of the home, choose to 

abandon the foreclosure without providing any notice to the homeowner that they are still on the hook for repaying the mortgage 

debt, taxes, and other expenses. 

By this point, the homeowner has usually left the house, hoping 

to cut their losses. But the property exists in limbo because neither 

the borrower nor the servicer has clear control. And more importantly, neither has a strong incentive to keep the property in good 

shape, which hurts both the homeowner and the surrounding community.

• Last year, CFPB officials announced they were looking into 

this issue of ‘‘zombie’’ foreclosures. What updates can you provide at this time?

• Are there changes that can be made to disclosure or other requirements to give homeowners better awareness of when 

mortgage servicers abandon a property?

A.4. The Bureau recognizes that concentrations of abandoned properties have a negative impact on communities and consumers, who 

may be left in legal limbo. ‘‘Zombie’’ foreclosures which occur when 

a servicer abandons an already initiated foreclosure, can contribute 

to those concentrations of abandoned properties. Uncertainty about 

legal title may complicate efforts to enforce compliance with local 

ordinances that require basic maintenance of the property and may 

cloud responsibility for payment of sewer, water, and other local 

taxes and assessments. Consumers, believing a foreclosure inevitable and imminent, may move out of the property, leaving behind 

an empty house. The resulting concentration of empty homes in 

economically distressed communities can further tax local government resources and strain neighborhood stability. 

As you know, ascertaining the cause of vacancy or abandonment 

is not simple nor is the solution. According to a 2010 Government 

Accountability Office (GAO) report, ‘‘zombie’’ foreclosures represent 

approximately 1 percent of vacant homes. In many cases, vacant or 

abandoned houses may be owned by local taxing entities or third 

parties who acquired title as a result of a tax sale or foreclosure 

of a tax lien. In many cases, these owners may lack sufficient resources to rehabilitate or demolish the structures so that they can 

be conveyed to occupants or converted to other uses. 

State law generally governs the foreclosure process in concert 

with the rights and remedies specified in the mortgage contract. 

Neither State nor Federal law generally requires servicers or investors to exercise their right to foreclose and take possession of the 

property securing a note upon default. In extreme cases, servicers 

may abandon foreclosures in the belief that doing so minimizes 


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losses to their investors, whose financial interests they have a fiduciary duty to protect. However, the discretion afforded by the mortgage contract, State and Federal law, together with the exercise of 

the servicer’s fiduciary duty to investors, has led to significant loss 

mitigation work by servicers. This has helped stabilize communities and preserve home ownership, while reducing investor 

losses. 

The Bureau’s servicing rules do require mortgage servicers to 

have policies and procedures in place reasonably designed to provide consumers accurate and timely information about their accounts, including the availability of loss mitigation. In addition, the 

Bureau has proposed that some further information be provided to 

consumers when a decision is made to charge off their loan. These 

basic informational requirements may be helpful to consumers facing foreclosure and could help consumers make informed decisions 

about whether they should remain in the property or not. 

Although the foreclosure process is addressed differently in each 

State, some States and local governments have created foreclosure 

laws and court rules, which include: expedited foreclosure procedures for abandoned properties; enhanced property condition code 

enforcement; or mandatory property registration or preservation requirements. For example, following passage of the Vacant Property 

Registration Act by the New Jersey legislature in 2011, many municipalities across the State enacted ordinances requiring creditors 

to register and maintain abandoned properties as a condition of 

conducting a foreclosure. Dealing with the issue of abandoned properties at a local level in the communities most affected by the problem may allow communities to tailor their response to local conditions. 

The Bureau continues to monitor this important issue and to 

meet with other government agencies, consumer advocates, and industry stakeholders to identify solutions to reduce the number of 

uncompleted or ‘‘zombie’’ foreclosures.

Q.5. The financial services sector, like much of our economy, continues to experience changes driven by the rise of mobile devices 

and related technology. This is especially true in the consumer financial services space, including with respect to nontraditional 

loans. And some in the industry believe that mobile devices may 

offer a promising opportunity to improve access among underbanked consumers—according to the Federal Reserve, among 

underbanked consumers, more than a third use mobile banking.

• How does the CFPB’s proposed rule on small-dollar lending 

take into account the technology and systems used by financial 

service providers who focus on mobile device access?

• Some market participants who focus on mobile access have expressed concerns that requirements under the rule for consumers to provide paper documentation in some circumstances 

could reduce access or create data security concerns. Does the 

CFPB agree with these views? What steps is the CFPB taking 

to account for these considerations in the rule?

A.5. The proposals under consideration for payday, vehicle title, 

and certain other similar loans would apply to all covered loans, regardless of the channel—including mobile device—through which a 


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consumer obtains the loan. The Bureau’s goal is to ensure that consumers are offered the benefits and protections of Federal law regardless of how the consumer applies for, receives, and makes payments on a loan. The Bureau recognizes that evolving technology 

can provide important gains in efficiency and convenience and will 

seek to provide appropriate flexibility in our rulemaking to allow 

lenders and consumers both to take advantage of such developments.

Q.6. As you know, the CFPB recently began the process of proposing new rules for small-dollar consumer credit, such as payday 

and auto title loans. I support the CFPB’s efforts to address abuses 

in these markets. I appreciate the general principles outlined in 

the proposal and am hopeful that the final rule will leave consumers better protected. 

As you and I have discussed in the past, I believe it is important 

for the final rule to strike the right balance between strong protections and continued access to credit for underserved consumers. According to the FDIC, nearly 68 million adults are unbanked or 

underbanked, and 63 percent of these consumers use alternative financial services outside the traditional banking system—including 

payday and title loans that would be regulated under the new proposal. 

Many of these consumers likely also fall in the category of what 

the CFPB has termed ‘‘credit invisibles’’—individuals who have no 

credit record, no credit score, and as a consequence, very restricted 

access to credit. 

With almost half of American households reporting in a recent 

Federal Reserve survey that they would not have access to as little 

as $400 to cover emergency expenses, the combination of all three 

can be devastating: lacking access to the banking system, unable 

to obtain credit through traditional providers, and lacking the resources to cover emergency expenses. 

While the CFPB has identified abuses in the small-dollar consumer lending market, its 2014 report on payday lending also 

found that at least some share of borrowers have two or fewer 

loans, pay on time, and then borrow no more.

• What steps is the CFPB taking to ensure that its small-dollar 

lending rule maintains access to credit for one-time borrowers 

who truly face no other option for emergency financial needs?

• Has the CFPB received feedback as to whether its proposed 

framework for determining a borrower’s ability to repay allows 

sufficient flexibility for borrowers whose credit is more difficult 

to evaluate through traditional means? If so, how is the CFPB 

taking this feedback into account?

A.6. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Bureau is required to consider as part of the rulemaking process the potential reduction in access to consumer financial products or services for consumers. For payday, vehicle title, 

and certain other similar loans, the Bureau is considering several 

alternative requirements that would permit lenders to extend certain covered loans without determining whether a consumer has 

the ability to repay the loan. These proposals are crafted to facilitate ongoing access to such forms of credit while retaining some


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important protections that prevent consumers from harm associated with a debt trap. The Bureau sought feedback on these proposals under consideration as part of the Small Business Regulatory Enforcement Fairness Act (SBREFA) process and continues 

to obtain feedback from lenders, consumers, other governments, 

and other interested parties as we develop a proposed rule. 

The Bureau also sought feedback on the ability-to-repay requirements under consideration. During the SBREFA process, the Bureau received robust response from small business. The Bureau is 

carefully considering comments from the small entities and the 

findings of the Small Business Review Panel as we develop a proposed rule. Following public release of the proposals under consideration for payday, vehicle title, and certain other similar loans, 

the Bureau has also sought and received considerable feedback 

from other industry participants, consumer advocates, other governments, and consumers about the potential ability to repay 

framework. The Bureau continues to use all of this information to 

develop a proposed rule that permits lenders flexibility in

conducting the ability to repay determination while achieving the 

stated consumer protection purposes of the rulemaking.


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ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD


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Message from 

Richard Cordray 

Director of the CFPB 

At the Consumer Financial Protection Bureau, we are the nation's first federal agency whose sole 

focus is protecting consumers in the financial marketplace. Financial products like mortgages, 

credit cards, and student loans involve some of the most important financial transactions in 

people's lives. In the Dodd-Frank Act, Congress created the Bureau to stand on the side of 

consumers and ensure they are treated fairly in the financial marketplace. Since we opened our 

doors, we have been focused on making consumer financial markets work better for the 

American people, and helping them improve their financial lives. 

In this, our seventh Semi-Annual Report to Congress and the President, we describe the 

Bureau's efforts to achieve this vital mission. Through fair rules, consistent oversight, 

appropriate enforcement of the law, and broad-based consumer engagement, the Bureau is 

helping to restore American families' trust in consumer financial markets, protect consumers 

from improper conduct, and ensure access to fair, competitive, and transparent markets. 

In the six months covered by this report, our supervisory actions resulted in financial 

institutions providing more than $114 million in redress to over 70o,ooo consumers. During 

that timeframe we also have helped secure orders through enforcement actions for more than 

$19 million in relief to consumers who fell victim to various violations of consumer financial 

protection laws, along with over $32 million in civil money penalties. We brought numerous 

enforcement actions for various violations ofthe Dodd-Frank Act, including an illegal 

marketing-services-kickback scheme that Wells Fargo and JPMorgan Chase participated in 

which resulted in $11.1 million in redress for wronged consumers and civil money penalties of 

more than $21 million to the Bureau and $3 million to the State of Maryland. We also worked 

with the Department of Education to obtain $480 million in debt relief to student loan 

SEMI-ANNUAL REPORT OF THE CFPB, SPRING 2015 
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borrowers wronged by Corinthian Colleges. The Bureau also achieved consumer redress of 

approximately $2.9 million from M&T Bank, $2.67 million from Continental Finance Company, 

and $2.5 million from Freedom Stores, in addition to ordering that these companies pay civil 

money penalties and change their business practices. 

The Bureau also issued a number of proposed and final rules. In October 2014, we issued a final 

rule to promote more effective privacy disclosures from financial institutions to their customers. 

The new rule allows companies that limit their consumer data-sharing and meet other 

requirements to post their annual privacy notices online in more circumstances and deliver 

them individually in fewer circumstances. In November 2014, the Bureau issued a Notice of 

Proposed Rulemaking proposing strong new federal consumer protections for the prepaid 

market. This proposal would require prepaid companies to limit consumers' losses when 

prepaid funds are stolen or cards are lost, investigate and resolve errors, provide easy and free 

access to account information, and adhere to credit card protections if a credit product is offered 

in connection with a prepaid account. In December 2014, the Bureau issued a proposal to 

amend various provisions of its mortgage servicing rules, in both Regulation X and Regulation 

Z, including further clarification of the applicability of certain provisions when the borrower is 

in bankruptcy, possible additional enhancements to loss mitigation requirements, proposed 

applicability of certain provisions to successors in interest, and other topics. In January 2015, 

the Bureau proposed changes to several of the motigage rules the Bureau issued in 2013 to 

facilitate responsible mortgage lending by small creditors, particularly in rural or underserved 

areas. If finalized as proposed, the proposal would increase the number of financial institutions 

able to offer certain types of mortgages in rural or underserved areas, and help small creditors 

adjust their business practices to comply with the new rules. 

As a data-driven institution, the Bureau published several reports and other publications during 

this reporting period, highlighting several important topics in the consumer finance area, 

including a report on medical debt, a snapshot of complaints received about reverse mortgages, 

a report on consumers' perspectives on credit scores and credit reports, a study on consumer 

arbitration agreements, and a "Know Before You Owe" mortgage toolkit. 

The premise that lies at the very heart of our mission is that consumers deserve to be treated 

fairly in the financial marketplace and to have someone stand on their side when that does not 

happen. To this end, since launching Consumer Response operations on July 21, 2011, through 

March 31, 2015, the CFPB has handled approximately 582,600 consumer complaints, including 

complaints on credit reporting, debt collection, money transfers, bank accounts and services, 

credit cards, mortgages, vehicle loans, payday loans, student loans, and certain other consumer 

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financial products or services, including prepaid cards, debt settlement services, credit repair 

services, and pawn and title loans. 

The progress we have made has been possible thanks to the engagement of hundreds of 

thousands of Americans who have utilized our consumer education tools, submitted complaints, 

participated in rulemakings, and told us their stories through our website and at numerous 

public meetings from coast to coast. We have benefited as well from an ongoing dialogue and 

constructive engagement with the institutions we supervise, with community banks and credit 

unions with whom we regularly meet, as well as with consumer advocates throughout the 

country. Our progress has also resulted from the extraordinary work of the Bureau's 

employees-dedicated public servants who are committed to promoting a healthy consumer 

financial marketplace. Each day, we work to accomplish the goals of renewing peoples' trust in 

the marketplace and ensuring that markets for consumer financial products and services are 

fair, transparent, and competitive. These goals not only support consumers in all financial 

circumstances, but also help responsible businesses compete on a level playing field, and 

reinforce the stability of our economy as a whole. 

In the years to come, we look forward to continuing to fulfill Congress's vision of an agency 

dedicated to cultivating a consumer financial marketplace based on transparency, responsible 

practices, sound innovation, and excellent customer service. 

To close, I would like to dedicate this edition to Senior Budget Analyst Jeffrey L. Swartz, who 

passed away this spring well before his time, survived by his wife and four children. 

Jeff lived an exemplary life of public service. He served for over 28 years as a budget analyst at 

the Naval Sea Systems Command, EPA, and the Bureau. He also served in the Army Reserves for 

over 25 years, including deployments in Saudi Arabia, Bosnia, and Iraq. 

Jeff joined the Bureau in 2011; as an early member of the budget team he directly shaped the 

Bureau's budgeting approach, and helped guide and advise many of us through the ropes of that 

sometimes difficult process. Since then, he had an integral role in shaping past editions of this 

report, as well as this current one. Far beyond his particular contributions, Jeff will be 

remembered by his many friends for his big smile and his upbeat and irrepressible good nature. 

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I often reflect on the incredible people we have been able to attract to join us in our mission of 

consumer protection, and I am saddened to have lost such an admirable, well-loved colleague. 

In remembrance of Jeffs dedication to public service, we dedicate this edition to his memory. 

Sincerely, 

Richard Cordray 

Director 

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Table of contents 

Message from Richard Cordray ................................................................................. 2 

Table of contents ......................................................................................................... 6 

1, Executive summary .............................................................................................. 9 

Listening to consumers .......................................................................... 10 

Delivering for American consumers and leveling the playing field ........ n 

Building a great institution ...................................................................... 15 

Consumer challenges in obtaining financial products and 

services ............................................................................................................... 17 

Consumer concerns ................................................................................. 17 

Shopping challenges ............................................................................... 55 

Delivering for American consumers and leveling the playing field .............. 61 

Resources for consumers ........................................................................ 61 

Outreach ................................................................................................. 79 

Partnerships ............................................................................................ 82 

Regulations and guidance ................................................................................. 88 

1 Implementing statutory protections ...................................................... 88 

Addressing longstanding consumer protection and regulatory burden 

concerns in other markets ...................................................................... 91 

Facilitating implementation of new regulations .................................... 93 

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Supervision ......................................................................................................... 97 

Supervisory activities .............................................................................. 98 

Supervisory guidance ............................................................................. 98 

Coordination and information sharing with state regulators ................ 99 

Examiner training and commissioning 

............................................................................................................... 99 

Technology ............................................................................................ 1oo 

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 

(SAFE Act) ............................................................................................ 100 

Enforcement ...................................................................................................... 1 03 

1 Conducting investigations .................................................................... 103 

Enforcement actions ............................................................................. 103 

Fair lending ....................................................................................................... 120 

Fair lending supervision and enforcement ........................................... 121 

Interagency fair lending coordination and outreach ............................ 127 

Home Mortgage Disclosure Act ............................................................ 129 

Building a great institution: update ................................................................ 131 

Open government .................................................................................. 131 

Budget ............................................................................................................... 134 

How the CFPB is funded ....................................................................... 134 

Diversity and excellence .................................................................................. 144 

I Recruiting and hiring ........................................................................... 144 

Staff education, training, and engagement .......................................... 146 

Diversity ................................................................................................ 148 

Appendix A: ............................................................................................................. 157 

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More about the CFPB ..................................................................................... 157 

Appendix 8: ............................................................................................................. 159 

Statutory reporting requirements ................................................................. 159 

Appendix C: ............................................................................................................. 161 

Significant rules, orders, and initiatives ....................................................... 161 

Appendix D: ............................................................................................................. 170 

Actions taken regarding rules, orders, and supervisory actions with respect to 

covered persons which are not credit unions or deposit01y 

institutions ............................................................................................ 170 

Appendix E: ............................................................................................................. 173 

Significant state attorney general and regulator actions ............................... 173 

Appendix F: ............................................................................................................. 175 

Reports ......................................................................................................... 175 

Appendix G: ............................................................................................................. 178 

Congressional testimony ............................................................................... 178 

Appendix H: ............................................................................................................. 179 

Speeches ......................................................................................................... 179 

Appendix 1: ............................................................................................................... 183 

Financial and budget reports ........................................................................ 183 

Appendix J: .............................................................................................................. 186 

CFPB organizational chart ............................................................................ 186 

Appendix K: ............................................................................................................. 187 

Defined terms ................................................................................................ 187 

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Executive summary 

The Consumer Financial Protection Bureau (CFPB or Bureau) presents this Semi-Annual Report 

to the President, Congress, and the American people, in fulfillment of its statutory responsibility 

and commitment to accountability and transparency. This report provides an update on the 

Bureau's mission, activities, accomplishments, and publications since the last Semi-Annual 

Report, and provides additional information required by the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (Dodd-Frank or Dodd-Frank Act).' 

The Dodd-Frank Act created the Bureau as the nation's first Federal agency with a mission of 

focusing solely on consumer financial protection and making consumer financial markets work 

for American consumers, responsible businesses, and the economy as a whole. In the wake of 

the financial crisis of 2008-2010, the President and Congress recognized the need to address 

widespread failures in consumer protection and the rapid growth in irresponsible lending 

practices that preceded the crisis. To remedy these failures, the Dodd-Frank Act consolidated 

most Federal consumer financial protection authority in the Bureau. 2 The Dodd-Frank Act 

charged the Bureau with, among other things: 

1 Appendix B provides a guide to the Bureau's response to the reporting requirements of Section 1016(c) of the DoddFrank Act The last Semi-Annual Report ·was published in December 2014 and may be viewed at: 

b tt p: I/ files.consumerfi na net> .gov; f /20150 1_ dph. sem i-nn nua 1-report -f~lll-2 o 14. pdf. 

2 Previously, seven different federal agencies were responsible for ru1emaking, supervision, and enforcement relating 

to consumer financial protection. The agencies which previously administered statutes transferred to the Bureau are 

the Federal Reserve Board (and the Federal Reserve Banks) (Board or FRB), Department of Housing and Urban 

Development (HUD). Federal Deposit Insurance Corporation (FDIC), Federal Trade Commission (FTC), National 

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Ensuring that consumers have timely and understandable information to make 

responsible decisions about financial transactions; 

Protecting consumers from unfair, deceptive, or abusive acts and practices, and from 

discrimination; 

Monitoring compliance with Federal consumer financial law and taking appropriate 

enforcement action to address violations; 

Identifying and addressing outdated, unnecessary or unduly burdensome regulations; 

Enforcing Federal consumer financial law consistently in order to promote fair 

competition; 

Ensuring that markets for consumer financial products and services operate 

transparently and efficiently to facilitate access and innovation; and 

Conducting financial education programs.3 

The Bureau has continued its efforts to listen and respond to consumers and industry, to be a 

resource for the American consumer, and to develop into a great institution worthy of the 

responsibility conferred on it by Congress. 

Listening to consumers 

Listening and responding to consumers is central to the Bureau's mission. The Bureau continues 

to provide consumers with numerous ways to make their voices heard. Consumers nationwide 

have engaged with the Bureau through public field hearings, listening events, roundtables and 

town halls, and through our website, consumerflnance.gov. Consumer engagement strengthens 

the Bureau's understanding of current issues in the ever-changing consumer financial 

Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and Office of Thrift 

Supervision. 

3 See Dodd-Frank Act, Pub. L. No.111-203, Sec.1021 (b) and (c). 

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marketplace and informs every aspect of the Bureau's work, including research, rule writing, 

supervision, and enforcement. 

The Bureau has continued to improve and expand the capabilities of its Office of Consumer 

Response (Consumer Response) to receive, process, and facilitate responses to consumer 

complaints. Consumer Response has also continued to develop and update a robust public 

Consumer Complaint Database. The database updates nightly and is populated by over 370,000 

complaints from consumers about financial products and services from all over the country. 

On March 19, 2015, the CFPB issued a final policy statement to provide guidance on how the 

Bureau plans to exercise its discretion to provide consumers who submit their complaints 

directly to the CFPB the opportunity to share their individual stories with other consumers and 

the marketplace by including consumer complaint narratives in the Consumer Complaint 

Database. Only those narratives for which opt-in consumer consent is obtained and to which a 

robust personal information scrubbing process is applied are eligible for disclosure. The CFPB 

gives companies the opportunity to respond publicly to the substance of the consumer 

complaints they receive from the CFPB by selecting from a set list of public-facing response 

categories. Companies are under no obligation to avail themselves of the opportunity. The 

Bureau also issued a Notice and Request for Information with the final policy statement to seek 

input from the public on the potential collection and sharing of consumer compliments and 

related data and feedback specific to positive interactions with consumer financial companies. 

Delivering for American consumers and 

leveling the playing field 

The Bureau has continued to expand its efforts to serve and protect consumers in the financial 

marketplace. The Bureau seeks to serve as a resource on the macro level, by writing clear rules 

of the road and enforcing consumer financial laws in ways that improve the consumer financial 

marketplace, and on the micro level, by helping individual consumers resolve their specific 

issues with financial products and services. While the various divisions of the Bureau play 

different roles in carrying out the Bureau's mission, they all work together to protect and 

educate consumers, help level the playing field for participants, and fulfill the Bureau's statutory 

obligations and mission under the Dodd-Frank Act. In all of its work, the Bureau strives to act in 

ways that are fair, reasonable, and transparent. 

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We are working to provide tools and information to develop practical skills and support sound 

financial decision making directly to consumers. These skills include being able to ask questions 

and to plan ahead. One way we are doing this is with our online tool, Ask CFPB. This tool 

provides answers to over 1,000 questions about financial products and services. It answers 

questions on topics including mortgages, credit cards, and how to dispute errors in a credit 

report. This resource is found at consumerfinance.gov j askcfpb/. We are also focusing on 

helping consumers build the skills to plan ahead. For example, our Paying for College set of tools 

helps students and their families compare what their college costs will be down the road as they 

decide where to pursue a college education. Our Owning a Home set of tools will help consumers 

shop for a mortgage loan by helping them understand what mortgages are available to them and 

easily make mortgage comparisons. The Money Smart for Older Adults curriculum, developed 

with the FDIC, includes resources to help people prevent elder financial exploitation and 

prepare financially for unexpected life events. 

We are working with a broad range of partners to provide decision-making support in moments 

when consumers are most receptive to receiving information and developing financial decisionmaking skills. This support includes integrating financial capability into other programs and 

services where consumers may be seeking assistance. We are also tailoring our approaches to 

financial decision-making circumstances, challenges, and opportunities for specific populations, 

including servicemembers and veterans, students and young adults, older Americans, and 

lower-income and other economically vulnerable Americans. 

When Federal consumer financial protection law is violated, the Bureau's Supervision, 

Enforcement, and Fair Lending Division is committed to holding the responsible parties 

accountable. In the six months covered by this report, our supervisory actions resulted in 

financial institutions providing more than $114 million in redress to over 700,000 consumers. 

During that timeframe we also have helped secure orders through enforcement actions for more 

than $19 million in relief to consumers who fell victim to various violations of consumer 

financial protection laws, along with over $32 million in civil money penalties. We brought 

numerous enforcement actions for various violations of the Dodd-Frank Act, including an illegal 

marketing-services-kickback scheme that Wells Fargo and JPMorgan Chase participated in 

which resulted in $11.1 million in redress for wronged consumers and civil money penalties of 

more than $21 million to the Bureau and $3 million to the State of Maryland. We also worked 

with the Department of Education to obtain $480 million in debt relief to student loan 

borrowers wronged by Corinthian Colleges. The Bureau also achieved consumer redress of $2.9 

million from M&T Bank, $2.67 million from Continental Finance Company, and $2.5 million 

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from Freedom Stores, in addition to ordering that these companies pay civil money penalties 

and change their business practices. The Bureau has also continued to develop and refine its 

nationwide supervisory program for depository and nondepository financial institutions, 

through which those institutions are examined for compliance with Federal consumer financial 

protection law. In the same time period, our supervisory actions have resulted in institutions 

providing over $114 million in redress to over 70o,ooo consumers. Initiatives during the 

reporting period of this report include a review of the existing internal examination report 

review processes and implementation of recommendations arising out of that review. 

Continuing the CFPB's policy of transparency, the Bureau has released two editions of 

Supervisory Highlights during this reporting period. These editions discussed regulatory 

violations or unfair, deceptive, or abusive acts or practices in the areas of consumer reporting, 

debt collection, deposits, mortgage servicing and student loan servicing, as well as guidance on 

Home Mortgage Disclosure Act reporting, updates on larger participant rulemakings, and public 

enforcement actions. This publication is intended to inform both industry and the public about 

the development of the Bureau's supervisory program and to discuss, in a manner consistent 

with the confidential nature of the supervisory process, broad trends in examination findings in 

key market or product areas. 

The Bureau has also published new guidance documents, with other regulators where 

appropriate, to help institutions know what to expect and how to become, or remain, compliant 

with the law, including bulletins on the treatment of confidential supervisory information4 and 

social security disability income verification.s 

Reasonable regulations are essential for protecting consumers from harmful practices and 

ensuring that consumer financial markets function in a fair, transparent, and competitive 

manner. The Research, Markets, and Regulations Division has focused its efforts on promoting 

markets in which consumers can shop effectively for financial products and services and are not 

4 http:/ /files.consumertinance.gov/f/20150l __ cfpb_compliance-bulletin_treatment-of-confidential-supen·isoryint(>rmation.pdf. 

5 http:/ /files.consumcrfinancc.go\'/f/201411_cfpb_bulletin_disability-incomc.pdf. 

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subject to unfair, deceptive, or abusive acts or practices. During this reporting period, the 

Research and Markets teams released studies or other publications on prepaid account 

agreements6, consumer credit reporting relating to medical and non-medical collections?, 

college credit card agreements a, consumer mortgage shopping9, and arbitration. 10 The 

Regulations office issued regulations modifying and clarifying a number of rules implementing 

changes made by the Dodd-Frank Act to the laws governing various aspects of the mortgage 

market. 

During this reporting period, the Bureau has published several proposed or final rules or 

requests for information under the Dodd-Frank Act, including proposals to amend, or 

amendments to several of the mortgage rules the Bureau issued in 2013 (2013 Mortgage Rules). 

The amendments include a rule that provides an alternative small servicer definition for certain 

nonprofit entities, and a rule which, in certain circumstances, extends the timing requirement 

for revised disclosures in the 2013 TILA-RESPA rule. 

To support the implementation of and industry compliance with its rules, the Bureau has 

published plain-language compliance guides summarizing the rules, and it has actively engaged 

in discussions with industry about ways to achieve compliance. 11 The Bureau also continued its 

efforts to streamline, modernize, and harmonize financial regulations that it inherited from 

other agencies. 

In addition to implementing the Dodd-Frank Act, the Bureau continues to explore other areas 

where regulations may be needed to ensure that markets function properly and possibly harmful 

6 http:/ jfiles.consumerfinance.gov/f/201411_cfpb_study-of-prepaid-account-agreements.pdf. 

7 http:/jfi1es.consumerfinance.go\·jf/201412_cfpb_reports._consumer-credit-medical-and-non-medicalcollections. pdf. 

8 http: I /files.consumerfi nance .goyjf/20 1412_ cfpb _college-card-agreement-report -2014. pdf. 

9 http: J 1 files .consu merfi n a nee. g(w /f/ 20150 l._ cfp h_consu mers-mortgage-shopping-experience. pdf. 

10 http://files.consumerfinance.go\)f/20150~L.efpb_arbitration-study-report-to-congress-2015.pdf. 

11 http:/ jwww .consumerfinance .gO\} guidancC' I #compliance. 

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or inefficient practices are addressed. For example, in October 2014, the Bureau issued a 

proposed rule defining larger participants of the automobile financing market and defining 

certain automobile leasing activity as a financial product or service. In December 2014, the 

Bureau issued a proposed rule regarding prepaid accounts under Regulations E and Z. Over the 

next six months, the Bureau will continue implementing the Dodd-FrankAct and using its 

regulatory authority to ensure that consumers have access to consumer financial markets that 

are fair, transparent, and competitive. 

Building a great institution 

The Bureau continues to grow and evolve as an institution. As of March 31, 2015, the CFPB team 

consisted of 1,459 employees working to carry out the Bureau's mission. It has worked to build a 

human and physical infrastructure that promotes -and will continue to promote- diversity, 

transparency, accountability, fairness, and service to the public. That infrastructure includes: 

Demonstrating a strong commitment to openness and utilizing the Bureau's website to 

share information on its operations; 

Recruiting highly-qualified, diverse personnel; 

Providing training and engagement opportunities for CFPB staff to improve skills, 

increase knowledge, and maintain excellence; and 

Further promoting diversity and inclusion in the CFPB's workforce and among its 

contractors, including through the Bureau's Office of Minority and Women Inclusion 

(OMWI). 

The Bureau recognizes that the best way to serve consumers is to ensure that its workforce 

reflects the ideas, backgrounds, and experiences of the American public. OMWI supports the 

Bureau's mission by working with the offices of Human Capital and Civil Rights to continue 

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building a diverse and inclusive workforce that can foster broader and better thinking about how 

to approach markets." 

We will continue working hard to ensure that the American people are treated fairly in the 

consumer financial marketplace. We encourage you to visit consumerfinancc.gov for updates. 

"During this reporting period, the Bureau's Office of Equal Employment and Opportunity transitioned to the Office 

of Civil Rights, and it and the OMWI office moved under the umbrella of the newly created Office of Equal 

Opportunity and Fairness, housed in the Director's Office and reporting directly to Director Cordray. 

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Consumer challenges in 

obtaining financial products 

and services 

The challenges consumers face in navigating and obtaining financial products and services are a 

driving force behind the CFPB's efforts to make consumer financial markets work better. 

Listening and responding to consumers are integral components of our mission, and the Bureau 

provides numerous ways for consumers to make their voices heard. 

Consumer concerns 

The Bureau's long-term vision for consumer finance markets is one where consumer protections 

and business opportunities work in tandem, where financial firms lead through responsible 

business practices, and where educated consumers can make well-informed decisions. It is 

critical for the stability ofthe marketplace and the well-being of consumers to ensure that 

everyone is playing by the same rules. 

As we continue to emerge from the continuing effects of the devastating financial crisis of 2008, 

we find that debt collection is central and cuts across virtually all credit products: credit cards, 

mortgages, student loans, payday loans, and other consumer loans. Currently, about 30 million 

consumers - nearly one out of every ten Americans - are subject to debt collection, for amounts 

that average about $1,500 each. 

Many companies in this industry play by the rules. But others cut corners and seek to gain an 

advantage by ignoring the rules. These bad actors are a detriment to every company that is 

faithfully following the law, and their actions harm consumers. 

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During the reporting period covered by this report, consumers shared with the CFPB their 

experiences- positive and negative- with financial products and services. Consumers have the 

opportunity to provide the Bureau with such feedback through a variety of forums, including 

the "Tell Your Story" feature on the CFPB's website, and by participating in roundtables, town 

halls, and field hearings. This feedback is critical to our efforts to understand the challenges 

consumers face in obtaining the financial products and services they need. 

With respect to credit cards, the first consumer financial product the Bureau accepted 

complaints about, many of the stories that consumers have shared with us over the past year 

through "Tell Your Story" indicate that consumers continue to experience issues with attempts 

to resolve billing disputes, payment issues, ·and fraud and identity theft related issues as well as 

related problems with debt collection and credit reporting. Consumers also express frustration 

with receiving unwanted promotional offers, only to be denied credit. Others report their 

surprise when companies increase their interest rate, citing a change in the consumer's credit 

rating. 

In addition to "Tell Your Story," consumers have opportunities to voice concerns and share their 

experiences in person at field hearings and public meetings, focused on particular consumer 

finance issues. During this reporting period, consumers and advocates have participated in large 

Bureau-sponsored public events in Long Beach, CA; Wilmington, DE; Oklahoma City, 

OK; Newark, N.J; and Richmond, VA. 13 These events have drawn hundreds of participants, many 

of whom have shared their personal experiences with libraries, workplace financial education, 

mortgages, payday lending, mobile financial services, consumer finance complaints, and other 

consumer financial issues. 

The CFPB's Office of Community Affairs has also hosted roundtable conversations with leaders 

of consumer, civil rights, community, housing, faith-based, student, and other organizations. 

The roundtables have provided opportunities for stakeholders to meet with Director Cordray, 

Deputy Director Antonakes, and other senior Bureau staff to share their first-hand perspectives 

on key consumer finance issues that affect their communities. 

1

3 Benveen October 11 2014 and March 31, 2015. 

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Collecting, investigating, and responding to consumer complaints are integral parts of the 

CFPB's work, as Congress set forth in the Dodd-FrankAct. 1

4 The Bureau hears directly from 

consumers about the challenges they face in the marketplace, brings their concerns to the 

attention of companies, and assists in addressing their complaints. 

Choose a product or 

service to get started 

AND 

e Credit card (!Y Money transfer 

Vehkle or other 

~?:~sw~~,r _!,o~r: 

The CFPB began Consumer Response operations on July 21, 2011, by accepting consumer 

complaints about credit cards. The Bureau now accepts complaints about mortgages, bank 

accounts and services, student loans, vehicle and other consumer loans, credit reporting, money 

transfers, debt collection, payday loans, prepaid cards, additional nonbank products (including 

14 See Dodd-Frank Act, Pub. L. No. 111-203, Sec. 1021(c)(2). 

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debt settlement services, credit repair services, and pawn and title loans), and digital currency. 

The CFPB continues to work toward expanding its complaint-handling capacity and plans to 

include other products and services. Consumers may also contact the CFPB with questions 

about other products and services. The Bureau answers questions and refers consumers to other 

regulators or additional resources as appropriate. 

What happens when I submit a complaint? 

Data by product 

Download. sort, and visualize 

Example visualizations 

What information do you publish? 

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Information about consumer complaints is available to the public, through the Bureau's public 

Consumer Complaint Database, launched on June 19, 2012. It was initially populated with credit 

card complaints received on and after June 1, 2012, and has been expanded over time: 

October 2012: added credit card complaints dating back to December 1, 2011; 

March 2013: added mortgage complaints dating back to December 1, 2011, bank account 

and service complaints, student loan complaints, vehicle and other consumer loan 

complaints, all dating back to March 1, 2012; 

May 2013: added credit reporting complaints dating back to October 22, 2012 and 

money transfer complaints dating back to April4, 2013; 

November 2013: added debt collection complaints dating back to July 10, 2013; 

July 2014: added payday loan complaints dating back to November 6, 2013; 

January 2015: added prepaid cards, other consumer loans (pawn and title), and other 

financial services dating back to July 19, 2014. 

A complaint is listed in the database when the company responds to the complaint, or after the 

company has had the complaint for 15 days, whichever comes first. Complaints can be removed 

if they do not meet all ofthe publication criteria. •s 

The database updates nightly, and contains certain individual complaint-level data collected by 

the CFPB, including the type of complaint, the date of submission, the consumer's zip code, and 

the company that the complaint concerns. The database also includes information about the 

actions taken by a company in response to a complaint- whether the company's response was 

timely, how the company responded, and whether the consumer disputed the company's 

response. The database does not include confidential information about consumers' identities. 

On March 19, 2015, the CFPB issued a final policy statement to provide guidance on how the 

Bureau plans to provide consumers who submit their complaints directly to the CFPB the 

15 See Disclosure of Ce1tain Credit Card Complaint Data, 77 Fed. Reg. 37,558 (June 22, 2012). 

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opportunity to share their individual stories with other consumers and the marketplace by 

including consumer complaint narratives in the Consumer Complaint Database. Consumers will 

now have the option to check a box and opt-in to sharing their narrative. In order to provide 

time for companies to learn about this new system, the Bureau will not publish any consented-to 

narrative for at least 90 days after the policy's publication in the Federal Register. 

Web-based features of the database facilitate the ability to filter data based on specific search 

criteria, to aggregate data in various ways, such as by complaint type, company, zip code, date, 

or any combination of available variables, and to download data. Information from the database 

has been shared on social media and evaluated using other new applications. 

The Bureau generally has relied on the consumer's characterization of his or her complaint to 

identifY its nature for analytical purposes. However, the CFPB's experience to date suggests that 

consumers may have differing interpretations of what these categories mean. For example, one 

consumer might choose to categorize a problem as a billing dispute, while another might 

identifY the same issue as a concern with a provider's processing of the transaction. The CFPB 

continues to assess how to make the complaint form more intuitive for consumers. 

The Bureau continually strives to improve data quality and protect sensitive information, while 

making data increasingly available through reports to Congress and to the public about the 

complaints the CFPB receives and by sharing certain data with the public through the Consumer 

Complaint Database. 

How the CFPB handles complaints 

In keeping with the CFPB's statutory responsibility and its commitment to accountability, the 

following pages provide an overview of the handling and analysis of complaints received by the 

Bureau from April I, 2014 through March 31, 2015. '

6 

16 While the repm1ing period forth is Semi-Annual Report is six months, Dodd-Frank Act§ 1016(c)(4) requires "an 

analysis of complaints about consumer financial products or services that the Bureau has received and collected in 

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The CFPB's Consumer Response team screens all complaints submitted by consumers based on 

several criteria, including whether the complaint falls within the Bureau's primary enforcement 

authority, whether the complaint is complete, and whether the complaint is duplicative of a 

prior submission by the same consumer. Screened complaints are forwarded via a secure web 

portal to the appropriate company.'7 The company reviews the information, communicates with 

the consumer as needed, and determines what action to take in response. The company then 

reports back to the consumer and the CFPB via the secure company portal, and the Bureau 

invites the consumer to review the response and provide feedback.' 8 Consumer Response 

reviews the feedback consumers provide about company responses, using this information along 

with other information such as the timeliness of the company's response, for example, to help 

prioritize complaints for investigation. Consumers who have submitted complaints to the 

Bureau through Consumer Response can log onto the secure consumer portal available on the 

CFPB's website, or call a toll-free number, to receive status updates, provide additional 

information, and review responses provided to the consumer by the company. 

Complaint 

submitted 

Review 

and route 

Company 

response 

Consumer 

review 

Rcviewanrl 

investigate 

Analyzo 

and report 

Throughout this process, subject-matter experts help monitor certain complaints. For example, 

the Office of Servicemember Affairs coordinates with Consumer Response on complaints filed 

by servicemembers or their spouses and dependents. 

its central database on complaints during the preceding year." Therefore, this section reports on the time period 

April I, 2014 through March 31, 2015. 

17 Consumer Response may refer a complaint to the appropriate regulator if, among other reasons, it does not involYe 

a product or market that is vdthin the Bureau's jurisdiction or that is not currently being handled by the Bureau. 

1

8 The CFPB requests that companies respond to complaints within 15 calendar days. If a complaint cannot be closed 

within 15 calendar days, a company may indicate that its ·work on the complaint is "In progress" and provide a final 

response vvithin 6o ealendar days. 

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Complaints received by the CFPB 

Between April1, 2014 and March 31, 2015, the CFPB received approximately 250,500 consumer 

complaints. 19 Approximately 68% of all consumer complaints were submitted through the 

CFPB's website and 8% via telephone calls. Referrals accounted for 14% of all complaints 

received, with the remainder submitted by mail, email, and fax. 20 

FIGURE 1: CONSUMER COMPLAINTS BY PRODUCT 

Debtcollection~~~~====:=-----34% Mortgage 2o% 

Credit reporting 19% 

Bank account or service 8% 

Credit card s% 

Consumer loan~ 4% 

Student loans 111111111113% Payday loan 1111111111 2% 

Money transfers II 0 B% 

Prepaid I 0 5% 

Other financial service 1 a 4"A, 

The Dodd-Frank Act created the Office of Servicemember Affairs to address the specific 

challenges faced by servicemembers, veterans, and their families (collectively 

"servicemembers"). The Office of Servicemember Affairs monitors complaints from 

servicemembers in conjunction with Consumer Response. Between April1, 2014 and March 31, 

2015, approximately 17,100 complaints were submitted by servicemembers. 

'9 Unless othemise noted or the context suggests otherwise, the various tables and complaint tabulations appearing 

herein cover this period. 

20 This analysis excludes multiple complaints submitted by a given consumer on the same is..;:;;ue and whistleblower 

tips. All data are current through March 31, 2015. Since launching Consumer Response operations on July 21, 2011 

through March 31, 2015, the CFPB receiYed approximately 582,600 consumer complaints. 

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FIGURE 2: SERVICEMEMBER COMPLAINTS BY PRODUCT 

Debt collection lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll 50% 

Mortgage ::::::~:'1111"% Credit reporting IO% 

Bank account or service~ 6% 

Consumer loan ~ G% 

Credit card t111'1111!15% 

Payday loan 111111 J% 

Student loans 

Other financial service iJ o T% 

Prepaid I 0 ?% 

Money transfers Iii 0 6% 

The tables and figures presented below show complaints by type, actions taken, company 

responses, and consumers' feedback about company responses. 21 

21 Percentages may not sum to 100% due to rounding. 

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Consumers' debt collection complaints 

Figure 3 and Table 1 show the types of debt collection complaints reported by consumers for the 

approximately 85,300 debt collection complaints the CFPB has received. 

FIGURE 3: TYPES OF DEBT COLLECTION COMPlAINTS REPORTED BY CONSUMERS 

10% 

FaisestaMments 

or representation 

Improper contact 

or shanng ol1nfc 

7% 

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TABLE 1: TYPES OF DEBT COLLECTION COMPLAINTS REPORTED BY CONSUMERS 

Continued attempts to collect debt not owed (Debt was discharged in 

bankruptcy, debt resulted from identity theft, debt was paid, debt is not 

mine) 

Disclosure verification of debt (Did not receive notice of right to dispute, not 

enough information to verify debt, did not disclose communication was an 

attempt to collect a debt) 

False statements or representation (Attempted to collect wrong amount, 

impersonated attorney, law enforcement or government official, indicated 

committing crime by not paying debt, indicated should not respond to 

lawsuit) 

Total debt collection complaints 

27 SEMI-ANNUAL REPORT OF THE CFPB, SPRING 2015 

38% 

14% 

10% 

100% 
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The most common type of debt collection complaint is about continued attempts to collect a 

debt that the consumer reports is not owed. In many of these cases, the attempt to collect the 

debt is not itself the problem; rather, consumers assert that the calculation of the amount of 

underlying debt is inaccurate or unfair. In other cases, the consumer complains about the 

furnishing of information to credit reporting agencies. These complaints, which are often 

consistent with complaints consumers submit to the Bureau about credit reporting, suggest that 

consumers frequently only learn about debt collection accounts when they check their credit 

reports. 

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Complaints about debt collectors' communications tactics (telephone collections especially) are 

also still very common. In addition to the frequent complaints about collection calls, which 

consumers say are too frequent or at inconvenient times of the day, there were a significant 

number of complaints about calls to third parties or calls to the consumer's place of 

employment. 

Consumers also complained about the lack of debt validation received from debt collectors and 

consumers often ask collectors for additional documentation to support the debt. The amount of 

documentation provided by some debt collectors in response appears to frustrate many 

consumers, especially when the documentation is a simple invoice or bill for the services or 

goods that were the subject of the debt being collected. There are a number of collectors who 

reportedly respond to any consumer complaints by closing the account and returning it to their 

client. 

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Consumers' mortgage complaints 

Figure 4 and Table 2 show the types of mortgage complaints reported by consumers for the 

approximately 48,8oo mortgage complaints the CFPB has received. 

FIGURE 4: TYPES OF MORTGAGE COMPLAINTS REPORTED BY CONSUMERS 

2"1" 1% 

Receiving a cred1t offer Other 

4% 

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TABLE 2: TYPES OF MORTGAGE COMPLAINTS REPORTED BY CONSUMERS 

Problems when you are unable to pay (Loan modification, collection, foreclosure) 48% 

Making payments (Loan servicing, payments, escrow accounts) 

Applying for the loan (Application, originator, mortgage broker) 8% 

Receiving a credit offer (Credit decision/Underwriting) 2% 

lotal mortgage complaints 

The most common type of mortgage complaint involves problems consumers face when they are 

unable to make payments, such as issues relating to loan modifications, collections, or 

foreclosures. In particular, consumers still complain about delays and ambiguity in the review of 

their modification applications. Some consumers expressed concerns about the documentation 

requests they receive and argue that they were not provided a reasonable date by which the 

required documents had to be returned but instead were instructed to return the documents 

"immediately". Other consumers complained that they were not considered for all available loss 

mitigation options or that the terms of the approved modification were unfavorable (e.g., 

required interest only payments). Consumers with successfully completed loan modifications 

have complained that some servicers do not amend derogatory credit reporting accrued by 

consumers during trial periods although documents provided to the consumers by servicers 

indicated that they would do so. 

Other common types of mortgage complaints address issues related to making payments, 

including loan servicing, posting of payments, or management of escrow accounts. For example, 

consumers express concern over difficulties they experience when the servicing of their loan is 

transferred, including complaints about fees charged by the prior servicer, unexplained escrow 

deficiencies, issues with the new servicer accepting the previous servicer's modification, and 

communication between the old and new servicer (especially when loss mitigation efforts are 

ongoing). 

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Consumer complaints about mortgage originations tend to involve the lengthy application and 

approval processes and unauthorized credit inquiries. Consumers also complained about 

delayed loan denials that occurred just before settlement but were based upon information that 

was disclosed early in the application process (e.g., bankruptcy, lack of employment history, 

etc.). They expressed frustration that fees were charged even though they believe the loan 

originator knew that the loan would not be approved. A number of complaints involved the 

lender's refusal to honor rate-locks, and concerns that the terms of loans with variable interest 

rates were not clearly disclosed. 

Consumers' credit reporting complaints 

Figure 5 and Table 3 show the types of credit reporting complaints reported by consumers for 

the approximately 47.400 credit reporting complaints the CFPB has received. 

FIGURE 5: TYPES OF CREDIT REPORTING COMPLAINTS REPORTED BY CONSUMERS 

Credit report1ngcompany's 

i11VeS\iga\IOI1 

Credit moO!tonngor 

nlentltyprotectwn 

... J% 

Improper use 

ofcred1trepart 

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TABLE 3 TYPES OF CREDIT REPORTING COMPLAINTS REPORTED BY CONSUMERS 

Incorrect information on credit report (Information is not mine, Account terms, Account 

status, Personal information, Public record, Reinserted previously deleted information) 

Credit reporting company:sirl\lestigatitlf1 (l!'W\;lstigalian 109!<'1()() long, Did rot get Pl'Oj)ef 

notice of investigation statuso:r results, Did not I<'!CE;li've adequate help over the phone, 

Problem with statement of dispute) 

Unable to get my credit report or credit score {Problem getting free annual report, Problem 

getting report or credit score) 

Credit monitoring 

Billing d1Sj)Ul!3; ""''"m'"u. 

changes, Problem with fraud 

Improper use of my credit report (Report improperly shared by credit reporting company, 

79% 

7% 

Received marketing offers after opting out, Report provided to employer without written 3% 

authorization) 

total credit reporting complaints 

This table illustrates that the most common type of credit reporting complaint is about incorrect 

information appearing on the consumer's credit report, such as information that does not 

belong to the consumer, incorrect account status, and incorrect personal information. Of the 

approximately 37,400 such complaints submitted by consumers, approximately 24,500 (66%) 

were about the three nationwide credit reporting companies. 

Other common complaints are about issues with credit reporting companies' investigations of 

information disputed by consumers and difficulties in obtaining a credit report or credit score. 

Consumers report that credit reporting companies sometimes return findings on their disputes 

within only a few days, and consumers question the depth and validity of such quick 

investigations. Additionally, consumers report frustration when they have submitted 

documentation that they believe proves that the information provided by the data furnisher was 

inaccurate, but no change is made to their credit report. 

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Consumers' bank account and service complaints 

Figure 6 and Table 4 show types of bank account and service complaints, such as complaints 

about checking and savings accounts, reported by consumers for the approximately 20,300 

bank account and service complaints received by the CFPB. 

FIGURE 6: TYPES OF BANK ACCOUNT AND SERVICE COMPLAINTS REPORTED BY CONSUMERS 

12% 

Sendmg or 

rsce1vmg 

payments 

8% 

Usmg a deb!t or A TM card 

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TABLE 4: TYPES OF BANK ACCOUNT AND SERVICE COMPLAINTS REPORTED BY CONSUMERS 

,~.;;;:~~~·,~! !Ti ;~~~;;§~~·~lf!·~i~, ~~l~i;~..;i;'1:~~. ~~r illf?HE~';~~l:f.;§;1~~;:f::rr:!; i)~~;:;;~r~fil:!:~,~r~~i r~~;~'i;i'l~~t!:f~t!, :;;~1~1;;ii~!, ;;;~i~-'.;i;:¥~t:if.~~f;ffi., 

·~~r.~t~~,. ;;:.h;r.r::i,!:r~~·'· 1 !T¥~i·r~f:~-i'!, =~~~~'i;~~f:!'fi•~~n:~~~, !:~i·gr~t =~tF;~~Eg?.~f:i'?l~!.;! 

As the table illustrates, the most common type of bank account and service complaint relates to 

opening, closing, or managing the account. These complaints address issues such as account 

maintenance fees, legal processing fees for judgments and levies, changes in account terms, 

confusing marketing, early withdrawal penalties for certificates of deposit, and involuntary 

account closures. Other common complaints relate to deposit and withdrawal issues, such as 

transaction holds, the company's right to offset deposit accounts, and unauthorized debit card 

charges. In this area, many consumers are frustrated by companies' handling of error disputes 

and requests to stop payment on preauthorized electronic debits. Another common type of 

complaint relates to problems caused by a consumer's funds being low, including overdraft fees, 

bounced checks, charged-off accounts, and negative reporting to credit reporting agencies. In 

this area, many consumers are frustrated by the way some companies appear to manipulate the 

order in which deposits and withdrawals are posted to eonsumers' aecounts to maximize 

overdraft fees. 

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Consumers' credit card complaints 

Table 5 shows the most common types of credit card complaints that the CFPB has received as 

reported by consumers. About 75% of the approximately 18,900 credit card complaints fell into 

these 10 categories. 

TABLE 5: MOST COMMON CREDIT CARD COMPLAINTS REPORTED BY CONSUMERS 

As the table illustrates, billing disputes are the most common type of credit card complaint. 

Consumers continue to be confused and frustrated by the process and by their limited ability to 

challenge inaccuracies on their monthly credit card billing statements. For example, some 

consumers realize only after their claim has been denied that they needed to notify their credit 

card companies within 6o days of any billing errors. In other cases, consumers are not aware 

that companies typically do not stop a merchant charge once the cardholder has authorized it, or 

do not override a merchant's "no-return policy." Other common types of credit card complaints 

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relate to identity theft, fraud, or embezzlement; closing or cancelling an account; and annual 

percentage rates or interest rates. 

Consumers' consumer loan complaints 

Figure 7 and Table 6 show the types of consumer loan complaints, such as complaints about 

installment loans, vehicle loans and leases, personal lines of credit, and pawn and title loans 

reported by consumers for the approximately 10,8oo consumer loan complaints received by the 

CFPB. 22 

FIGURE 7: TYPES OF CONSUMER LOAN COMPLAINTS REPORTED BY CONSUMERS 

4% 

11% Other 

22 The Bureau began handling complaints about pawn and title loans as part of the consumer loan complaint categol}r 

on July 19, 2014. 

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TABLE 6 TYPES OF CONSUMER LOAN COMPLAINTS REPORTED BY CONSUMERS 

Managing the loan, lease, or line of credit ({3illing, late fees, damage or loss, insurance 

(GAP, credit, etc.), credit reporting, privacy) 

Taking out the .loan or lease I Account terms and changes (Term changes (mid-deal 

changes, changes after closing, rates, fees, etc.), required add-on products, trade-in 

payoff, fraud) 

Other (Charged fees or interest I did not expect, identity theft/fraud/embezzlement, 

billing disputes, credit reporting, other) 

41% 

20% 

4% 

The table illustrates that the most common type of consumer loan complaint pertains to 

managing the loan, lease, or line of credit. Other common types of complaints address problems 

consumers have when they are unable to pay (including issues related to debt collection, 

bankruptcy, and default) and problems when taking out the loan or lease, such as term changes. 

38 SEMI-ANNUAL REPORT OF THE CFPB, SPRING 2015 
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Consumers' student loan complaints 

Figure 8 and Table 7 show the types of student loan complaints reported by consumers for the 

approximately 7,100 student loan complaints received by the CFPB. 

FIGURE 8: TYPES OF STUDENT LOAN COMPLAINTS REPORTED BY CONSUMERS 

4% 

Gett:ngaloan 

TABLE 7 TYPES OF STUDENT LOAN COMPLAINTS REPORTED BY CONSUMERS 

Dealing with my lender or servicer (Making payments, getting information about my 

loan, managing my account) 

Can't repay my loan (Deferment, forbearance, default, bankruptcy, payment plan; 

refinancing) · 

Getting a loan (Confusing terms, rates, denial, confusing advertising or 

marketing, sales tactics or pressure, financial aid services, recruiting) 

Total student loan complaints 

55% 

40% 

4% 

100% 

The most common type of student loan complaint addresses problems consumers confront 

when they are dealing with lenders or servicers. Consumers also report problems when they are 

unable to pay, such as issues related to default, student debt collection, and bankruptcy. 

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Consumers report that they continue to struggle with the limited affordable payment options 

permitted in their loan agreements. Specifically, some consumers say they are unable to 

refinance or restructure the repayment terms of their loan, either to lower monthly payments 

during periods of financial hardship, or to improve existing terms based upon the consumer's 

improved credit profile and credit-worthiness. Some consumers also express confusion about 

the difference between their private loans and public loans, specifically when it comes to 

forbearance and deferment options. 

Consumers' payday loan complaints 

Figures 9-10 and Table 8 show the types of payday loan complaints reported by consumers for 

the approximately s,Soo payday loan complaints the CFPB has received. 

FIGURE 9: TYPES OF PAYDAY LOAN COMPLAINTS REPORTED BY CONSUMERS 

40 SEMI·ANNUAL REPORT OF THE CFPB, SPRING 2015 

B. ;:~~d fees or interest I did not 

8 Cannot contact lender 

Received a loan I did not apply for 

Applied for a loan, but didn't receive 

money 

Payment to account not cred!led 

Can't stop lender from charging my 

bank account 

Lender charged my bank account on 

wrung day or for wrong amount 
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FIGURE 10: TYPES OF PAYDAY LOANS CONSUMERS COMPLAIN ABOUT 

TABLE 8 TYPES OF PAYDAY LOAN COMPLAINTS REPORTED BY CONSUMERS, BY TYPE OF LOAN 

Charged fees or interest I did not expect 36% 35% 19% 31% 

Cannot contact lender 27% 

Received a loan I did not apply for 6% 10% 26% 14% 

Payment to account not credited 10% 8% 6% 8% 

Can't·slop lender from charQing 

account 

Lender charged my bank account on wrong day 5% 3% 1% 3% or for wrong amount 

Total 100% 100% '100%' ·· 1oo% 

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Of the s,Soo payday loan complaints submitted by consumers, approximately 63% were about 

problems consumers experienced after obtaining a payday loan online. Approximately 13% 

reported problems when obtaining a payday loan in person or at a store. For the remaining 

approximately 24% of complaints, the consumer did not indicate how the loan was obtained. 

The most common type of payday loan or deposit advance (i.e., bank payday advance loan) 

complaint is about being charged unexpected fees or interest. Consumers also complain about 

problems with contacting the lender. Other common types of consumer complaints involve 

receiving loans for which they did not apply and issues with applying for the loan, but not 

receiving the money. 

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Consumers' money transfer complaints 

Figure 11 and Table 9 show the types of money transfer complaints reported by consumers for 

the approximately 1,900 money transfer complaints the CFPB has received. 2 3 

FIGURE 11: TYPES OF MONEY TRANSFER COMPLAINTS REPORTED BY CONSUMERS 

6% 

Wronge~mountcharged 

4% 

Incorrect or missing 

dlsclosuresor1nlo 

2:.\ The Bureau began handling complaints about virtual currency as part of the money tra.nsfer complaint category on 

August 11, 2014. 

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TABLE 9: TYPES OF MONEY TRANSFER COMPLAINTS REPORTED BY CONSUMERS 

Fraud or scam 

Other transaction issLJes (Unauthorized lrans!)ction, cancellation, refund,. 

etc.) 

Money was not available when promised 

Wrong amount charged or received (Transfer amounts, fees, exchange 

rates, taxes, etc.) 

lncorrectlmi~sing disclostires or info 

Total money transfer complaints 

40% 

23% 

18% 

6% 

100% 

This table illustrates that the most common type of money transfer complaint was about fraud 

or scams. In these cases, the consumer is prompted to send funds as a result of a scam, and 

someone other than the consumer's intended recipient ultimately receives the funds. For 

example, consumers often complain that they were prompted to transfer funds in response to a 

request for help from a family member or friend, for the purchase of goods or services, the rental 

of an apartment, a loan, a job opportunity, or to pay taxes on lottery earnings. In response to 

such complaints, companies engaged in money transfers suggest that they have no liability when 

someone other than the intended recipient receives the funds, as long as the company complied 

with its policies and procedures and the minimum identification requirements were satisfied by 

the recipient. Another common type of complaint involves issues with other transactions, such 

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as the refusal to cancel transactions or honor refunds when the consumer believes the company 

should provide them. 

Consumers' prepaid card complaints 

Figure 12 and Table 10 show the types of prepaid card complaints reported by consumers for the 

approximately 1,400 prepaid card complaints the CFPB has received. 2 4 

FIGURE 12: TYPES OF PREPAID CARD COMPLAINTS REPORTED BY CONSUMERS 

/l .. dvertiS'Pg 

4% 

3% 1% 

Overdraft. savings 

or rewards features 

24 CFPB began accepting complaints about prepaid cards on July 19, 2014. 

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TABLE 10 TYPES OF PREPAID CARD COMPLAINTS REPORTED BY CONSUMERS 

Unauthorized transactions or other transadiion 

issues 

Fraud or scam 

Adding money 

Overdraft, savings or rewards features 

29% 

27% 

4% 

.1% 

The most common types of prepaid card complaints involved unauthorized transactions or other 

transaction issues and managing, opening, or closing a prepaid card account. Consumers also 

commonly complain about frauds and scams in relation to prepaid cards. Some consumers are 

frustrated that they are charged an inquiry fee when they call to obtain the balance on the card. 

Many consumers appear to be confused about the application of various fees related to the 

maintenance of the account, including fees that are assessed when funds are deposited on the 

card or withdrawn from the card. Consumers also complained that they did not know that 

prepaid cards expire and that they have experienced differences in error resolution procedures 

among issuers. The remaining complaints involved issues with adding money to a reloadable 

prepaid card, dealing with misleading advertising or marketing, or not being properly 

compensated on rewards. 

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Other financial services complaints 

Figure 13 and Table 11 show the types of other financial services complaints reported by 

consumers for the approximately 1,000 other financial services complaints the CFPB has 

received. 25 

FIGURE 13: TYPES OF OTHER FINANCIAL SERVICES COMPLAINTS REPORTED BY CONSUMERS 

Fraud .or scam 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 47 ""' 

Customer service or customer relations 1111111111111111111111111111111111111111111111111111111111111111 22% 

Advertising and marketing - ?% 

Excessive fees- 7% 

Unexpected or other feesDisclosures...: 5% 

Lost or stolen check 

Lost or stolen money order m 2% 

Incorrect exchange rate 11% 

Other Iii"% 

25 CFPB began accepting complaints about check cashing, credit repair, debt settlement, foreign currency exchange, 

money orders, refund anticipation checks, and traYelers' and cashiers' checks on July 19, 2014. 

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TABLE 11 TYPES OF OTHER FINANCIAL SERVICES COMPLAINTS REPORTED BY CONSUMERS 

Fraud or scam 47% 

or customer rE!)Iations 

Advertising and marketing 7% 

Unexpected or other fees 7% 

Lost or stolen check 2% 

Incorrect exchange rate 1% 

Other ;08% 

Total other financial services complaints 100% 

Of the 1,000 other financial services complaints submitted by consumers, approximately 47% 

dealt with fraud or scams. Approximately 22% of complaints were about customer service 

issues, while approximately 7% of complaints dealt with excessive fees or unexpected fees and 

advertising and marketing. The remaining complaints for other financial services involved 

issues with disclosures and lost or stolen checks or money orders, and incorrect exchange rates. 

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How companies respond to consumer complaints 

Approximately 157,400 (or 63%) of all complaints received between April1, 2014 and March 31, 

2015 were sent by Consumer Response to companies for review and response. 26 Table 12 shows 

how companies responded to these complaints during this time period. 

Company responses include descriptions of steps taken or that will be taken, communications 

received from the consumer, any follow-up actions or planned follow-up actions, and a 

categorization of the response. Response category options include "Closed with monetary relief," 

"Closed with non-monetary relief," "Closed with explanation," "Closed," "In progress," and other 

administrative options. "Monetary relief' is defined as objective, measurable, and verifiable 

monetary relief to the consumer as a direct result of the steps taken or that will be taken in 

response to the complaint. "Closed with non-monetary relief' indicates that the steps taken by 

the company in response to the complaint did not result in monetary relief to the consumer that 

is objective, measurable, and verifiable, but may have addressed some or all of the consumer's 

complaint involving non-monetary requests. "Non-monetary relief' is defined as other objective 

and verifiable reliefto the consumer as a direct result of the steps taken or that will be taken in 

response to the complaint. "Closed with explanation" indicates that the steps taken by the 

company in response to the complaint included an explanation that was tailored to the 

individual consumer's complaint. For example, this category would be used if the explanation 

substantively meets the consumer's desired resolution or explains why no further action will be 

taken. "Closed" indicates that the company closed the complaint without relief- monetary or 

non-monetary- or explanation. Consumers are given the option to review and dispute all 

company closure responses. 

Companies have responded to approximately 95% of complaints 27 sent to them and report 

having closed 92% of the complaints sent to them. Table 12 shows how companies have 

responded to consumer complaints, and Table 13 shows untimely company responses as a 

percentage of complaints sent to companies for response. 

26 The remaining complaints have been referred to other regulatory agencies (25%), found to be incomplete (to%), or 

are pending with the consumer or the CFPB (1% and 1%, respectively). 

27 Companies haYe responded to approximately 150,000 of the 157,400 sent to them for response. 

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TABLE 12: HOW COMPANIES HAVE RESPONDED TO CONSUMER COMPLAINTS2 s 

Closed Closed Closed Company 

with with non- Closed (without Administ- Company did not 

with rative provide a monetary monetary explanation relief or reviewing timely relief relief explanation) response 

re5J>Ot1Se 

Debt 1% 16% 66% 4% 1% 2% 9% collection 

Mortgage 2% 4% 82% 2% 4% 3% 

Credit 1% 29% 65% <1% 1% 3% 

account 20% 5% 68% 2% 1% 2% 1% or service 

Credit 21% 10% 62% <1% 2% 1% card 

Consumer 7% 7% 77% 1% 1% 2% 4% loan 

Student 5% 7% 80% <1% 1% 2% 4% loans 

Money 12% 3% 78% 1% 2% 3% 2% transfers 

Payday 4% 4% 68% 3% 7% 2% 1;1% loan 

Other 

financial 9% 4% 73% 1% 3% 4% 7% 

services 

Prepaid 27% 6% 59% 1% 1% 3% 

All 6% 13% 71% 2% 2% 2% 

28 "\Vhile companies' responses under previous ~1.tegorizations were maintained, for operational and reporting 

purposes, responses categorized as "full resolution provided," "partial resolution provided," and "closed ,\ith relief' 

are considered a subset of"closed with monetary relief," and responses categorized as "no resolution provided" and 

"dosed \dthout relief' are categorized as ''dosed with explanation." 

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TABLE 13 UNTIMELY COMPANY RESPONSES AS A PERCENTAGE OF COMPLAINTS SENT TO COMPANY 

Debt 1% 9% 58% 6% 2% 3% 21% collection 

Mortgage 1% 1% 71% 4% 11% 2% 8% 

Credit 1% 14% 70% <1% 6% 1% 7% reporting 

Bank 

account 9% 2% 67% 4% 11% 1% 6% or service 

Credit 23% 6% 64% 1% 1% 2% 3% card 

Consumer 7% 4% 67% 2% 4% 2% 13% I oat\ 

Student 1% 2% 85% 2% 2% 3% 5% loans 

Money 26% <1% 61% <1% 9% <1% 4% transfers 

Payday 3% 3% 43% 6% 11% 3% 33% loan 

Other 

financial 13% <1% 75% <1% 0% 3% 9% services 

Prepaid 17% 0% 83% 0% <1% <1% 8% 

All 43% 7% 62% 5% 5% 3% 16% 

After Consumer Response forwards complaints to companies, the company has 15 days to 

respond and 6o days to provide a final response, where applicable. Company responses 

provided outside of these windows are deemed untimely. As shown in Table 12, consumers did 

not receive a timely response in 4% of cases. Where companies eventually responded to the 

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consumer, most often they provided a response of Closed with explanation. However, Table 13 

shows that 16% of complaints with untimely company responses never received a response. 

Payday loan complaints were the most likely to receive no response, with 33% of complaints 

with an untimely company response never receiving a response. 

Companies sometimes report an amount of monetary relief, where applicable. Through March 

31, 2015, companies provided relief amounts in response to more than 8,8oo complaints. For 

companies which have reported monetary relief, the median amount of relief reported was $144; 

however, the amount varies by product. 

TABLE 14: MONETARY RELIEF REPORTED BY COMPANIES 

Debt collection 540 $357 

lylortgage 960 $500 

Credit reporting 200 $23 

Bani< account ()r service 2,970 $105 

Credit card 3,040 $118 

Consumer loan 420 

Student loans 250 $200 

Payday loan 70 

Money transfers 150 $94 

i60 $200 

Other financial services 20 $699 

Overall 8,800 $144 

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Companies also have the option to provide non-monetary relief in response to complaints. 

Consumers have received a range of non-monetary relief in response to their complaints, such 

as: 

providing mortgage foreclosure alternatives that did not include direct monetary 

payments to the consumer, but that help them to keep their home; 

stopping harassment from debt collectors; 

cleaning up consumers' credit reports by correcting submissions to credit bureaus; 

restoring or removing a credit line; 

correcting account information, including in credit reports; and 

addressing formerly unmet customer service issues. 

Consumers' feedback about companies' responses 

Once the company responds, the CFPB provides the company's response to the consumer for 

review. Where the company responds "Closed with monetary relief," "Closed with non-monetary 

relief," "Closed with explanation," or "Closed," consumers are given the option to provide 

feedback on the company's response. Figure 14 shows how consumers responded to the 

approximately 143,900 complaints where they were given the option to provide feedback. 

Approximately 65% of such consumers did not dispute the responses provided, while 

approximately 20% of consumers did dispute the response prov~ded. The rest were pending with 

consumers at the end of this period. 

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FIGURE 14: CONSUMER FEEDBACK ABOUT COMPANY RESPONSES 

Debt collection llllllllllllllllllllilllllllllllllllllllllllllllllll~~~(\~~i~l~~~~; 

Mortgage IIIIIIIIIIIIIIIIIIIIIIIIIIJIIII~~~:~~~~Jl0; 

Credit reporting llll\llllll\lliilll\ll\lll\llllll\ll\llllll~;~~iB\~;~f~l;:~:~~,~; 

Bank account or service 1111111\ill\llllllllllllllllllllllif~~~;,~\]lf.: 

Credit card 111111111111111111111111111111!\l~i~~~~~ici 

Consumer loan lllllllllllllllllllllllllllllllll~~~~~l~~~~gihl; 

Payday !oan 11111111111111111111111111111~\§~~iJJ~~~!~ 

Other financial serv!ce llllllllllilllllllllllllllll~~~l~1~~~~~~l~J1 

Money transfers llllllllllllllllllllllllllll;t]~¥;:\i:~~~~~~ 

Student loans lllllllllllilllllllllllllllllls~~~\1~~~\i~~) 

Allllllllllllllllllllllllllllllllllllllllllllllllllllllll~~~~~~~~qt 

Consumer did not dispute company·s response 

II Consumer disputed company's response 

Pendmg consumer rev1ew of company's response 

Consumer response investigation and analysis 

After requesting that companies respond to complaints sent to them for response and giving 

consumers the opportunity to review and provide feedback on company responses, Consumer 

Response prioritizes complaints for investigation based on a review of the complaint, the 

company's response, and the consumer's feedback. Consumer Response seeks to determine why 

a company failed to provide a timely response (if applicable) and whether the consumer's 

feedback about the company's response (if applicable) justifies additional review of the 

company's minimum required actions under the consumer financial protection laws within the 

CFPB's authority. In the course of an investigation, Consumer Response may ask companies and 

consumers for additional information. In some cases, Consumer Response has referred 

complaints to colleagues in the CFPB's Division of Supervision, Enforcement, and Fair Lending 

for further consideration. 

Listening to consumers and reviewing and analyzing their complaints is an integral part of the 

CFPB's work in understanding issues in the consumer financial marketplace, and in helping the 

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market work better for consumers. The information shared by consumers and companies 

throughout the complaint process informs the Bureau about business practices that may pose 

risks to consumers and helps the Bureau supervise companies, enforce federal consumer 

financial laws, and write better rules and regulations. 

Shopping challenges 

The challenges that consumers face in the marketplace highlight the importance of a tenet that 

is central to the CFPB's mission- promoting markets in which consumers can understand and 

anticipate the risks, costs, and other terms of consumer financial products and services. When 

the costs, risks, and other key features of financial products are transparent and understandable, 

consumers are better able to compare products and choose the best one for them. 

Over the past six months, the Bureau has analyzed different areas that may pose challenges to 

consumers when shopping for or obtaining consumer financial products or services. The 

following describes our findings from a Bureau white paper focusing on consumers' mortgage 

shopping experience. 

Mortgage shopping 

The CFPB studied the stages of getting a mortgage, particularly the extent to which consumers 

shopped for mortgages, their knowledge of the mortgage process when they began, and the 

sources of information they relied on. 

In that study, we restricted our analysis to respondents who took out mortgages to purchase a 

home, as opposed to those who were refinancing an existing mortgage who are likely to have 

different shopping goals and challenges. We paid particular attention to first-time home buyers 

and other mortgage borrowers who may have been less knowledgeable about the mortgage 

process before taking out their mortgage. 

Key Findings 

Almost half of consumers who take out a mortgage for home purchase fail to shop prior 

to application; that is, they seriously consider only a single lender or mortgage broker 

before choosing where to apply. The tendency to shop is somewhat higher among firsttime home buyers. 

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The primary source of information relied on by mortgage borrowers is their lender or 

broker, followed by a real estate agent, Fewer consumers obtain information from 

outside sources, such as websites, financial and housing counselors, or personal 

acquaintances (such as friends, relatives, or coworkers). 

Most consumers report being "very familiar" with the types of mortgages, available 

interest rates, and the process of taking out a mortgage. Those who are unfamiliar with 

the mortgage process are less likely to shop and more likely to rely on real estate agents 

or personal acquaintances. 

A sizeable share of borrowers report that factors not directly related to mortgage cost, 

including the lender or broker's reputation and geographic proximity, are very important 

in their decision making. Borrowers who express such preferences are much less likely to 

shop. 

How much do consumers shop? 

The interest rates available for mortgages often vary across lenders, even for the same consumer 

and for loans with otherwise identical product features. As a result, consumers may save 

substantial sums if they consider the product offerings of multiple lenders or brokers. 

In considering the available options, consumers can shop for a mortgage either before applying 

for a loan or afterwards (or both). We discuss what the responses indicate about the amount of 

comparison shopping consumers engaged in before and after their first application. 

For pre-application mortgage shopping, almost half of consumers who took out a home 

purchase mortgage reported that they seriously considered only a single lender or mortgage 

broker before applying for a loan. First-time homeowners were only slightly more likely to shop, 

despite their relative inexperience. 

For most borrowers, the mortgage shopping process stops after their first application. About 

77% of borrowers applied to only one lender. Almost one in five of the borrowers who applied to 

multiple lenders (comprising about five percent of all home purchase borrowers) reported doing 

so because they had been turned down on an earlier application. Additionally, about 35% of 

borrowers who applied to multiple lenders report being motivated by concerns over whether 

they would qualify for the loan, suggesting that they may have applied to multiple lenders 

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simultaneously. Most borrowers, however, (about So%) applied to multiple lenders out of a 

desire to find better loan terms. To some extent, the responses to these questions may 

understate the amount of shopping activity mortgage borrowers engage in. For example, 

borrowers may have been able to compare the terms of multiple lenders or brokers without 

"seriously considering" them as options. Nevertheless, we believe that these results indicate that 

a significant minority of consumers may not be shopping enough to ensure they are receiving 

the mortgage that best fits their circumstances. 

How familiar are consumers with the mortgage process? 

One factor that may affect whether consumers shop for loans is the amount of knowledge they 

have or believe they have about mortgage loan features and about the process of taking out a 

mortgage. The relationship between knowledge and shopping behavior is not necessarily clear. 

On the one hand, less knowledgeable consumers may shop more in an effort to better educate 

themselves about the range of options available and to ensure that the offers they receive are 

competitive. On the other hand, less knowledgeable consumers may have more difficulty 

acquiring or understanding the information available (for example, they may not know the right 

questions to ask or may find it difficult to evaluate tradeoffs between a lower interest rate for 

higher upfront fees or costs) and therefore engage in less effort to collect it. 

The National Survey of Mortgage Borrowers (NSMB) asked recent mortgage borrowers to recall 

the beginning of their mortgage experience and evaluate how familiar they were at the time with 

various aspects of the mortgage process, including the types of mortgages available, the 

prevailing interest rates, their own credit history, the money needed at closing, and the income 

and down payment requirements. In each case, consumers were asked to report whether they 

had been very, somewhat, or not at all familiar with that aspect of the process. 

Most consumers (51%) said they were "very familiar" with the mortgage process from the 

beginning, while only 14% reported being "not at all familiar" with the process. While the level of 

familiarity differed somewhat across the parts of the process that borrowers were asked about, 

similar patterns were observed with about half of consumers or more being very familiar with 

that part of the mortgage process and 10% or fewer being completely unfamiliar. 

Consumers reported being most familiar with their own credit score and credit history, which 

may not be surprising given that this is information about themselves and not market offerings. 

They were least familiar with the money needed for closing, with only 49% reporting being very 

familiar and 14% reporting being completely unfamiliar. 

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As expected, first-time homebuyers report being less familiar with the mortgage process. One in 

four first-time homebuyers report being completely unfamiliar with the mortgage process from 

the start and only about a third of these consumers say they were very familiar with the process. 

The lack of familiarity of first-time home buyers (relative to experienced homebuyers) was 

observed across the different parts of the mortgage process. These are all very important aspects 

of the mortgage process, and a lack of familiarity could hinder a first-time homeowner's ability 

to make optimal choices 

What information sources do consumers use? 

Respondents were asked to report whether they used each source "a lot," "a little," or "not at all." 

The source of information that was most commonly used by mortgage borrowers is the 

borrower's lender or mortgage broker: 70% of borrowers for home purchase report using that 

source "a lot." Real estate agents, who help consumers find a house, are also frequently relied 

upon for information about mortgages, though only 33% of consumers say they used this source 

a lot. 

Less frequently used were personal acquaintances (i.e., friends, relatives, or coworkers), 

bankers, or financial planners. First-time home buyers are more likely to rely on personal 

acquaintances and slightly more likely to rely on websites. In other respects, the use of 

information sources by first-time homebuyers was similar to that of all mortgage borrowers. 

Our earlier results suggest that consumers who are less familiar with the mortgage process are 

less likely to shop. For these consumers, gathering information about the mortgage process is 

likely to be particularly important and understanding the sources of information they use may 

be useful in helping these consumers become more knowledgeable shoppers. 

The results suggest that borrowers used the different sources of information with similar 

intensities regardless of whether they were informed about the mortgage process, with two 

notable exceptions. Uninformed consumers tended to rely on personal acquaintances and real 

estate agents much more than consumers who were very familiar with the process. For instance, 

while only 11% of informed consumers relied on personal acquaintances, this share rises to 36% 

among uninformed ones. A potential explanation is that friends and real estate agents may be 

better able to convey information in a way that is more accessible to these borrowers. 

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What do consumers look for in a lender or broker? 

For some mortgage borrowers, characteristics besides interest rates or other mortgage terms 

may play an important role in their choice of lender or broker. Three characteristics were very 

important for a sizeable minority of consumers. Among these is having an established banking 

relationship with the lender, which was considered to be very important by 42% of mortgage 

borrowers. Since most potential borrowers likely maintain few banking relationships, such a 

preference could inhibit the number of potential alternative lenders that a borrower considers. A 

local office nearby is very important for 40% of borrowers. Reputation of the lender is very 

important for 41% of borrowers. 

To better understand how such preferences may affect the extent of shopping, we calculate 

shopping intensity (again measured as the percentage of consumers who seriously considered 

multiple lenders before applying and whom we refer to as "shoppers") among consumers who 

indicated that each characteristic was "very important." 

The results suggest that having a preference for one or more of these characteristics reduces the 

willingness to shop. Those consumers who indicated that none of the characteristics was very 

important to them were the most likely to shop (70%). In contrast, consumers were the least 

likely to shop ifthey considered it very important for the lender or broker to be a personal friend 

or relative. Consumers were also relatively less likely to shop if they felt it was very important 

that the lender be a community bank or credit union, a lender or broker used previously to get a 

mortgage, or someone with whom they have an established banking relationship. There are 

several potential explanations for why such preferences may inhibit shopping. Consumers may 

believe that such lenders provide the best deal for the consumers, feel loyalty to a bank or lender 

they have used in the past, or value the convenience of a local institution. Regardless of the 

reason, the effect of such non-monetary preferences is significant: Consumers who did not have 

a strong attachment to any of the listed characteristics were 40% more likely to shop than those 

who did. 

Conclusion 

Buying a home is one of the most important financial decisions a consumer can make and 

selecting the mortgage that best meets the consumer's needs is an important part of that 

decision. As the recent crisis illustrated, mortgage features and pricing can have enormous 

impact on consumers' homeownership experiences. While many risky features are no longer 

permitted or available in the marketplace, mortgages still have different terms and features and 

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consumers must be careful to select one that fits their needs and budget. For borrowers who 

know exactly what features of a mortgage they need, it may be possible to achieve substantial 

savings by shopping for a lower interest rate. 

Our preliminary analysis ofresponses to the NSMB reveals that consumers do not shop 

extensively for mortgages when purchasing a home. Instead, almost half of consumers who 

borrow to finance a home purchase only seriously consider a single lender or broker before 

choosing where to apply. While few consumers apply to more than one lender or broker, those 

who do are primarily motivated by a desire to get better loan terms suggesting that, at least for 

these consumers, shopping occurs throughout the mortgage process. The primary source of 

information used by mortgage borrowers is their lender or broker, followed by their real estate 

agent. A smaller fraction of consumers obtains information from other sources that do not have 

a direct financial stake in the home purchase transaction and that may provide more unbiased 

information, such as websites, financial or housing counselors, or friends and relatives. While 

most mortgage borrowers report that they were very familiar with the mortgage process from 

the start, consumers with less familiarity appear to rely more heavily on real estate agents and 

personal acquaintances. 

While these results provide interesting information about the shopping behavior of mortgage 

borrowers, they are preliminary and more work remains to be done. In particular, the current 

analysis has not attempted to evaluate the extent to which more shopping improves mortgage 

outcomes, such as better loan terms (e.g., lower interest rates, fewer points and fees) and fewer 

delinquencies and foreclosures. 

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Delivering for American 

consumers and leveling 

the playing field 

The CFPB exercises its authorities under Federal consumer financial protection laws to 

administer, implement, and promote compliance with those laws. To this end, the Bureau has 

worked to expand the resources it makes available to consumers to build the foundation 

necessary for making consumer financial markets work better. 

Resources for consumers 

The CFPB has launched a variety of offices, detailed in each subsection below, to provide 

assistance and information to consumers. The Bureau strives to provide individualized help to 

consumers based on their specific issues with financial products and services, and it works to 

improve financial literacy and capability- among the public as a whole, and among consumers 

who have experienced particular challenges in the financial markets. 

Consumer response 

As detailed in the previous section, Consumer Response receives complaints and inquiries 

directly from consumers. The CFPB accepts complaints through its website and by telephone, 

mail, email, fax, and referral. 

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Consumers submit complaints on the CFPB website using complaint forms tailored to specific 

products, and can also log on to the secure consumer portal to check the status of a complaint 

and review a company's response. While on the website, consumers can chat with a live agent to 

receive help completing a complaint form. Consumers can also call the Bureau's toll-free 

number to ask questions, submit a complaint, check the status of a complaint, and more. 29 The 

CFPB's U.S.-based contact centers handle calls with little-to-no wait times, can provide services 

to consumers in more than 180 languages, and serve hearing- and speech-impaired consumers 

via a toll-free telephone number. Cutting-edge technology, including the secure company and 

consumer portals, makes the process efficient and user-friendly for consumers and companies. 

The CFPB also provides secure channels for companies to communicate directly with dedicated 

staff about technical issues. 

As Consumer Response processes complaints and responds to inquiries, it continues to seek new 

ways to improve existing processes to make them as efficient, effective, and easy-to-use as 

possible. Based on feedback from consumers and companies, as well as from its own 

observations, Consumer Response identifies new opportunities to improve its processes and 

implement changes with each product launch. By applying the lessons learned through previous 

complaint function rollouts, it has continued to improve its intake process, enhanced its 

communication with companies, and ensured the system's ease-of-use and effectiveness for 

consumers. The CFPB has also invested significant effort into researching and understanding 

how to make the complaint form more intuitive to more accurately capture consumers' issues. 

Consumer education and engagement 

The CFPB's Consumer Education and Engagement Division (CEE) develops and implements 

initiatives to educate and empower consumers to make better-informed financial decisions. 

Improving financial literacy and capability encompasses many short and longer-term efforts, 

and CEE seeks to engage consumers by providing information and educational tools designed to 

provide clear and meaningful assistance to consumers when they need it. 

29 To find more information about submitting a complaint, please see Appendix A. 

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Financial education 

The Bureau's Office of Financial Education (OFE) focuses its efforts on: (1) developing and 

implementing initiatives to improve consumers' financial literacy and capability, (2) engaging in 

ongoing outreach efforts to understand the financial education needs of various communities 

and share our tools and resources, and (3) managing a research and effective practices portfolio 

to enhance existing approaches to financial education. 

OFE has also continued its work on tax-time savings. For the fourth year, OFE, in consultation 

with the Internal Revenue Service, is working to encourage Earned Income Tax Credit (EITC) 

eligible recipients to save some portion of their EITC refunds as a seed to grow savings. The 

initiative uses the free tax preparation services offered to low- and moderate-income taxpayers 

through Volunteer Income Tax Assistance (VITA) sites to reach EITC-eligible individuals and 

families. In 2013, OFE and the Office of Financial Empowerment partnered with three VITA 

sites to pilot the CFPB's Ready? Set, Save! initiative. This initiative was aimed at encouraging 

EITC-eligible taxpayers to pre-commit to saving a portion of their refund at the time their taxes 

are being prepared and they first learn the amount of their EITC credit and expected tax refund. 

Listening sessions with VITA site coordinators and tax preparers from the 2013 pilot revealed 

common barriers they encountered to discussing savings with clients, which informed the 

development of 2014 program materials. In 2014 the Offices piloted an expanded Ready? Set, 

Save! campaign in 13 communities around the country, which included approximately 100 VITA 

sites. The Bureau provided training and materials to approximately 2,000 volunteer tax return 

preparers who served approximately 75,000 low- and moderate-income taxpayers. Each VITA 

site received worksheets, checklists, and posters to encourage taxpayers to consider savings. The 

training was designed to better equip volunteers to have a conversation about saving with 

taxpayers at the time they learn the amount of their refund and to inform them about various 

savings options available, including direct deposit into an account and/or purchasing a Series I 

savings bond. The Offices have continued their efforts in the 2015 tax season. 

In July 2013, OFE initiated a community financial education project to promote access to 

reliable, unbiased financial education and resources through public libraries across the country. 

Research indicates that libraries are highly trusted as a source of information, and serve 

consumers effectively in times of economic stress. These factors, along with library presence in 

local communities across the country, make them natural partners for financial education. 

The project was publicly announced in April 2014, launched in July 2014, and continues to the 

present. In order to develop the project, the Bureau identified a diverse group of nine partner 

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libraries that could help us learn about library capabilities and constraints, as well as the types 

of programs that would be attractive and realistic for libraries to implement. With input from 

government agencies, foundations, and trade associations that work with libraries, we identified 

initial partner libraries based on a combination offactors. These factors included the diversity of 

the areas and patrons they serve, the library's experience in working with others in their 

communities, and a consideration of the interest expressed in participating. We selected some 

libraries that have been innovative in providing financial education programs and some that had 

not yet offered financial education programs. We also chose libraries that would represent a 

range of geographic locations and types of communities. The initial partner libraries were the 

Brooklyn Public Library, New York; Columbus Metropolitan Library, Ohio; Florence County 

Library System, South Carolina; Fresno County Public Library, California; Georgetown County 

Library, South Carolina; Menominee Tribal College, Wisconsin; Orange County Library System, 

Florida; Pelham Public Library, Alabama; and San Francisco Public Library, California. 

The Bureau is also partnering with federal agencies and national organizations that have 

relationships with libraries and local communities, such as the American Library Association, 

the FINRA Investor Education Foundation, the U.S. Department of Agriculture National 

Institute of Food and Agriculture, the Institute of Museum and Library Services, the Federal 

Reserve Bank of Chicago, and the FDIC. We continue to work with libraries individually and on 

a state-by-state basis to help them develop local partnerships and build on existing programs, 

resources, and infrastructure to reach consumers in their neighborhoods. Resources for libraries 

are available at consurncrfinancc.gov/library-resourccs/. 

Since commencement of the project in July, libraries in more than 400 communities have asked 

to participate in the project in various ways, such as by receiving free financial education and 

program materials (we have distributed more than 400,000 publications to libraries across the 

country). Libraries participate in training opportunities, share best practices, work with 

financial education partners, and learn how they can enhance financial education in their 

communities. Participating libraries include public, college and university, law, and K-12 school 

libraries, as well as libraries on military bases and Native American tribal lands. These libraries 

have an overall network of 1,912 branches. 

Beyond these specific initiatives, OFE has continued to produce and develop a range of 

educational materials for consumer reference. 

OFE has engaged a variety of communities and stakeholders, and continues to reach out to key 

financial educators and community leaders. OFE communicates directly with consumers 

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through webinars, listening sessions, and larger events. OFE's outreach this year has focused on 

workplace financial education, youth financial education and policies, and identifYing 

approaches to resolve common financial challenges for consumers. OFE held a number of events 

around the country to assess needs and establish its priorities in these areas. Engaging 

consumers directly on consumer financial education topics always has been, and remains, a 

priority for OFE, and it continues to manage a Linkedin online discussion group for financial 

education practitioners, which shares information on trends, news, and practices in financial 

education. 

The Bureau is an active member of the Financial Literacy and Education Commission 

(Commission). The Director ofthe CFPB serves as the Vice-Chair of the Commission, which was 

created with the broad purpose of improving Americans' financial literacy. In recent years it has 

focused its efforts on improving the financial capability of young people. This focus and the 

programs of the Commission are intended to help young people start early in learning about 

money and building sound habits in order to enable them to be successful throughout their lives. 

This effort is intended to ensure that parents, teachers, community leaders, and others have the 

knowledge, resources, and tools available to guide young people to start thinking about financial 

success as early as possible. 

In addition, the Director serves as a member of the President's Advisory Council on Financial 

Capability for Young Americans. The Council's role is to advise the President and the Secretary 

of the Treasury on how to promote financial capability among young Americans and encourage 

building the financial capability of young Americans at an early stage in schools, families, 

communities and at the workplace. In addition, the Council works to build public-private 

partnerships between the Commission; other agencies; state, tribal, and local governments; and 

private entities. 

Employers, including the federal government, can play an important role in helping people 

avoid financial distress and in promoting long-term financial well-being. Employers can do this 

by implementing practices in the workplace that strengthen financial capability, including 

making it easier for employees to adopt positive saving and investing habits. The Bureau is 

developing information for employers about workplace financial education, which we will share 

with other federal agencies, as well as with state and local governments and private sector 

employers. This information includes a report on Financial Well ness at Work. The Bureau also 

launched a targeted workplace initiative focused on empowering public service organizations to 

help their employees tackle their student debt. As part of this initiative, the Bureau developed a 

toolkit, Employer's Guide to Assisting Employees with Student Loan Repayment. Public service 

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organizations can use the toolkit to help employees learn about their options and work toward 

qualifying for federal loan repayment benefits available for student debt, including Public 

Service Loan Forgiveness. The Bureau is asking public service employers to take a pledge to help 

their employees in this effort. You can find the pledge at consumerfinancc.gov/pledgc/. 

OFE also continues to advance its research and effective practices portfolios by working to 

develop metrics for success in financial education and to test solutions for consumers as they 

make regular, everyday financial decisions. 

In particular, a project to develop metrics for success in financial education for working age and 

older American consumers was launched in FY 2013. In the past year, the Bureau completed the 

first phase by developing a consumer-driven definition of financial well-being for working-age 

and older Americans and developing hypotheses regarding the drivers of financial well-being. 

A report detailing these findings was published in January 2015. This work included: 

Background research on how financial well-being is defined and measured in the 

literature to date, and what is already known about the relationship between financial 

knowledge, behavior, and well-being; 

In-depth qualitative interviews with consumers, as well as various types of financial 

professionals, such as financial educators, advisers, planners, coaches, tax preparers, and 

credit counselors; and 

Consultation with academic and practitioner experts. 

This project should allow the CFPB, other government agencies, and those involved in financial 

education to further identify approaches to improving consumer financial well-being. In 

addition, by creating and vetting measures for consumer financial knowledge, behavior, and 

well-being, the project will create a stronger quantitative basis for evaluating financial education 

policies and programs. More specifically, these metrics should significantly increase the ability 

of the CFPB, other government agencies, and other financial education providers to select 

approaches and criteria that make the biggest contributions to improving consumer outcomes. 

Consumer engagement 

The Consumer Engagement Office (CE) develops digital resources, information, and tools to 

help consumers make better-informed financial decisions. CE works to create an interactive, 

informative relationship between the CFPB and consumers, and collaborates with offices and 

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divisions across the Bureau on ways to effectively engage the public. CE approaches this mission 

with user-centered and data-driven approaches to public engagement. 

CE continues to improve and build out the Bureau's online presence with innovative, userfocused, approaches to social media and web development. Through research and user testing, 

CE has been able to tap into the needs and interests of consumers, thus creating opportunities to 

engage the public in the moments when the Bureau's tools and resources can be most useful to 

them. 

CE also creates scalable platforms that empower American consumers to navigate financial 

markets. In particular, Ask CFPB is an interactive online tool that gives consumers answers to 

over 1,000 questions about financial products and services, including credit cards, mortgages, 

student loans, bank accounts, credit reports, payday loans, and debt collection. 3° Since 

launching in March 2012, Ask CFPB has provided clear, authoritative financial information to 

more than 6.5 million unique visitors, and currently receives about 40o,ooo visits per month. 

CE has also prioritized making the Bureau's information more accessible in non-English 

languages, especially Spanish. According to Census data, 37 million people in the U.S. primarily 

speak Spanish at home. Recognizing that at least some portion of this population could be well 

served by Spanish language resources, the Bureau launched consumcrfinancc.gov/cs, a website 

that provides Spanish-speaking consumers a central point of access to the Bureau's resources, in 

Spanish. The website has four major components: a homepage that highlights CFPB services, 

Ask CFPB content in Spanish, a complaints page that highlights the phone number consumers 

can call to submit a complaint in Spanish, and an "About Us" page that features a Spanishlanguage video and introductory content about how the CFPB works to protect consumers. The 

website was created using responsive design, meaning it is optimized for use on both mobile 

devices and computers in order to better serve all consumers. 

The Bureau amended Regulation E in October 2013, providing new protections to consumers 

who collectively send billions of dollars in remittance transfers every year. The new rule 

included disclosure requirements, error resolution, and cancellation rights. In particular, the 

3° http:/ /\\·1\'\\'.consumerfinancC>.govj askcfpb. 

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rule specified that the Bureau's phone number and website be listed on the remittance receipts 

given to consumers. In the summer of 2014, using this receipt requirement as a starting point, 

CE partnered with teams from Regulations, Consumer Response, Technology & Innovation, and 

others to provide non-English speakers with a more seamless path to accessing the Bureau's 

complaint services from multiple channels. In July 2014, Consumer Response added seven 

language options to the call center's Interactive Voice Response (IVR) system, allowing callers to 

immediately hear options for and select English, Spanish, Chinese, Vietnamese, Korean, 

Tagalog, Russian, Arabic, and Haitian Creole. At the same time, T&I and CE launched an 

updated consumerfinance.gov homepage with language options on the top header, with each 

option corresponding to a language offered by the improved IVR system. This header gives 

consumers a pathway from the homepage of our website to detailed information about the 

Bureau in a preferred language, and an explanation of their rights when sending money abroad. 

In coordination with this effort, the Office of Regulations will adopt changes to the remittance 

rule that will allow providers to include links to these new sections of the website on the receipts 

they provide in accordance with the rule. Written into the rule will be the list of specific language 

website addresses, each of which will directly lead consumers to the explanation of their rights 

when sending money abroad in the aforementioned languages. 

Now, when consumers receive their disclosure, call our number, or visit us online, they know 

from the start that the Bureau's tools and services are available to them, regardless of their 

English language ability. 

Servicemember affairs 

The Dodd-Frank Act included the establishment of an Office of Servicemember Affairs (OSA) to 

"be responsible for developing and implementing initiatives for service members and their 

families," including initiatives intended to "educate and empower service members and their 

families to make better informed decisions regarding consumer financial products and services." 

OSA works to improve consumer financial protection for servicemembers, veterans, and their 

families in a number of ways. OSA partners with the Department of Defense and the 

Department of Veterans Affairs to provide opportunities for servicemembers, veterans, and their 

families to receive financial education relevant to their needs. OSA monitors complaints 

submitted by servicemembers, veterans, and their families. OSA coordinates consumer 

protection efforts among federal and state agencies related to consumer financial products and 

services offered to, or used by, military families. 

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Listening to Servicemembers 

OSA conducted 32 outreach events during this reporting period, delivering consumer financial 

information to more than 2,300 military and veteran consumers to help them make betterinformed financial decisions. OSA also delivered consumer financial education information to 

more than 205,000 consumers using digital and social media channels. 

More specifically, these figures include reaching out to servicemembers where they live and 

work. OSA visited 14 military installations/National Guard units and participated in 10 town 

halls and nine roundtable discussions with senior military leaders during this reporting period. 

At these outreach events, the OSA team listened to military personnel and their families discuss 

the financial challenges they face, observed financial education training, and provided 

educational materials. In addition to visiting military units at their bases, OSA provided 

information at eight Military Saves events around the country during the last week of February 

2015. 

Training for service providers 

The Office of Servicemember Affairs' education efforts have included providing subject-matter 

expertise to the military legal community. For example, in October 2014, OSA provided 

instruction at The U.S. Air Force Judge Advocate General's School located in Montgomery, 

Alabama. OSA also coordinates with the Senior Military Liaison in CFPB's Office of 

Enforcement, who provides training to legal assistance attorneys on various military 

installations. Our combined efforts help advance OSA's educational reach by leveraging the 

extensive consumer law mission ofthe Judge Advocate General's Corps (JAG), and ensuring 

that JAG legal assistance attorneys have up-to-date information on federal laws and policies 

affecting servicemembers in the consumer financial marketplace. 

OSA also hosts an ongoing series of virtual Military Financial Educator Forums on consumer 

financial topics for service providers who deliver financial, educational, or legal counseling to 

servicemembers and their families worldwide. The goal of these forums is to supply incremental 

and easily digestible information to those who provide advice on current consumer financial 

topics to servicemembers and their families. 

Content highlights from the video forums are relayed through social media channels to reach 

those serving the U.S. military across the globe. External social media partnerships with the 

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Department of Defense and the Military Family Learning Network are used to amplify the 

message delivered by the video trainings to servicemembers stationed overseas. 

In October 2014, OSA's newest video addressing credit reporting and the military joined the 

library of archived topics available as on-demand video trainings on the Bureau website 

at consumerfinance.govjserviccmembers/on-demand-fonnns-and-tools/. Over Soo service 

providers from military installations around the world have accessed these virtual training tools 

since their debut. To date, these trainings include: issues in debt collection, solutions for 

servicemembers with troubled mortgages, issues of importance to the veteran community, and 

credit reporting. 

Monitoring Complaints from the Military Community 

OSA released a snapshot of consumer complaints filed by servicemembers, veterans and their 

family members in November 2014. From July 2011 through December 2014, the CFPB received 

over 28,ooo complaints from servicemembers, veterans and their family members. Complaints 

have been received from aliso states and from all branches and ranks of the military. Over half 

of the overall complaint volume came in 2014 as outreach efforts helped spread the word about 

the resources available to the military community. Although complaints about mortgages topped 

the cumulative volume of complaints handles in our first few years, debt collection is now the #1 

complaint category for military consumers, making up 29% of all the complaints in 2014 from 

those who self-identify as military. 

Older Americans 

The CFPB's Office of Financial Protection for Older Americans (Office for Older Americans), 

develops initiatives designed to protect consumers, 62 and older, and help them to protect 

themselves, from unfair, deceptive, or abusive practices. The Office also provides older 

consumers with information and tools to assist them with current and future financial choices 

that may affect their long-term savings and later-life economic security. In addition, the Office 

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for Older Americans works with community organizations and other entities that educate and 

assist older consumers.3' 

Snapshot of debt collection complaints submitted by older consumers and 

Consumer Advisory 

On November 5, 2014, the Office for Older Americans issued a Consumer Advisory and 

Snapshot of debt collection complaints submitted by older consumersY The Snapshot provided 

an overview of the debt collection complaints the Bureau received from July 2013 to September 

2014. Older consumers, like their younger counterparts, submit more complaints about debt 

collection than about any other product or service. According to complaints, older consumers 

experience a range of problems -from the dearth of basic information about the debt being 

collected, and collection attempts that target the wrong consumer, to collectors' use of coercive, 

offensive or misleading communications. In addition, the Office for Older Americans issued an 

advisory with four things older Americans may do if they are having problems with debt 

collectors, namely, 1.) Get more information if you don't recognize the debt; 2.) Dispute the debt 

if it's not yours or if the amount is wrong; 3.) Stop harassing and/or offensive calls; and 4.) 

Know your rights, including that your federal benefits have many protections from garnishment 

in collection.33 

Snapshot of reverse mortgage complaints December 2011 - December 

2014 and Consumer Advisory 

On February 9, 2015, the Office for Older Americans issued a Consumer Advisory and Snapshot 

of reverse mortgage complaints December 2011- December 2014.34 The Snapshot provides an 

overview of the complaints submitted to the CFPB from consumers who have experienced 

3' 12 u.s.c § 5493(g). 

32 http: j jwww.eonsu merfina nce.goY/ reports j a ~snapshot -of-debt -collection -com plaints-submitted-b) ·-olderconsumers/. 

33 http:; jwww.con~u merfina nce.govj blog/fou r-t hi ngs-o lder-a mericans-ca n-do-abont -debt -collection-problems/. 

34 http: j jw\rw .consu mcrfina ncc.gov j reports jsna pshot -of-reYersc-mortga gc-complain ts-dcecmber-20 11-2014/. 

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problems '.\ith reverse mortgages. The most common complaint is about difficulty mth changing 

the loan terms, and problems communicating mth loan servicers. In addition, many complaints 

were from non-borromng spouses facing the loss of their home after the borromng spouse died. 

Therefore, the Office for Older Americans issued a Consumer Advisory mth three things for 

reverse mortgage borrowers and/or their family members to do in case the loan was made in the 

name of only one of two spouses: 1.) Verify who is on the loan; 2.) If the loan is in the name of 

only one spouse, make a plan for the non-borromng spouse; and 3.) Talk to your children and 

heirs to make a plan for any non-borrower family members living in the house. 

Elder justice coordinating council 

The Bureau serves as a member agency of the Elder Justice Coordinating Council (EJCC). The 

Council was established by the Elder Justice Act of 2009 to coordinate activities related to elder 

abuse, neglect, and exploitation across relevant federal, state, local, and private agencies and 

entities. The Council is chaired by the Secretary of Health and Human Services (HHS). The 

Bureau is one of 11 member agencies, in addition to HHS, that HHS has identified for 

membership based on administering programs related to abuse, neglect, or financial 

exploitation of older Americans. The Bureau, through its Office for Older Americans, is 

coordinating and building cooperative plans mth its Council partners to address mistreatment 

of elders. Older Americans' staff members serve on the Elder Justice Interagency Working 

Group that staffs the Council. The Working Group has developed recommendations and 

proposed action steps for the Council. The Council continues to meet tmce a year mth active 

participation of the CFPB. 

Older Americans Financial Exploitation Prevention and Protection Networks 

The Office for Older Americans is conferring mth older American protection networks of state 

and local governments, elder justice advocates, law enforcement agencies, financial service 

providers, and other key stakeholders that are working to improve community response to elder 

financial exploitation. The primary goals of the networks are to increase prevention of, and 

improve collaboration and response to, elder financial exploitation. The Office for Older 

Americans has launched a project mth the Federal Research Division of the Library of Congress 

to study the activities undertaken by these networks, their outcomes, and best practices. The 

study will also inform the creation of a tool kit for communities to use to create a network or to 

enhance existing ones. 

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Consumer Guides and Guidance 

The Office for Older Americans continued disseminating its guides nationwide, including, 

KNOW YOUR FINANCIAL ADVISER 

A plain language consumer guide to help consumers assess financial adviser certifications for 

quality and accountability. The Guide is a follow up to our Report to Congress and the SEC 

entitled Senior Designations for Financial Advisers: Reducing Consumer Confusion and Risks. 

The Report, released in April 2012, among other things, describes consumer confusion 

surrounding the wide variety of so-called designations that many financial advisers use to 

signify expertise in senior financial issues. 

MANAGING SOMEONE ELSE'S MONEY 

These are user-friendly how-to guides to help family members and others serving as fiduciaries 

who handle financial affairs for older Americans and other vulnerable adults and who often have 

no experience handling someone else's money. In the next phase ofthe project, we will publish 

six sets of state-specific fiduciary guides as well as a replication manual for other states. 

INTERAGENCY SUPERVISORY GUIDANCE ON REPORTING FINANCIAL ABUSE OF OLDER 

ADULTS 

In September 2013, the CFPB, along with seven other federal financial regulators, issued 

guidance for financial institutions on reporting suspected financial abuse of older adults. The 

Guidance informed financial institutions that reporting suspected elder financial abuse to 

appropriate authorities generally does not violate the privacy provisions of the Gramm-LeachBliley Act (GLBA). 

MONEY SMART FOR OLDER ADULTS 

In June 2013, we launched, in partnership with the FDIC, a new financial resource tool, "Money 

Smart for Older Adults'', to help prevent elder financial exploitation. It is an instructor-led, 

stand-alone training module that provides information on how to prevent, identify and respond 

to elder financial exploitation. The curriculum is available free by download and a consumeroriented Participant/Resource Guide is available in PDF format from the CFPB. 

REVERSE MORTGAGE CONSUMER GUIDE 

Following release ofthe Bureau's Reverse Mortgage Report, we released a plain language guide 

that highlights key decision points for consumers who are considering a reverse mortgage. 

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CONSUMER ADVISORY: 3 PENSION ADVANCE TRAPS TO A VOID 

The Office for Older Americans recognizes that many retirees depend on a pension to cover dayto-day as well as occasional unexpected expenses. In March 2015, the Office for Older 

Americans and the Office of Servicemember Affairs released a consumer advisory on avoiding 

pension advance traps and presented these materials to members of the Financial Literacy 

Education Committee.3s 

Students 

The Dodd-Frank Act directed the Secretary of the Treasury, in consultation with the Bureau's 

Director, to designate a Private Education Loan Ombudsman within the Bureau "to provide 

timely assistance to borrowers of private education loans." The Private Education Loan 

Ombudsman position is held by the Assistant Director of the Office for Students. The Office for 

Students works to enhance the ability of students and younger consumers to make financial 

decisions, including monitoring complaints about private student loans, providing information 

and tools to help students understand the risks from student loans and other financial products, 

and identifying policy and marketplace issues with special impact on students and younger 

consumers. 

Financial aid offers from colleges and universities often fail to make basic information clear, 

such as how much of a particular aid offer is made up of loans that need to be paid back and how 

much comes from grants that do not. The Higher Education Opportunity Act of 2008 required 

the Secretary of Education to develop a model financial aid offer format to help students and 

their families make informed decisions about how to finance postsecondary educational 

expenses. The Bureau partnered with the Department of Education to develop a "Financial Aid 

Shopring Sheet" to help students and their families make informed decisions about how to 

finance postsecondary educational expenses. The shared mission to improve the shopping 

35 http:/ f\n\ w.c:on.sumcrfinanf:C' .gov/blog/ consumer-ad' i-:;ory-3-pensiothHinmce-traps-to-a.Yoid/. 

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process for potential student borrowers made the Bureau and the Department of Education 

natural partners in a Know Before You Owe project on student loans.36 

The Financial Aid Shopping Sheet is a standardized, easy-to-read form of a financial aid award 

letter that colleges and universities can send to prospective students. The Shopping Sheet is 

designed to allow college applicants to better understand the debt implications of their college 

choice and compare the costs of the schools to which they apply. 

In April 2012, the President of the United States issued an Executive Order requiring colleges 

that accept Department of Defense Tuition Assistance Program funds to provide military 

students with an offer letter based on the principles developed for the Financial Aid Shopping 

Sheet, in order to provide better information to recipients of military and veteran education 

benefits.37 The Executive Order also encourages colleges that accept Post-9/11 G.I. Bill benefits 

to do the same. 

As of April 2015, 2,971 colleges and universities, with a combined enrollment of more than 8.9 

million students, had voluntarily agreed to adopt the Financial Aid Shopping Sheet. 38 

The Bureau has continued to develop more tools to help consumers make better financial 

decisions about paying for college and managing student debt. As part of the Paying for College 

suite oftools, the Bureau launched Repay Shtdcnt Debt, a combined, expanded version of our 

tools for borrowers in repayment. 

In October 2014, the Bureau published advice to consumers struggling with a high monthly 

payment on their private student loans.39 The advice contained sample instructions for 

borrowers experiencing financial hardship to instruct their student loan servicer to inform them 

36 http:/ /l'l'\'t'W .eonsumerfinance.go" /sludenls/knowhefore_vouowe/: 

37 http: jjw¥. ,,._ \vhi tehouse .gO\ ·/the-press-office/ 2012/04 I 27/ cxceutin~-ordcr-cstabli.shing-p rincip les-exc:cllencccducational-instituti. 

38 http: 1 jmn,2.ed.goY/policy/ h ighered/ gu id/ aid-oiter/ shopping-s heel -instil ut ions. xis. 

39 http:/ jW\\'\v.consumerfinanec.goyjblogjstruggling-priYatc-student-loan-borrowers-stiH-searching-for-hclp/. 

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of any available options to lower their monthly payment. The Bureau also released the Annual 

Report of the Private Education Loan Ombudsman, providing an analysis of complaints received 

between October 1, 2013 and September 30, 2014. This report highlighted issues related to the 

obstacles encountered by private student loan borrowers seeking an affordable monthly 

payment.4° 

In December 2014, the Bureau also published a consumer advisory warning student loan 

borrowers to be wary of third-party companies promising "Student Debt Relief." The advisory 

contained warning signs that a debt relief company may be a scam, encouraging consumers to 

be wary of companies that charge high up-front fees, make promises of loan forgiveness, and 

demand borrowers sign paperwork before they explain what services they offer. 4' 

In January 2015, the Bureau released a sample "Safe Student Account Scorecard."42 As part of 

the Bureau's ongoing work on safe student banking, the scorecard would help colleges to avoid 

partnering with financial institutions that offer checking and prepaid accounts with tricks and 

traps. 43 The Bureau's initiative on safe student banking asks the public for feedback on a 

scorecard that colleges can use to evaluate proposals from financial institutions when soliciting 

bids to provide accounts to their students-helping schools negotiate safe and affordable 

products for students. 

Financial empowerment 

The Dodd-Frank Act mandated that the Bureau include a unit whose functions are to include 

providing "information, guidance, and technical assistance regarding the offering and provision 

of consumer financial products or services to traditionally underserved consumers and 

4° http: i / \V\\W.eonsu mcrfina nee .gov/ reports/ an nua !-report-of-the-cfpb-st u dent-loan-om hudsma n-2 o 14/. 

41 http:/ jw\n v.consmnerfina nee.govjblog/ eon~u mer-ad\ ·isory-studen 1 -lon n -dcht-relief-eompanies-may-eost -yout 11 ousa mb-o f-dolla rs-a nd-dri\'l:o-~·ou- further-in t o-deb1 /. 

42 http: j j\-nnr .con.su merfinance.gm'/ students/request-for-information-regarding -an-initiative-on-safe-studenthanldng/. 

4:l http://files.consumerfinance.gov/f/201309_cfpb_banking-otl-Campus-forum.pdf. 

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communities."44 "Traditionally underserved consumers" include un-banked and under-banked 

consumers. 4s The Office of Financial Empowerment (Empowerment) directs its efforts toward 

strengthening financial consumer protection and enhancing the financial capability of lowincome and other economically vulnerable consumers who comprise the traditionally 

underserved. 

Empowerment is working to integrate financial empowerment strategies into existing publicsector and non-profit programs that assist low-income and other economically vulnerable 

people who are among the traditionally underserved. 

Financial empowerment toolkit and training 

The Office of Financial Empowerment has developed, field tested and launched Your Money, 

Your Goals: A financial empowerment toolkit for social services programs. The toolkit 

provides tools that social service staff can use to incorporate financial capability information 

into their work with clients and to make referrals to specialized providers. The toolkit includes 

information that staff can share with clients on topics such as emergency savings; 

understanding, correcting, and building credit history; managing debt; cash flow budgeting; and 

identifying financial products to use to pursue various financial and life goals. The toolkit also 

includes worksheets and other tools individuals can use to strengthen their personal money 

management skills. For example, the toolkit includes materials that can be used to help grow 

skills in financial tasks such as ordering a credit report or understanding and managing debt. 

The Bureau field tested the toolkit in fall 2013 by conducting train-the-trainer webinars for 26 

social service organizations located across the country. These organizations in turn provided 

training to 1,400 frontline social service staff from their own and other organizations on how to 

use the toolkit in their work. The Bureau then gathered feedback that included the extent to 

which the staff had used the toolkit with their clients and whether the training increased the 

44 DFA 1013(b)(2). 

45 DFA 1013(b)(1)(F). 

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confidence of the staff in their knowledge of the topics and their ability to help their clients 

manage their finances. 

After receiving input from field-test users, we finalized the text and released it nationally on July 

30, 2014. More information is available at consumcrfinancc.gov/your-money-your-goals/. We 

are conducting webinar trainings that are available through the CFPB website, as well as 

through in-person and webinar trainings and with national organizations to equip them to train 

their own staffs. The Bureau is also developing customized versions of the toolkit to address 

particular populations or financial capability needs. For example, we developed an abbreviated 

toolkit focused on credit reporting and debt collection for use by law school-based legal clinics 

that work with consumers on these issues. 

Empowering youth 

The Child and Family Services Improvement and Innovation Act requires that each child age 16 

and older in foster care receive annually a free copy of any consumer credit report pertaining to 

the child until the child is discharged from foster care, and receive assistance in interpreting and 

resolving any inaccuracies in the report. State and county child welfare agencies are currently 

working with the national credit reporting agencies to implement these requirements. 

In 2014, the Offices of Financial Empowerment and Financial Education worked with 

stakeholders at the HHS Children's Bureau, the FTC, and youth advocacy organizations to help 

streamline the procedures for child welfare agencies to obtain credit reports. We assisted in 

developing capacity to help youth in foster care to identify identity theft, fraud, and credit report 

errors, and resolve inaccuracies in the reports. The Bureau developed tools, including sample 

letters for ordering credit reports and templates for disputing credit report errors. The tools 

provide guidance to caseworkers who are responsible for pulling and cleaning up credit reports 

for youth in foster care. These tools are available at consumertlnance.gov(blog/how-to-protectvulnerable-children-from-idcntity-theft/. Most recently, we have provided outreach and 

training to caseworkers on the materials. 

Youth summer employment programs present unique opportunities to reach young people with 

financial capability education. Young people who may be entering the workforce for the first 

time can build lasting habits. In November 2013, Empowerment, along with federal agency 

partners from the Financial Literacy and Education Commission, convened a roundtable of 

national and local leaders to discuss current efforts to help youth build financial capability 

through employment programs. The successful programs represented at the roundtable 

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included three important components: integrating financial education into existing youth 

employment programs, partnering with employers, and collaborating with financial institutions 

to improve access to financial services such as transaction accounts. The discussion also 

identified many programs that recognized the need to help youth develop financial skills, but 

that did not have the time, expertise, or resources to do so. Building on these key takeaways, 

Empowerment developed tools that stakeholders might use to incorporate financial capability 

skills training into their youth summer employment programs. The Bureau collaborated with 

several communities to pilot these new tools in the summer of 2014, and in 2015, is expanding 

the youth program to up to 25 cities. 

Outreach 

In addition to its efforts to engage specific populations, the CFPB has hosted public events 

across the country to discuss CFPB initiatives and to solicit input about issues related to 

consumer financial products and services. The public participated in field hearings on prepaid, 

medical debt collection, arbitration, payday lending, and other consumer finance issues 

in Wilmington, DE; Oklahoma City, OK, Newark, N.J and Richmond, VA. 

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An audience member participates during the public sessional a field hearing on payday lending in 

Richmond, VA. 

In conjunction v.~th these field events, Director Cordray and Deputy Director Antonakes held 

roundtables mth community leaders, legal services attorneys, housing counselors, local officials, 

community banks, credit unions, housing industry participants, and others as part of the CFPB's 

commitment to engage mth the public. The CFPB also hosted a public meeting of its Consumer 

Advisory Board in Washington, DC on February 19, 2015. 

The Bureau has also actively solicited the perspectives of consumer and civil rights groups, 

including holding roundtables mth community-based organizations across the country. During 

this reporting period, the Bureau's Office of Community Affairs has engaged thousands of 

community group representatives through more than 150 meetings, briefing calls, and public 

appearances. 

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Audience members review materials at a public hearing on prepaid cards in Wilmington, DE. 

The Bureau's Office of Financial Institutions and Business Liaison was established in April 2013 

to facilitate and coordinate dialogue with all industry participants, and since October 2014, has 

hosted more than 300 meetings, briefing calls, and public appearances with financial 

institutions and financial industry trade associations. 

Director Cordray and senior CFPB leadership have also delivered several speeches at widelyattended industry and nonprofit conferences. 46 In addition to direct outreach through field 

events, roundtables, public meetings, speeches, and briefing calls, the CFPB launched Project 

Catalyst to support innovators in creating consumer-friendly financial products and services. 

The Bureau believes that markets work best when they are open to new ideas, and that the 

insights and innovations that come from looking at problems and solutions from new angles 

hold great potential in our efforts to achieve our mission of making the consumer finance 

market work for all consumers. Project Catalyst is designed to open lines of communication and 

foster collaborations that promote consumer-friendly innovation. 

46 A list of speeches given in this reporting period by CFP!l personnel may be found in Appendix H of this report. 

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To these ends, Project Catalyst has continued to develop its outreach efforts and to introduce 

policy tools. One policy tool is the "pitch a pilot" program in which Bureau subject matter 

experts work with entrepreneurial companies to better understand what works for consumers 

and to inform our policy-making in the process. Another policy tool is a trial disclosure program 

in which the CFPB provides waivers of federal disclosure requirements for successful applicants 

to allow them to develop and test innovative and consumer-friendly disclosures. More 

information about Project Catalyst is available on the CFPB's website.47 

Partnerships 

The Bureau has furthered many existing partnerships and formalized several new ones. 

To date, the Bureau has signed numerous memoranda of understanding (MOU) with 

intergovernmental partners, including federal agencies, state financial regulatory entities, state 

and tribal attorneys general, and municipal law enforcement agencies. The Bureau has also 

actively solicited the perspectives of consumer and civil rights groups. 

Senior Bureau leadership has also testified before Congress 53 times since the Bureau opened its 

doors in 2011, including eight occasions between October 1, 2014 and March 31,2015.48 

Office of the Consumer Advisory Board and Councils 

The CFPB's Office of the Consumer AdYisory Board and Councils is charged with managing the 

Bureau's advisory groups and serving as the liaison between advisory group members and the 

47 http:; /wwwxonsumerfina nee .go\·jProjectCatalyst/, 

48 CFPB testimony before Congress may be found in Appendix G of this report. The numbers in this section conform 

to the reporting period, while the numbers in Appendix G go back a calendar year to conform with the remaining 

appendices. 

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Bureau.49 In addition to its regular engagements with external stakeholders, the Bureau's 

outreach also includes the: 

Consumer Advisory Board (CAB); 

Community Bank Advisory Council (CBAC); 

Credit Union Advisory Council (CUAC); and 

Academic Research Council (ARC) 

Among its responsibilities, the Office ofthe Consumer Advisory Board and Councils: 

Manages the policies and procedures for the constitution and management of advisory 

boards and councils; 

Manages the selection process for the Bureau's advisory boards and councils; 

Conducts agenda setting for advisory board and council meetings; 

Regularly facilitates discussions between the Bureau and advisory board/council 

members; and 

Recommends policy and associated strategies as suggested by advisory boards and 

councils. 

The Consumer Advisory Board and Councils offer vital insight and perspective of financial 

service providers as the Bureau strives to issue thoughtful, research-based rules. 

The Consumer Advisory Board meets at least twice per year. The Credit Union and Community 

Bank Advisory Councils each meet, on average, twice per year in person and twice per year by 

conference call. The Academic Research Council meets once annually. 

49 http:/ ;\nn r .consu mcrt'inancc.gm "/blog; category./ consumcr-adYisory-board/. 

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Consumer Addsory Board members at a CAB meeting in \Vashington, DC. 

Role of the Consumer Advisory Board 

Section 1014(a) ofthe Dodd-Frank Act states: 

The Director shall establish a Consumer Advisory Board to advise and consult with the 

Bureau in the exercise of its functions under the Federal consumer financial laws, and 

to provide information on emerging practices in the consumer financial products or 

services industry, including regional trends, concerns, and other relevant 

information. so 

The Advisory Board and Councils help the Bureau solicit external stakeholder feedback on a 

range of topics, including consumer engagement, policy development, and research, and from a 

range of actors, including academics, industry, community members, and advocates. The 

5° Dodd-Frank Act, Pub. L. No. 111-203, § 1014(a). 

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advisory boards and councils consult on a variety of cross-cutting topics, report on meetings, 

and the CFPB provides minutes and/or summaries of their meetings on the Bureau's website. 

Members of the Bureau's board and councils serve for limited, specified terms. 

Membership and public application process of the Consumer Advisory 

Board and Councils 

Membership to all the Bureau's Advisory bodies is facilitated through a public process whereby 

members of the public may apply to serve on a board or council. The Bureau will accept 

applications for these four advisory bodies on a yearly basis. On January 16, 2015 the Bureau 

announced that applications for 2015 membership was open and requested applications be 

submitted no later than February 28, 2015,51 New CAB members will serve a three-year term 

and new ARC, CBAC and CUAC members will serve two-year terms. The Bureau will announce 

the newly appointed board and council members later in the year. 

Section 1014(b) of the Dodd-Frank Act states: 

In appointing the members of the Consumer Advisory Board, the Director shall seek to 

assemble experts in consumer protection, financial services, community development,fair 

lending and civil rights, and consumer financial products or services and representatives 

of depository institutions that primarily serve underserved communities, and 

representatives of communities that have been significantly impacted by higher-priced 

mortgage loans, and seek representation of the interests of covered persons and 

consumers, without regard to party affiliationY 

Meetings of the Consumer Advisory Board and the other Councils 

The Bureau has held four meetings of the Advisory Board and Councils during this reporting 

period: 

5 1 h lt p: // \'\ l\ w .consn merfi na nee .gO\ /blog/ accepting~a pp lie a tions-for-our-ad\ isory-board-a nd-conncils-20 15/ 

52 Dodd-Frank Act, Pub. L. No. 111-203, § 1014(b). 

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One CAB meeting- February 2015 in Washington, DC. 53 

One CBAC meeting- October 2014 in Washington, DC.s• 

Two CUAC meetings- October 201455 and March 2015 in Washington, DC. 56 

Generally, Director Cordray provides remarks at our Board and Council meetings, and these are 

made available on our website. A public hearing has always been a part of the CAB meetings that 

are held in the field. However, in order to provide additional transparency into the discussions 

of the CAB and Councils, the Bureau now makes full advisory council meetings open and 

accessible to the public. The public meeting provides an opportunity for members of the public 

to hear the information and expertise CAB and Council members provide to the Bureau on the 

financial issues affecting their communities or constituencies. Any subcommittee meetings or 

discussions are also reported out and posted to consumerfinance.gov in meeting minutes and 

the Consumer Advisory Board's annual report to the Bureau. 

Topics covered with our Consumer Advisory Board and the other councils 

In October 2014, the CBAC met to discuss Title XIV Mortgage Rules and overdrafts. CBAC 

members shared trends in the marketplace and highlighted how smaller financial institutions 

have been working under the Title XIV requirements. In October 2014, the CUAC met to discuss 

overdrafts and consumer complaints. CUAC members shared information about how credit 

union overdraft and courtesy pay programs are distinguishable and provided feedback on the 

Bureau's proposal to publish consumer complaint narratives. 

53 http:/ ;'\n\-w.consumerfinance.go\·jhlog/sa,·e-thc-date-join-u.s-h)r-the·\dnter-~OlS·eonsumer-ad\·isor~·-boardmeet in g-in -washington-de/. 

54 http:/f,yww.consumerfinance.gov1 blog/sa,·e-the-date-join-us-for-a-community-hnnk-addsot}"-council-meetingin-\\·ashing!on-dc/. 

ss http:/ jw\\l\·.consumerfinancc:•.gm/blogjsave-the-date-join-us-for-a-credit-union-addsory-council-meeting-inwashington-dr I. 

s6 http:/ /www.consumerfinance.go\·jblogjs;n·e-the-date-join-us-for-a-credit-union-advisor~y-council-mecting-inwashington-dc-ma rch -2015/. 

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In February 2015, the CAB met to discuss trends and themes related to financial well-being and 

medical debt's impact on consumer credit scores and reports. CAB members provided insight 

into the implications of the research from the Bureau's report, "Financial well-being: The goal of 

financial education" and explained how these findings could be utilized to best support the 

financial well-being of consumers. 

For more information about the CAB and the other CFPB advisory bodies, please visit 

our website. 

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Regulations and guidance 

In the past six months, the Bureau has continued to issue a number of proposed and final rules 

that relate to the Dodd-Frank Act, including amending the annual privacy notice requirements 

under Regulation P, amendments to the 2013 Mortgage Rules which provide alternative small 

servicer definitions for certain nonprofit entities, and an amendment to the final 2013 TILARESPA rule which, in certain circumstances, extends the timing requirement for revised 

disclosures. The Bureau is also continuing to work on proposed and final rules on various other 

matters within its authority that would address longstanding consumer protection concerns in a 

number of consumer financial services markets. In addition, the Bureau is also continuing to 

follow-up on an earlier Request for Information seeking public comment on potential projects to 

streamline regulations. The Bureau also continues to be deeply engaged in assisting the 

mortgage industry with the implementation of Dodd-Frank Act requirements, including the 

Bureau's rules combining the TILA and RESPA mortgage disclosures, and the Bureau's 2013 

Mortgage Rules. 

Implementing statutory protections 

The CFPB continues to engage in significant activities designed to implement the Dodd-Frank 

Act consumer protection provisions. Following the Bureau's issuance of mortgage rules in 

January 201357 and the TILA RESPA rule in November 2013, the Bureau has continued to 

57 In .January 201~~, the Bureau issued several rules implementing changes made by the Dodd~FrankAct to the laws 

goYerning various aspects of the mortgage market, including assessments of consumers' ability to repay their loans, 

mortgage servicing, loan originator compensation, and other topics. These rules, all of which took effect by January 

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engage in activities to support the implementation process for these rules with both industry 

and consumers, as described further in Section 4·3· Other statutory implementation efforts have 

included issuing additional rules issued pursuant to Dodd-Frank mandates. Much of the 

Bureau's recent activity continues to be mortgage-related; 

In March 2014, the Bureau, in conjunction with the FRB, FDIC, NCUA, OCC, and FHFA, 

(collectively, the Agencies) proposed minimum requirements for Appraisal Management 

Companies as required by the Dodd-Frank Act. The proposed rule would also implement 

the requirement in the Dodd-Frank Act for States to report to the Appraisal 

Subcommittee of the Federal Financial Institutions Examination Council (FFIEC) the 

information required by the Appraisal Subcommittee to administer the new national 

registry of appraisal management companies. During this reporting period, the Agencies 

reviewed the public comments from the March 2014 proposal and worked toward issuing 

a final rule. 

In July 2014, the Bureau proposed amendments to Regulation C to require lenders to 

report new data elements required by Dodd-Frank Act revisions to HMDA. The Bureau 

is also using the rulemaking as an opportunity to explore ways to modernize and 

improve HMDA data collection and reporting, particularly in light of other regulatory 

and mortgage market initiatives to improve the consistency of data standards and 

information flows. Prior to issuing the proposed rule, the Bureau, along with the Small 

Business Administration's Office of Advocacy and the Office of Management and Budget, 

launched a small business review panel process to gather input on the rulemaking in 

February 2014. The comment period for the proposed rule closed at the end of October 

2014. During this reporting period, the Bureau is working to finalize the rule and to use 

the feedback provided by the public to determine how to improve the HMDA data in an 

efficient and effective manner. 

In October 2014, the Bureau took steps to provide additional guidance to industry on 

mortgage-related issues involving the 2013 Mortgage Rules. The Bureau issued a final 

I8 1 2014, are nm\' providing significant improvements in the mortgage process that benefit both consumers and the 

mortgage industry alike through strengthened consumer protections and increased efficiencies. The Bureau's 

implementation activities for these rules are further discussed in section 4.3. 

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rule that provides an alternative small servicer definition for nonprofit entities that meet 

certain requirements and amends the existing exemption from the ability-to-repay rule 

for nonprofit entities that meet certain requirements. The final rule also provides a cure 

mechanism for the points and fees limit that applies to qualified mortgages. 

In October 2014, in response to industry feedback, the Bureau also proposed 

amendments to the TILA-RESPA rule to seek comment on limited and technical issues 

concerning the rule. After notice and comment, the proposed amendments were adopted 

on January 18, 2015. The rule was modified to extend the timing requirement for 

creditors to provide a revised Loan Estimate when a consumer locks the loan's interest 

rate or extends a lock rate, to provide for the placement on the Loan Estimate of 

language relating to construction loans, to provide for placement of the NMLSR ID on 

the integrated disclosures, and to make non-substantive corrections, such as corrected or 

updated citations and cross-references. 

In November 2014, the Bureau proposed amendments to certain mortgage servicing 

rules issued in 2013 in part to implement Dodd-Frank Act amendments to RESPA and 

TILA. These proposed amendments focus primarily on clarifying, revising, or amending 

provisions regarding force-placed insurance notices, policies and procedures, early 

intervention, and loss mitigation requirements under Regulation X's servicing 

provisions; and periodic statement requirements under Regulation Z's servicing 

provisions. The proposed amendments would also address proper compliance regarding 

certain servicing requirements when a consumer is a potential or confirmed successor in 

interest, is in bankruptcy, or sends a cease communication request under the Fair Debt 

Collection Practices Act. The proposed rule would also make technical corrections to 

several provisions of Regulations X and Z. 

In January 2015, the Bureau proposed amendments to some ofthe Bureau's 2013 

Mortgage Rules implementing the Dodd-Frank Act that would modify general 

requirements for certain small creditors, including those that operate predominantly in 

"rural or underserved" areas. 

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Addressing longstanding consumer 

protection and regulatory burden 

concerns in other markets 

In addition to work implementing Dodd-Frank Act mandates relating to mortgages, the Bureau 

has continued to focus attention on a number of issues in other consumer financial products and 

services markets. This work includes rulemakings to revise regulations the Bureau inherited 

from other agencies and the issuance of a proposed rule governing prepaid cards, as well as 

continued research and other preparations for rulemakings to address several longstanding 

issues regarding debt collection, payday loans and deposit advance programs, and overdraft 

features on deposit accounts. 

As reflected in its Fall 2014 regulatory agenda, the Bureau has continued work on a number of 

projects to address longstanding concerns in other consumer financial services markets. For 

example: 

In November 2014, the Bureau proposed amendments to Regulations E and Z to create a 

comprehensive set of consumer protections for prepaid financial products, which are 

increasingly being used by consumers in place of traditional checking accounts. The 

proposed rule would expressly bring prepaid products within the ambit of Regulation E 

(which implements the Electronic Fund Transfer Act) as prepaid accounts and create 

new provisions specific to such accounts. The proposal would also amend Regulation E 

and Regulation Z (which implements the Truth in Lending Act) to regulate prepaid 

accounts with overdraft services or credit features. The comment period for the proposed 

rule closed at the end of March, and the Bureau is reviewing the feedback provided by 

the public. 

The Bureau is considering developing a proposed rule on debt collection building on the 

comments received concerning an ANPR on debt collection issued in November 2013 

and is conducting research, analysis, and outreach as appropriate on this topic. Debt 

collection generates more complaints to the federal government each year than any other 

consumer financial services market. The Bureau distributed a survey to consumers to 

learn about their experiences with credit and debt, including debt collection. The results 

of the survey will provide information related to debt collection on a broad cross-section 

of consumers that is not available elsewhere. The Bureau is also undertaking consumer 

testing initiatives to determine what information would be useful for consumers to have 

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about debt collection and their debts and how that information should be provided to 

them. 

The Bureau is developing proposals for regulations to address issues in the markets for 

payday, vehicle title, and some high-cost installment loans. The Bureau has convened a 

Small Business Review Panel with the Office of Management and Budget and the Office 

of Advocacy in the Small Business Administration and has released an outline of 

proposals under consideration. The Bureau is gathering feedback on the proposals under 

consideration from small entities, and a 'A-ide variety of other stakeholders before issuing 

a proposal. 

Building on Bureau research and other sources, the Bureau is considering whether rules 

with regard to overdraft programs on checking accounts may be appropriate, and, if so, 

what types of rules would be appropriate. The CFPB issued a white paper in June 2013 

and a report in July 2014 based primarily on supervisory data from several large banks 

that highlighted a number of possible consumer protection concerns, including how 

consumers opt in to overdraft coverage for ATM and one-time debit card transactions, 

overdraft coverage limits, transaction posting order, overdraft and insufficient funds fee 

structure, and involuntary account closures. The CFPB is continuing to engage in 

additional research. A possible rulemaking might include disclosures or address specific 

acts or practices. 

The Bureau has also continued to work on defining larger participants in markets for consumer 

financial services and products. Under Title X of the Dodd-Frank Act, the Bureau is authorized 

to exercise supervisory authority over larger participants that it defines by rule. 

In September 2014, the Bureau proposed a rule that would define larger participants in 

the market for automobile financing. The proposal also would define "financial product 

or service" under the Dodd-Frank Act to include additional automobile leases and would 

make certain technical corrections to existing larger-participant rules. The comment 

period closed in December 2014, and the Bureau is preparing to issue a final rule. 

With regard to regulations that the CFPB inherited, the Bureau issued a Request for Information 

in December 2011 seeking comment on opportunities to streamline, modernize, and harmonize 

regulations that it inherited from other federal agencies. The Bureau has sought to address such 

issues in the course of its rulemakings, for instance, by using the rulemakings to consolidate 

mortgage disclosures under TIIA and RESPA to clarify or reduce the burden of existing 

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regulations and by exploring opportunities to reduce unwanted regulatory burden as part of the 

HMDA rulemaking. 

The Bureau has also launched other rulemaking and guidance initiatives designed to streamline 

existing regulations and reduce regulatory burden. 

In October 2014, the Bureau issued its Annual Privacy Notices Rule to reduce the 

burdens on financial institutions who were concerned with previous requirements for 

mailing annual privacy notices under the Gramm-Leach-Bliley Act. Specifically, the Rule 

provided an alternative delivery method for annual privacy notices that financial 

institutions already must send to customers under the Gramm-Leach-Biiley Act. If a 

financial institution limits it's sharing of customer information and meets other 

requirements, this alternative method allows the institution to post the privacy notice on 

its website rather than mail it, and to mail the privacy notice only if the consumer 

requests it. This Rule reduces the regulatory burden on financial institutions, especially 

small institutions, and enhances internet access to privacy policies for consumers. 

In February 2015, the Bureau proposed a rule to temporarily suspend card issuers' 

obligations under Regulation Z to submit credit card agreements to the CFPB for a 

period of one year (i.e., four quarterly submissions), in order to reduce burden while the 

CFPB works to develop a more streamlined and automated electronic submission 

system. The Bureau finalized this rule near the end of the reporting period. 

Facilitating implementation of new 

regulations 

As the Bureau has issued regulations to implement Dodd-FrankAct requirements, it has focused 

intently on supporting the implementation process for these rules with both industry and 

consumers. The Bureau has continued to provide implementation support for the mortgage 

rules issued under Title XIV ofthe Dodd-Frank Act, which went into effect by January 18, 2014, 

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including engaging in public outreach, speaking at industry conferences, and providing training 

to housing counselors on new mortgage servicing rules. 

The Bureau finalized the TILA-RESPA rulemaking in November 2013.s8 In developing the TILARESP A rule, the Bureau sought to facilitate implementation by incorporating in the regulation 

and the Official Interpretations detailed instructions for completing the forms along with many 

examples. The Bureau also included illustrative examples for completing the new forms for 

various different types of mortgage products and closing scenarios. The Bureau is working on a 

number of initiatives to help facilitate implementation before the August 2015 effective date: 

Guides and sample forms- Shortly after the Bureau finalized the TILA-RESPA rule, the 

Bureau published a plain-language small entity compliance guide providing an overview 

and summary of key aspects of the TILA-RESPA rule, a plain-language guide to forms 

providing detailed, illustrated instructions on completing the new Loan Estimate and 

Closing Disclosure forms, and a number of sample completed forms to assist in the 

implementation and understanding of the new rules. The Bureau revised and published 

updated versions of the two guides reflecting the amendments to the rule issued in 

January 2015. 

o The Bureau published a number of sample forms, in both English and Spanish, to 

provide additional support to lenders as they make any necessary changes to their 

systems. 

o The Bureau also published a sample timeline that illustrates the new disclosure 

timing requirements for a sample real estate transaction. This timeline is 

particularly useful to lenders and settlement service providers that need to adjust 

their business requirements around the new rules. 

s8 As discussed in Section 4.1, in Januar:y 2015, after extensive outreach to stakeholders, the Bureau published an 

amendment to the TILA-RESPA rule in which it made two minor modifications and technical amendments to the 

rule in order to smooth compliance for industry. 

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Webinars and other informal guidance- In conjunction with the Federal Reserve 

System, the Bureau has conducted a series ofwebinars on the TILA-RESPA rule. Early 

webinars provided an overview of the final rule and the new disclosures and addressed 

basic questions regarding interpretation and application of the rule. The Bureau plans to 

conduct additional webinars to further facilitate implementation and address specific 

implementation and interpretive questions. The Bureau intends to hold these webinars 

periodically throughout the implementation period while regularly soliciting feedback 

and additional questions in the interim to further facilitate compliance. 

Public outreach -Bureau staff has spoken at a number of industry conferences, 

roundtables and other formal events. Bureau staff continues to engage in extensive 

outreach to discuss the mortgage rules, identify and address implementation issues as 

they arise, and provide informal oral guidance in response to interpretive inquiries from 

a myriad of stakeholders. The Bureau recognizes that non-profits, like housing 

counselors, also play a significant role in providing consumers with support in the home 

buying process, and plans to engage with these stakeholders later in the implementation 

period. 

Inter-agency coordination - The Bureau is coordinating with other federal government 

regulators that also conduct examinations of mortgage companies to develop 

examination procedures for the new TILA-RESPA rule and to promote a consistent 

regulatory experience for industry. 

The Bureau has developed regulatory implementation materials and aids that support and assist 

regulatory implementation efforts for the TILA-RESPA rule and other rules, including 

compliance guides, sample forms, and webinar recordings, available on a section of its website 

dedicated to regulatory implementation. These materials, along with other communications and 

outreach efforts, facilitate industry access to information on regulatory requirements and 

developments, particularly for smaller businesses that may have limited legal and compliance 

staff.s9 Recently, the Bureau redesigned the regulatory implementation page for increased 

functionality, as well as to accommodate future growth. The Bureau plans to continue 

59 http:/ /www.consumerfinance.gov/rcgulatory-implemcntation/. 

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developing additional tools and resources to facilitate implementation and compliance with the 

new rules. 

Bureau staff is also working to monitor implementation of the new rules as they take effect, and 

to prepare broader research efforts to assess the impact of the rules over time. This information 

will provide vital feedback to the Bureau both in assessing the need for follow up within the 

remittances and mortgage markets and in improving its general rulewriting process over time. 

With respect to the new TILA-RESPA rule, the Bureau has intensified its implementation 

support and outreach efforts in an effort to ensure that institutions are making any business 

process, operational, or technological systems changes that may be necessary to comply with 

requirements of the rule and generate the new forms. 

Finally, one other important initiative launched by the Bureau to support both new and ongoing 

compliance efforts is the release of its "cRcgulations" project, in which the Bureau released a 

web-based, open source tool that aims to make regulations easier to navigate, read, and 

understand. eRegulations presents regulation text and commentary in a clear format, and allows 

users to compare different versions to identify changes. The Bureau began this effort in October 

2013 with the online release of Regulation E (including the new remittance transfer rules) with 

the goals of increased compliance, more efficient supervision, and improved accessibility. 60 The 

Bureau unveiled Regulation Z in May 2014, which includes most recent rule updates. 61 

60 http:/ /www.consumerfinance.gov/eregulations/1005. 

61 http:/ j\nvw.consumcrfinance.gm'fcregulations/I026. 

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Supervision 

The CFPB's supervisory authority extends to banks, thrifts, and credit unions with assets of 

more than $10 billion, as well as affiliates of those institutions, In addition, the CFPB supervises 

nonbank mortgage originators and servicers, payday lenders, and private student lenders of all 

sizes, and also supervises larger participants of other markets as the CFPB defines by rule, To 

date CFPB has promulgated larger-participant rules with respect to debt collectors, consumer 

reporting agencies, student loan servicers, and international money transmitters. The CFPB also 

recently published a proposed rule regarding supervision of nonbank auto lenders. 

The CFPB's Offices of Supervision Examinations and Supervision Policy are located within the 

Division of Supervision, Enforcement, and Fair Lending, These two offices develop and 

administer the CFPB's nationwide supervisory program for depository and nondepository 

financial institutions. In conducting its supervisory activities, the CFPB focuses on maintaining 

consistency across markets, industries, charters, and regions, as well as on ensuring efficient 

and effective examinations and supervisory work, The CFPB follows a risk-based approach to 

examinations, prioritizing consumer products and markets that pose significant risks to 

consumers. 

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Supervisory activities 

Since the last Semi-Annual Report was released in October 2014, the CFPB has issued the 

following public documents: 

Supervisory Highlights 

Continuing the CFPB's policy of transparency, Supervision has committed to periodically issuing 

"Supervisory Highlights." The goal of this publication is to inform both industry and the public 

about the development of the CFPB's supervisory program, as well as to discuss broad trends in 

examination findings in key market or product areas. 

The Fall 2014 edition of Supervisory Highlights, issued in October 2014, 62 shared supervisory 

observations found and addressed during supervision work completed between March 2014 and 

June 2014. The edition discussed regulatory violations or unfair, deceptive, or abusive acts or 

practices in the areas of consumer reporting, debt collection, deposits, mortgage servicing, and 

student loan servicing. It also included updated guidance about Home Mortgage Disclosure Act 

reporting and provided updates on CFPB guidance, larger participant rulemakings, and public 

enforcement actions issued during that period that resulted from or were supported by 

supervision. 

The Winter 2014 edition of SuperYisory Highlights, issued in March 2015,63 shared supervisory 

observations found and addressed during the supervision work completed between July 2014 

and December 2014. The edition discussed regulatory violations or unfair, deceptive, or abusive 

acts or practices in the areas of consumer reporting, debt collection, deposits, and mortgage 

origination. It also included information about violations of the Equal Credit Opportunity Act 

and Regulation B related to the treatment of protected forms of income. The Winter 2014 

edition discussed new examination procedures for credit card account management, CFPB 

guidance on confidential supervisory information and on avoiding prohibited discrimination 

62 http:/ jvlww.consurncrfinance.gm"/reports/supen1sory-highlights-fall-2Dt4/· 

63 http:/ /files .consumrrfi nance .gOY/f/ 20 1503_ cfpb _su pen isory-highligh ts-winter-20 15. pdf . 

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against consumers receiving Social Security disability income. Finally, the edition discussed the 

CFPB's new Examiner Commission Program. 

Supervisory guidance 

Compliance bulletin on treatment of confidential supervisory information 

In January of 2015, the CFPB issued a compliance bulletin regarding treatment of confidential 

supervisory information. 64 The bulletin was intended to remind supervised financial 

institutions, including nonbank companies that may be unfamiliar with federal supervision, of 

existing regulatory requirements regarding confidential supervisory information (CSI). The 

bulletin set forth the definition of CSI, provided examples of CSI, and highlighted certain 

existing legal restrictions on the disclosure of CSI. The bulletin also explained that provisions in 

non-disclosure agreements entered into by supervised financial institutions do not alter or limit 

the CFPB's existing supervisory authority or the institution's obligations related to CSI. 

Coordination and information sharing 

with state regulators 

The CFPB and state regulators coordinate on examinations under a framework for coordination 

on supervision and enforcement entered into by the CFPB and the Conference of State Bank 

Supervisors, acting on behalf of state financial regulatory authorities. 6s Examination 

coordination under the framework may occur where the CFPB and state regulators each have 

supervisory jurisdiction over particular banks or nondepository entities. The framework is an 

outgrowth of information sharing MOUs entered into by the CFPB and 62 state financial 

64 http: j; files.consH merfi na nee .gm:/f/ 2 o 1501_ cfpb __ com pl iance-h u11 eti n __ treatment-of-con fidentia 1-su pen:isory·-

information.pdf. 

65 http:/ j filcs.consu mcrfina n ce.gov/ f/2 o 13 05 __ efpb _.state-su perdsory-coordina tion-framework. pdf. 

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regulatory authorities in all so states, Puerto Rico, the District of Columbia, and Guam. The 

MOUs provide that state regulators and the CFPB will work together to achieve examination 

efficiencies and to avoid duplication of time and resources expended. The MOUs also establish 

safeguards and restrictions on the treatment of any shared information. 

Examiner training and commissioning 

The CFPB's Supervision Learning & Development (SL&D) team is responsible for training and 

commissioning the CFPB's field examination staff. The primary vehicle for commissioning is the 

Examiner Commissioning Program (ECP), which became effective as of October 27, 2014. The 

finalized ECP policy replaced the previous Interim Commissioning Policy (ICP), which allowed 

regional directors to submit executive review nomination memos for highly experienced 

examiners and field managers. The CFPB issued 173 commissions under the ICP to examiners, 

field managers, and headquarters staff. After the first two months under the new policy, an 

additional three examiners have achieved commissioned examiner status under ECP, bringing 

the total number of commissioned examiners to 176. 

The ECP includes six instructor-led, classroom-based courses, as well as formal on-the-job 

training (OJT) modules, Acting Examiner-in-Charge (EIC) assignments, and a comprehensive 

multiple-choice test and case study assessment. Within 12-18 months of achieving 

commissioned examiner status under ECP, examiners will complete a 120 day rotational 

assignment in any of a variety of offices in the Washington D.C. Headquarters. Completed and 

fully-implemented components of the ECP currently include 32 formal OJT modules and the 

following instructor-led classroom-based courses: Operations and Deposits/Prepaid Products, 

Lending Principles, Fair Lending Examination Techniques, Advanced Communications, and EIC 

(Examiner-in-Charge) Capstone course. 

Now that all parts of the ECP are finished and fully deployed, the two paths to examiner 

commissioning will be through previous commissioning by another federal regulator (as 

required by the Dodd-Frank Act), and through successful completion of the ECP, including the 

comprehensive exam and case study assessment. Examiners commissioned at other agencies 

v.'ill be required to complete the two week Capstone course to better understand processes and 

reports specific to CFPB within one year of joining the Bureau. 

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Technology 

The CFPB has paused implementation of enhancements to its examination management 

software (known as the "Supervision and Examination System") to evaluate a more strategic 

approach for development and to prioritize business requirements for this project. Once built, 

this System will aid the CFPB in supervising and enforcing Federal consumer financial law by 

utilizing current technology to support the monitoring of bank and non depository entities, and 

to collaborate across offices to improve the efficiency of the supervisory process. The 

development of system functionality will be prioritized by business needs. 

The CFPB is using a Compliance Tool (the Tool) to assist in conducting examinations of entities 

subject to CFPB supervision. The Tool provides for secure and standardized data submissions to 

the CFPB, and supports consistency in the examination process across institutions. The Tool is a 

software system that collects, validates, and analyzes loan portfolio and deposit account data 

through an automated system. It enables covered entities to upload data securely and improves 

the ability of CFPB examiners to conduct risk-based and targeted compliance reviews. 

The Secure and Fair Enforcement for 

Mortgage Licensing Act of 2008 (SAFE 

Act)66 

While administering the SAFE Act during 2014, the CFPB worked closely with the Conference of 

State Bank Supervisors (CSBS) to improve the way mortgage loan originator information is 

shared between state and Federal regulators through the Nationwide Mortgage Licensing 

System and Registry (NMLSR). The NMLSR, which the CSBS administers and maintains 

66 The SAFE Act calls for an annual report to Congress on the effectiveness of the Act. 12 U.S.C. § 5115(a). This 

section of the CFPB's Semi-Annual Report constitutes the annual SAFE Act Report for 2014. 

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through its wholly owned subsidiary, the State Regulatory Registry, LLC (SRR), was established 

through the SAFE Act to facilitate the licensing and registration of loan originators, and to make 

certain information about the loan originators available to the public, among other objectives 

laid out in the Act. The CFPB entered into an agreement with the SRR in September of 2012, 

which provided the CFPB access to state NMLSR information to help facilitate the CFPB's 

mission of protecting consumers. In 2014 the CFPB similarly made available NMLSR Federal 

registration information to state bank and nonbank regulatory agencies to more effectively 

achieve SAFE Act objectives such as enhancing consumer protection and aggregating and 

improving the flow of information to and between regulators. 

Officials from the CFPB and the CSBS held regular meetings during 2014. The purpose of the 

meetings was to discuss the operation of the NMLSR, resolve issues, and discuss requirements 

and policies related to the administration and function of the NMLSR. The CSBS used the 

meetings to keep the CFPB informed about changes to NMLSR technology and related training 

opportunities, and to provide information about the states' operation of the NMLSR for 

licensing loan originators. 

The CFPB continues to answer SAFE Act-related questions through its regulations guidance 

function and also maintains a SAFE Act Inquiries e-mail box to manage operational questions 

about the SAFE Act. During 2014 the e-mail box received an average of 25 inquiries each month 

primarily from individual loan originators and loan originator organizations. The questions 

typically ranged from routine compliance issues related to registration application and renewal 

to more complex guidance related to the disclosure of specific actions against loan originators in 

the NMLSR. In addition to assisting loan originators and others with SAFE Act questions, the email box continues to be a platform for identifying issues related to the operation of the NMLSR. 

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Enforcement 

The CFPB aims to enforce the consumer protection laws within the Bureau's jurisdiction 

consistently and to support consumer-protection efforts nationwide by investigating potential 

violations both independently and in conjunction with other federal and state law enforcement 

agencies. 

Conducting investigations 

Since the CFPB's launch, the Offices of Enforcement and Fair Lending and Equal Opportunity 

(Fair Lending) have been investigating potential violations of federal consumer financial laws. 

Some investigations were transferred to the Bureau by the prudential regulators and HUD, and 

the Bureau initiated other investigations based on potentially problematic practices that Bureau 

staff identified or consumers and others have reported. In utilizing its investigation resources, 

Enforcement considers many factors, including amount of consumer harm and the significance 

of the potential law violation. Investigations currently underway span the full breadth of the 

Bureau's enforcement jurisdiction. Further detail about ongoing investigations will not generally 

be made public by the Bureau until a public enforcement action is filed. 

Enforcement actions 

Section 1016(c)(5) of the Dodd-Frank Act requires the Bureau to include in the semi-annual 

report "a list, with a brief statement of the issues, of the public supervisory and enforcement 

actions to which the Bureau was a party during the preceding year." The Bureau was a party in 

45 public enforcement actions from April I, 2014 through March 31, 2015, detailed as follows: 

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Consumer Financial Protection Bureau v. National Corrective Group, Inc., et. al. 

(D. Md. No. 1:15-cv-899) (stipulated final judgment and consent order entered on March 31, 

2015) 

The CFPB took action against National Corrective Group, Inc. (NCG) and it's Chief Executive 

Officer for violations of the Fair Debt Collection Practices Act (FDCPA) and the deceptive acts 

and practices prohibition in the Consumer Financial Protection Act of 2010. NCG specializes in 

the collection of consumer debt for bounced checks, operating what is known as a "bad check 

diversion program." Many bad check diversion programs are run by companies that enter into 

contracts with state and local prosecutors' offices to collect bounced check debt. The CFPB's 

complaint alleged that NCG sent consumers notices on prosecutors' letterheads and created the 

false impression that consumers may be prosecuted for writing bounced checks, before any 

district attorney had reviewed the case and determined that prosecution was likely. NCG told 

consumers that, to qualify for the diversion program and avoid prosecution, they must pay the 

bounced check debts and enroll in the company's financial education class for an additional fee. 

The consent order entered by the court requires NCG to end its illegal practices and imposes a 

$50,000 CMP. 

Consumer Financial Protection Bureau v. Universal Debt & Payment Solutions, 

LLC, et al. (N.D.GA No. 1:1s-CV-o859) (complaint filed March 26, 2015). 

On March 26, 2015, the Bureau filed suit against a group of seven debt collection agencies, six 

individual debt collectors, four payment processors, and a telephone marketing service provider, 

for violations ofthe FDCPA and the CFP A's prohibition on unfair and deceptive acts and 

practices, and providing substantial assistance to unfair or deceptive conduct. The complaint 

alleges that the individuals, acting through a network of corporate entities, use threats and 

harassment to collect "phantom" debt from consumers. Phantom debt is debt consumers do not 

actually owe or debt that is not payable to those attempting to collect it. Their misconduct was 

facilitated by the substantial assistance of the payment processors and the telephone marking 

service provider. The defendants made millions of collections calls to consumers and consumers 

collectively paid millions of dollars because of the debt collectors' threats and false statements. 

The Bureau is seeking a permanent injunction, redress for consumers, and a monetary penalty. 

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Consumer Financial Protection Bureau v. All Financial Services, LLC (D. Md. No. 

1:15-CV-00420) (complaint filed February 12, 2015). 

On February 12, 2015, the Bureau filed a lawsuit against All Financial Services, LLC in federal 

court. The complaint alleges that All Financial Services, LLC disseminated deceptive and 

misleading advertisements for mortgage credit products in violation of Regulation Nand the 

deceptive acts and practices prohibition in the Consumer Financial Protection Act of 2010. 

Additionally, the Bureau alleges that All Financial Services, LLC failed to maintain copies of 

disseminated advertisements as required by Regulation N. The Bureau is seeking a monetary 

penalty and injunctive relief. 

In the Matter of: Flagship Financial Group, LLC (File No. 2015-CFPB-ooo6) (consent 

order entered February 12, 2015). 

The CFPB took action against Flagship Financial Group, LLC for misrepresentations in 

advertisements that improperly suggested that Flagship Financial Group, LLC was, or was 

affiliated with, a United States government entity and material misrepresentations that the 

advertised mortgage credit products were endorsed or sponsored by a government program. The 

CFPB found that the conduct violated Regulation Nand the deceptive acts and practices 

prohibition in the Consumer Financial Protection Act of 2010. Flagship Financial Group was 

ordered to pay $225,000 in civil money penalties and to comply with applicable federal laws, 

including Regulation N. 

In the Matter of: American Preferred Lending, Inc. (File No. 2015-CFPB-ooo5) 

(consent order entered February 12, 2015). 

The CFPB took action against American Preferred Lending, Inc. for misrepresentations in 

advertisements that improperly suggested that American Preferred Lending, Inc. was, or was 

affiliated with, a United States government entity and material misrepresentations that the 

advertised mortgage credit products were endorsed or sponsored by a government program. The 

CFPB found that the conduct violated Regulation Nand the deceptive acts and practices 

prohibition in the Consumer Financial Protection Act of 2010. American Preferred Lending, Inc. 

was ordered to pay $85,000 in civil money penalties and to comply with applicable federal laws, 

including Regulation N. 

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In the Matter of: NewDay Financial, LLC (File No. 2015-CFPB-ooo4) (consent order 

entered February 10, 2015). 

The CFPB ordered New Day Financial, LLC to pay a $2 million civil money penalty for violations 

of the Consumer Financial Protection Act of 2010 (CFPA) and Section 8 of RESPA. New Day is a 

non-hank mortgage lender focusing on originating refinance mortgage loans guaranteed by the 

Veterans Administration. In 2010, New Day entered into a marketing relationship with a 

veterans' organization and was named the "exclusive lender" ofthat organization, hut NewDay 

failed to disclose in advertising materials to consumers that the veterans' organization had a 

financial relationship with NewDay. This failure to disclose the relationship in the 

circumstances constituted a deceptive act or practice, which violates the CFPA. In addition, 

New Day's payments to the veterans' organization and the coordinating company for referral 

activities constituted illegal referral payments in violation of the RESP A. 

Consumer Financial Protection Bureau v. Union Workers Credit Services, Inc. 

(N.D. Tex. No. 3:14-cv-04410-L) (consent order entered on February 10, 2015). 

The CFPB filed a lawsuit against Union Workers Credit Services (UWCS) in federal court on 

December 17, 2014. The complaint alleges that the company violated the CFPA by falsely 

advertising as a general-use card one that could, in fact, only he used to buy products from 

UWCS itself, and falsely implying an affiliation with unions by, among other things, using 

pictures of nurses and firefighters in its advertising. The Bureau also alleges violations of the 

Fair Credit Reporting Act (FCRA) and Regulation V based on UWCS's use of consumer reports 

without consumers' consent in connection \vith credit transactions not initiated by consumers 

and based on UWCS's failure to advise consumers of their right to opt out of pre-screened 

solicitations. A consent order was entered on February 10, 2015. The order permanently hans 

UWCS from marketing or offering credit in any form, making any misrepresentations in offering 

or providing consumer financial products or services, and violating the FCRA. It also requires 

UWCS to pay a $70,000 penalty, or substantially all of its available liquid assets. 

In the Matter of: Continental Finance Company, LLC (File No. 2015-CFPB-o003) 

(consent order entered February 4, 2015). 

The Bureau ordered Continental Finance Company to refund an estimated $2.67 million to 

approximately g8,ooo consumers who were charged illegal credit card fees, pay a $250,000 

penalty, and submit to the Bureau's supervisory authority under 12 C.F.R. 1091.110. Continental 

had misled consumers about credit card costs by mischaracterizing opt-out procedures for paper 

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billing and misrepresented that security deposits would be FDIC-insured, in violation of the 

CFPA's prohibition on deceptive practices. Continental also assessed fees in violation of the 

CARD Act's limits during the first year after opening an account. 

Consumer Financial Protection Bureau & State of Maryland v. Wells Fargo Bank, 

N.A., et. al. (D. Md. No. 1:15-cv-00179-RDB) (stipulated final judgments and consent orders 

entered on February 10, 2015); In the Matter of: Wells Fargo Bank, N.A. (File No. 2015-

CFPB-ooo2) (consent order entered January 22, 2015); In the Matter of: JPMorgan Chase 

Bank, N.A. (File No. 2015-CFPB-0001) (consent order entered January 22, 2015). 

The CFPB and the Maryland Attorney General reached a settlement with Wells Fargo, 

JPMorgan Chase, and two individuals for an illegal kickback scheme with Genuine Title, a nowdefunct title company. Genuine Title offered loan officers valuable marketing services and cash 

payments in return for referring home buyers to Genuine Title for closing services, in violation of 

RESPA. The consent orders state that Wells must pay about $10.8 million in redress and Chase 

must pay about $300,000 in redress. Additionally, Wells must pay$21 million in civil penalties 

to the Bureau and $3 million in civil penalties to the State of Maryland, and Chase must pay 

$5oo,ooo in civil penalties to the Bureau and $1oo,ooo in civil penalties to the State of 

Maryland. The consent order requires the individual loan officer and his wife who took cash 

payments to pay a $30,000 penalty to the Bureau and bans the loan officer from the mortgage 

industry for two years. 

Consumer Financial Protection Bureau & Office of the Attorney General, State of 

Florida v. College Education Services, et al. (M.D. Fla. No. 8:14-cv-03078) (stipulated 

final judgment and order entered January 15, 2015). 

The CFPB, jointly with the Florida Attorney General, took action against College Education 

Services, a provider of student-loan debt-relief services, along with its two owners Marcia Elena 

Vargas and Frank Liz. The CFPB found that the company engaged in deceptive marketing 

practices under the CFPA and the Telemarketing Sales Rule by falsely promising lower monthly 

payments for student loans, improved credit scores, and quick results. The CFPB also found that 

the company violated the Telemarketing Sales Rule's ban on advance fees for debt-relief services 

by requiring upfront payments from consumers and the CFPA's prohibition on abusive practices 

by taking money from consumers that the company knew did not qualify for the relief promised. 

This action was resolved through a consent order that bans the company, Vargas, and Liz from 

operating in the debt-relief industry and imposes a $25,000 civil penalty. 

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Consumer Financial Protection Bureau, et al. v. Freedom Stores, Inc., et al. (E.D. 

Va. No. 2:14-cv-oo643-AWA-TEM) (stipulated final judgment and order entered January 9, 

2015). 

The CFPB and the Attorneys General of North Carolina and Virginia reached a settlement with 

Freedom Stores, Inc., Freedom Acceptance Corporation, Military Credit Services LLC, and their 

owners, of claims relating to the companies' practices of extending credit to and collecting debts 

from members of the United States military and other consumers. The stipulated final judgment 

and order prohibits the companies from filing debt-collection actions far away from where 

consumers reside or entered into purchase contracts, and from disclosing consumers' debts to 

third parties in attempting to collect. It also requires the companies to provide over $2.5 million 

in consumer redress in the form of refunds or debt-forgiveness and to pay a $10o,ooo civil 

money penalty. 

Consumer Financial Protection Bureau v. Sprint Corporation (S.D.N.Y. No. 14-cv9931) (complaint filed on December 17, 2014). 

The CFPB filed a lawsuit in federal court against Sprint Corporation. The complaint alleges that 

Sprint operated a billing system that allowed third parties to "cram" unauthorized charges on 

customers' mobile-phone accounts. The complaint alleges that Sprint violated the CFPA's 

prohibition on unfair practices by automatically billing consumers for illegitimate charges 

without their consent, disregarding red flags that highlighted the significant flaws in its thirdparty billing system, and ignoring consumer complaints about unauthorized charges. The 

complaint seeks refunds for affected consumers and penalties to deter unauthorized third-party 

charges in the future. The Bureau worked closely with the FCC's Enforcement Bureau on this 

investigation. 

Consumer Financial Protection Bureau v. Irvine Web Works, Inc., et al. (C. D. Cal. 

No. 8:14-cv-1967) (complaint filed December 11, 2014). 

The CFPB filed suit in federal court against Irvine Web Works, Inc., dba Student Loan 

Processing. US (SLP) and its owner, James Krause. The complaint alleges that SLP and Krause 

falsely represent an affiliation with the Department of Education (ED) in their marketing 

materials, including through the use of a logo very similar to the ED logo, the claim that the 

company "work[s] with" ED, and the appearance of SLP mailings. The complaint also alleges 

that the defendants charged illegal advance fees for their services, and deceived borrowers about 

the costs of the service by failing to clearly explain and disclose that they charge a monthly 

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service fee that continues until the consumer's federal student loans are paid in full or 

discharged. The Bureau alleges these practices violate the TSR and the CFPA's prohibition on 

deception. The complaint seeks a permanent injunction, restitution, disgorgement, and civil 

money penalties. 

Consumer Financial Protection Bureau v. Premier Consulting Group LLC, et. al. 

(S.D.N.Y. No. 1:13-cv-3064 (JLC)) (stipulated final judgment and order entered on December 4, 

2014). 

The CFPB entered a settlement with Premier Consulting Group LLC, a debt-settlement service 

provider, and the Law Office of Michael Lupolover. The Bureau had filed a complaint against 

these companies in May 2013. The Bureau's complaint alleged that the companies routinely 

charged consumers upfront fees before settling consumers' debts, in violation of the 

Telemarketing Sales Rule. Under the terms of the settlement, Premier was ordered to pay a civil 

penalty of $69,075, representing the amount of advance fees the companies took from 

consumers who did not have any debt settled. Premier and the Lupolover Firm will also be 

prohibited from any future violations of the Telemarketing Sales Rule. 

Consumer Financial Protection Bureau v. Franklin Loan Corporation (C.D. Cal. No. 

5:14-cv-02324-JGB) (stipulated final judgment and order entered on November 26, 2014). 

The CFPB brought an enforcement action against Franklin Loan Corporation, a California 

mortgage lender, for granting its employees bonus payments for steering consumers into loans 

with higher interest rates. The CFPB found that Franklin Loan's conduct violated the Federal 

Reserve Board's Loan Originator Compensation Rule. The rule prohibits mortgage lenders from 

paying loan officers based on loan terms such as interest rate. In addition to injunctive relief 

prohibiting the unlawful practice, Franklin Loan was ordered to pay $730,000 in redress to 

affected consumers. 

In the Matter of: DriveTime Automotive Group, Inc. and DT Acceptance Corp. (File 

No. 2014-CFPB-0007) (consent order entered November 19, 2014). 

The Bureau took action against DriveTime, a "buy-here, pay-here" auto dealer, for debt 

collection practices in violation of the CFPA's prohibition on unfair acts and practices that 

included, repeatedly calling borrowers at work, repeatedly calling references, and repeatedly 

calling VI-Tong numbers after being asked to stop. DriveTime also furnished inaccurate account 

information regarding the dates of repossessions and other facts, failed to conduct reasonable 

investigations of credit information furnishing disputes, and failed to implement reasonable 

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written credit reporting policies and procedures, in violation of FCRA and the Furnisher 

Rule. The consent order requires DriveTime to pay an $8 million civil money penalty. 

In the Matter of: Manufacturers and Traders Trust Company (File No. 2014-CFPB0016) (consent order entered October 9, 2014). 

The CFPB took action against Manufacturers and Traders Trust Company (M&T) for deceptively 

marketing free checking accounts in violation ofthe CFPA. M&T's advertising failed to inform 

consumers about key requirements to maintain free checking. When consumers failed to meet 

these requirements, M&T automatically converted their free checking accounts to checking 

accounts with fees. The CFPB ordered M&T to refund an estimated $2.9 million to 

approximately 59,000 account holders and to pay a $200,000 civil money penalty. 

United States et. al. v. Sun Trust Mortgage, Inc. (D.D.C. No. 1:14-cv-01028-RMC) 

(consent judgment entered September 30, 2014). 

The CFPB joined with the DOJ, HUD, and attorneys general in 49 states and the District of 

Columbia to file a joint proposed federal court order which required Sun Trust Mortgage, Inc., to 

provide $500 million in loss-mitigation reliefto underwater borrowers. The consent order, 

which was adopted by the court, required SunTrust to pay $40 million to approximately 48,ooo 

consumers who lost their homes to foreclosure and $10 million to the federal government to 

cover losses it caused to the Federal Housing Administration, Department of Veterans Affairs, 

and the Rural Housing Service. The order prohibits unlav.ful mortgage servicing practices, 

including robo-signing and illegal foreclosure practices, which violated the CFPA, and the order 

required Sun Trust to establish additional homeowner protections, including protections for 

consumers in bankruptcy. SunTrust was also ordered to pay a $418 million penalty in a parallel 

mortgage lending filing by DO,J. 

In the Matter of: Lighthouse Title, Inc. (File No. 2014-CFPB-0015) (consent order entered 

September 30, 2014). 

The CFPB ordered Lighthouse Title, Inc. to pay $200,000 in civil money penalties for violating 

RESP A. Lighthouse Title violated RESPA by entering marketing services agreements with 

various parties with the agreement or understanding that in return those parties would refer 

business to Lighthouse. The CFPB ordered Lighthouse Title to terminate any existing marketing 

services agreements and prohibited Lighthouse Title from entering any marketing services 

agreements for the duration of the consent order. 

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In the Matter of: Flagstar Bank, F.S.B. (File No. 2014-CFPB-0014) (consent order 

entered September 29, 2014). 

In the first enforcement action under the 2013 RESPA Mortgage Servicing Final Rule, the CFPB 

took action against Flagstar Bank, F.S.B., for violating the Rule and the CFPA in connection with 

servicing defaulted loans. Among other violations, the bank took excessive time to process 

borrowers' applications for foreclosure relief, failed to tell borrowers when their applications 

were incomplete, denied loan modifications to qualified borrowers, illegally delayed finalizing 

permanent loan modifications, and misinformed borrowers about their right to appeal the 

denial of a loan modification. Under the consent order, Flagstar is prohibited from acquiring 

pools of defaulted loans from third parties until it demonstrates it has the ability to comply with 

laws that protect consumers. Flagstar is also ordered to pay $27.5 million in redress to victims 

and $10 million in civil money penalties. 

In the Matter of: U.S. Bank N.A. (File No. 2014-CFPB-0013) (consent order entered 

September 25, 2014). 

The CFPB ordered U.S. Bank to refund an estimated $48 million to approximately 420,000 

customers and to pay a $5 million civil money penalty for illegal practices related to "add-on" 

products. The CFPB found that U.S. Bank engaged in unfair billing practices for certain identity 

protection products that promised to monitor customer credit and alert consumers to 

potentially fraudulent activity. A vendor for U.S. Bank billed customers for these products prior 

to having the authorization necessary to perform the credit monitoring and credit report 

retrieval services. The Bureau worked with the OCC to end these practices and provide relief for 

consumers. 

Consumer Financial Protection Bureau & the State of Florida v. Harper, et al. 

(S.D. Fla. No. 9:14-cv-80931 JIC) (stipulated preliminary injunctions issued September 15, 2014 

and September 23, 2014). 

This action involves a nationwide mortgage relief scheme that the CFPB, jointly with the Florida 

Attorney General, alleges took advantage of financially distressed homeowners in violation of 

Regulation 0. Under the name of the Hoffman Law Group, the defendants promised 

homeowners that, in exchange for a $6oo upfront fee, and a $495 monthly fee, the defendants 

would include the homeowners as plaintiffs in mass-joinder lawsuits against their lenders and 

servicers, which would get homeowners mortgage modifications or foreclosure relief. In reality, 

the defendants rarely, if ever, obtained meaningful mortgage assistance relief for the consumers. 

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The court issued a temporary restraining order on July 16, 2014, halting the defendants' 

business practices, placing the corporate defendants into receivership, and freezing the 

defendants' assets. On September 12, 2014, the clerk entered default against the five corporate 

defendants who had failed to appear in this matter, and the court entered orders adopting the 

stipulated preliminary injunctions on September 15, 2014 and September 23, 2014, as to the 

three remaining individual defendants. 

Consumer Financial Protection Bureau v. Corinthian Colleges, et al. (N.D. Ill. No. 

1:14-cv-07194) (complaint filed September 16, 2014). 

On September 16, 2014, the CFPB filed a lawsuit against Corinthian Colleges, Inc., one of the 

largest for-profit, post-secondary education companies, in federal court. The complaint alleges 

that Corinthian induced students to take private student loans by deceptively describing the job 

and career prospects of its graduates as well as Corinthian's career services, and by 

misrepresenting its job placement rates. Corinthian also engaged in aggressive debt collection 

practices in violation of the CFPA and the Fair Debt Collection Practices Act. 

Consumer Financial Protection Bureau v. Richard F. Moseley, Sr., et al. (W.D. Mo. 

No. 4:14-cv-00789DW) (temporary restraining order issued on September 9, 2014). 

The CFPB filed a lawsuit against a confederation of online payday lenders known as the Hydra 

Group, and its principals, alleging that they use a maze of interrelated entities to make 

unauthorized and otherwise illegal loans to consumers. The CFPB alleged that the defendants' 

practices violate the CFPA, TILA, and EFTA. On September 9, 2014, a federal court in Kansas 

City issued an ex parte TRO against the defendants, ordering them to halt lending operations. 

The court also placed the companies in temporary receivership, granted the appointed receiver 

and the CFPB immediate access to the defendants' business premises, and froze their assets. On 

October 3, 2014, the court entered a stipulated preliminary injunction against the defendants 

pending final judgment in the case. 

Consumer Financial Protection Bureau v. Global Client Solutions, LLC, et al. (C. D. 

Cal. No. 2:14-cv-06643-DDP-JPR) (stipulated final judgment and consent order entered on 

August 27, 2014). 

In a complaint filed in federal court, the CFPB charged Global Client Solutions, a payment 

processor, and its two principals, Robert Merrick and Michael Hendrix, with violating the 

Telemarketing Sales Rule by helping debt-settlement companies charge consumers illegal 

upfront fees. The court entered a stipulated final judgment prohibiting Global Client Solutions 

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from helping other companies collect illegal fees from consumers. The defendants will be subject 

to monitoring by the CFPB and will be required to make reports to the CFPB to ensure their 

compliance. The defendants will also pay over $6 million in consumer relief in addition to 

paying a civil money penalty of $1 million. 

In the Matter of: First Investors Financial Services Group, Inc. (File No. 2014-CFPB0012) (consent order entered August 20, 2014). 

The CFPB took action against First Investors Financial Services Group, Inc., for knowingly 

furnishing inaccurate information about consumers to credit reporting agencies. The inaccurate 

information likely Jed to errors in consumers' credit records, which could impair their ability to 

obtain credit. The CFPB found that First Investors' conduct violated the FCRA and the CFP A. 

First Investors was ordered to pay $2.75 million in civil money penalties, and to implement 

measures to insure the information the company provides to credit reporting agencies is 

accurate. 

In the Matter of: USA Discounters, Ltd. (File No. 2014-CFPB-oon) (consent order 

entered August 14, 2014). 

The CFPB ordered USA Discounters to refund approximately $350,000 to servicemembers for 

unfair and deceptive practices relating to installment loans for furniture, electronics, and other 

home goods. USA Discounters charged active duty servicemembers a fee for a company called 

SCRA Specialists LLC to assist servicemembers in availing themselves of their rights under the 

Servicemembers Civil Relief Act (SCRA). In fact, SCRA Specialists were charging 

servicemembers for legal protections to which they were already entitled and SCRA Specialists 

never actually performed most of the services offered to servicemembers. The consent order 

requires USA Discounters to cease engaging in this unlawful conduct, to provide full restitution 

to all consumers who paid the SCRA Specialists fee since 2009, and to pay a $so,ooo civil 

money penalty. 

In the Matter of: Amerisave Mortgage Corp., et al. (File No. 2014-CFPB-0010) (consent 

order entered August 12, 2014). 

The CFPB took action against Amerisave, its affiliate Novo Appraisal Management Corporation, 

and the owner of both companies, Patrick Markert, for engaging in a deceptive bait-and-switch 

mortgage lending scheme. The CFPB found that Amerisave lured consumers by advertising 

misleading interest rates, locked them in with costly-up-front fees, failed to honor its advertised 

rates, and illegally overcharged them for affiliated "third party" services. The order includes 

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permanent injunctive relief, requiring Amerisave to advertise only rates that are actually 

available to consumers, retain an outside consultant to help fix its advertising practices, and 

take other actions to prevent future consumer harm. Amerisave paid over $14.8 million in 

restitution and a $4.5 civil money million. Markert, in his individual capacity, paid an additional 

$1.5 million civil money penalty. 

In the Matter of: Colfax Capital Corp., et al. (File No. 2014-CFPB-0009) (consent order 

entered July 29, 2014). 

The Bureau took action against Colfax Capital and Culver Capital, also collectively known as 

"Rome Finance," and two of its owners for violating Regulation Z (Truth in Lending) by failing 

to accurately disclose credit information in financing for consumer goods sold online or near 

military bases, and the CFPA by servicing and collecting on financing agreements that state laws 

rendered void or limited the consumer's obligation to repay. Under the consent order, Rome 

Finance will cease efforts to collect on any ofthe outstanding finance agreements, and it paid $1 

in civil penalties. Additionally, under the order, Rome and two of its principals are permanently 

banned from consumer lending. 

Consumer Financial Protection Bureau v. Stephen Lyster Siringoringo, et al. (C. D. 

Cal. No. 8:14-cv-01155-JVS-AJW) (complaint filed July 22, 2014). 

The CFPB filed a complaint against three individuals and a company who marketed and sold 

purported mortgage assistance relief services to consumers. Stephen Lyster Siringoringo, 

Clausen & Cobb Management Company, Inc., Alfred Clausen, and ,Joshua Cobb allegedly 

violated Regulation 0 and the CFPA by charging advance fees for loan modifications, making 

misrepresentations related to purported modifications, and failing to make required disclosures. 

The complaint alleges that consumers paid thousands of dollars each in advance fees, but in 

numerous instances received none of the promised services or relief. 

Consumer Financial Protection Bureau v. The Mortgage Law Group, LLP, et al. 

(W.D. Wis. No. 3:14-cv-00513-JDP) (complaint filed July 22, 2014). 

On July 22, 2014, the CFPB filed a lawsuit in federal district court against The Mortgage Law 

Group, LLP, (d/b/a The Law Firm of Macey, Aleman & Seams), Consumer First Legal Group, 

LLC, and their principals Thomas G. Macey, Jeffrey J. Aleman, Jason E. Seams and Harold 

Stafford. The CFPB alleged that the defendants violated Regulation 0 and the CFPA by charging 

illegal up-front fees for mortgage assistance-relief services and by engaging in misleading and 

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deceptive practices, including falsely representing to consumers that they would receive 

mortgage-assistance-relief services through legal representation. 

Consumer Financial Protection Bureau v. Frederick J. Hanna & Associates, P.C., 

et al. (N.D. Ga. No. 1:14-cv-2211-AT) (complaint filed July 14, 2014). 

The CFPB filed a lawsuit in federal court against Frederick J. Hanna & Associates, P.C., a debtcollection Jaw firm, and its managing partners, for violating the FDCPA and the CFPA. The 

complaint alleged that the defendants operated a lawsuit mill, filing hundreds of thousands of 

debt-collection lawsuits against consumers in Georgia state court. The CFPB alleged that these 

suits often relied on deceptive affidavits and faulty or unsubstantiated evidence, and were filed 

without meaningful attorney involvement. The CFPB is seeking compensation for victims, a civil 

money penalty fine, and an injunction against the company and its partners. 

In the Matter of: ACE Cash Express, Inc. (File No. 2014-CFPB-oooS) (consent order 

entered July 10, 2014). 

The CFPB took action against payday lender ACE Cash Express, Inc., for violating the CFPA by 

engaging in several unfair and deceptive debt collection practices, and one abusive practiceleveraging an artificial sense of urgency to induce delinquent borrowers with a demonstrated 

inability to repay their existing Joan to take out a new ACE loan with accompanying fees. The 

Bureau found that this practice took unreasonable advantage of the inability of consumers to 

protect their own interest in selecting or using a consumer financial product or service. Under 

the consent order, ACE is ordered to reform its collection practices and to cease encouraging or 

suggesting that delinquent borrowers pay off their existing Joan and then take out a new loan 

with ACE. ACE was also ordered to pay $5 million in restitution and $5 million in civil money 

penalties. 

In the Matter of: Synchrony Bank,fjkja GE Capital Retail Bank (File No. 2014-

CFPB-0007) (consent order entered June 19, 2014). 

The CFPB ordered Synchrony Bank, formerly known as GE Capital Retail Bank, to provide an 

estimated $225 million in relief to consumers harmed by illegal and discriminatory credit card 

practices, including $56 million in refunds to consumers who were subjected to deceptive 

marketing practices, and $169 million in redress with respect to violations of ECOA for 

deceptively marketing credit card add-on products. The bank misrepresented the cost of the 

products, failed to inform some cardholders that they were ineligible for the products' benefits, 

failed to explain that they were enrolling consumers in an optional fee-based product, and 

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misrepresented the products' availability. The CFPB also ordered Synchrony Bank to pay $3.5 

million in civil money penalties. The violations of ECOA are discussed in the Fair Lending 

Enforcement section of this Report. 

In the Matter of: Stonebridge Title Services, Inc. (File No. 2014-CFPB-ooo6) (consent 

order entered June 12, 2014). 

The CFPB ordered Stonebridge Title Services to pay a civil money penalty of $30,000 for 

violating Section 8 of RESP A. Stonebridge paid illegal referral commissions to independent 

salespeople who referred title insurance business to it. Referral commissions are allowed under 

RESPA if the recipient of the payment is an employee of the company that is paying the referral. 

Though the salespeople received W-2 tax forms from Stonebridge, the Bureau determined that 

they were not bona fide employees. 

In the Matter of: JRHBW Realty, Inc., djbja RealtySouth; TitleSouth, LLC (File No. 

2014-CFPB-ooos) (consent order entered May 28, 2014). 

The CFPB ordered RealtySouth, Alabama's largest real estate brokerage company, and its 

affiliated title company, TitleSouth, to pay $soo,ooo in civil money penalties for violating 

RESP A. RealtySouth used a preprinted purchase contract- which homebuyers use to make an 

offer on a house -that either explicitly directed or suggested that title and closing work be 

performed by TitleSouth. The accompanying affiliated business arrangement disclosure 

contained dense text, including its own marketing claims that did not properly highlight to 

consumers that they were not required to use TitleSouth and could shop around for other title 

and closing companies. This conduct violated Section 8 of RESPA, which prohibits kickbacks, 

referrals to affiliated entities without appropriate disclosures, and payment of unearned fees in 

the context of residential real estate transactions. 

In the Matter of: Bank of America, N.A. and FIA Card Services, N.A. (File No. 2014-

CFPB-0004) (consent order entered April9, 2014). 

The CFPB ordered Bank of America and FIA Card Service to refund an estimated $727 million to 

approximately 2.9 million customers and to pay a $20 million civil money penalty for illegal 

practices related to credit card "add-on" products. The CFPB found that Bank of America and 

FIA Card Services deceptively marketed two credit card payment protection products that 

allowed customers to request the cancelation of some amount of credit card debt in the event of 

certain hardships or life events. Bank of America and FIA Card services also engaged in unfair 

billing practices for certain identity protection credit card products that promised to monitor 

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customer credit and alert consumers to potentially fraudulent activity. Bank of America and FIA 

Card Services billed consumers for these products prior to having the authorization necessary to 

perform the credit monitoring and credit report retrieval services. The Bureau worked with the 

OCC, who first uncovered the unfair billing practices, to end these practices and provide relief 

for consumers. 

Consumer Financial Protection Bureau v. ITT Educational Services, Inc., (S.D. Ind. 

No. 1:14-cv-292-SEB-TAB) (complaint filed February 26, 2014). 

The CFPB filed a lawsuit against ITT Educational Services alleging that the for-profit college 

chain engaged in unfair and abusive practices against consumers by pushing its students into 

high-interest, high-fee loans that the students could not afford and did not want, in violation of 

the CFPA. The complaint also alleged that ITT violated TILA and Regulation Z by failing to 

disclose finance charges in connection with installment loans given to students upon graduation. 

In the Matter of: PHH Corp. et al. (File No. 2014-CFPB-0002) (notice of charges filed 

January 29, 2014). 

The CFPB initiated an administrative proceeding against PHH Corporation and its affiliates, 

alleging that they harmed consumers through a mortgage insurance kickback scheme that 

started as early as 1995. A CFPB investigation showed that when PHH originated mortgages, it 

referred consumers to mortgage insurers \\'ith which it partnered. In exchange for this referral, 

these insurers purchased "reinsurance" from PHH's subsidiaries. CFPB alleges that PHH took 

the reinsurance fees as kickbacks, in violation of RESPA, which protects consumers by banning 

kickbacks that tend to unnecessarily increase the cost of mortgage settlement services. The 

CFPB alleges that because of PHH's scheme, PHH received as much as 40% of the premiums 

that consumers paid to insurers and PHH collected hundreds of millions of dollars in kickbacks, 

while consumers ended up paying excessive mortgage insurance premiums. The administrative 

law judge issued a recommended decision on November 25, 2014, and PHH and the Bureau 

have appealed to Director Cordray. As of March 31,2015, that appeal is pending. 

Consumer Financial Protection Bureau v. CashCall, Inc., et al. (D. Mass. No. 1:13-cv13167) (complaint filed December 16, 2013). 

The CFPB filed a complaint against an online loan servicer, Cash Call, Inc., for engaging in 

unfair, deceptive, and abusive practices, including debiting consumer checking accounts for 

loans that were void. The complaint seeks injunctive and monetary relief, as well as penalties for 

Cash Call's allegedly collecting on debts that consumers do not owe. 

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Consumer Financial Protection Bureau u. Borders & Borders, PLC, et al. (W.D. Ky. 

No. 3:13-cV-01047-JGH) (complaint filed October 24, 2013). 

The CFPB filed a complaint alleging that Borders & Borders, a real estate closing law firm, had 

set up joint ventures with local real estate and mortgage brokers for the purpose of funneling 

kickbacks to those brokers in exchange for referrals to Borders & Borders. The complaint seeks 

injunctive and other equitable relief. On February 12, 2015, the Court denied the defendants' 

motion for judgment on the pleadings. 

Consumer Financial Protection Bureau u. Morgan Drexen, Inc., et al. (C.D. Cal. No. 

13-cv-01267) (complaint filed August 20, 2013). 

On August 20, 2013, the CFPB filed a lawsuit in federal district court against a Nevada 

corporation, Morgan Drexen, Inc., and its President and Chief Executive Officer, Walter Ledda. 

In the complaint, the CFPB alleged that Morgan Drexen and Ledda have violated the 

Telemarketing Sales Rule and the Dodd-Frank Act by charging illegal up-front fees for debtrelief services, and falsely representing to consumers that they would become debt free in 

months if they worked with Morgan Drexen. On April 21, 2015, the Court granted the Bureau's 

motion for default judgment against Morgan Drexen on the ground that it had fabricated 

evidence in the case. 67 The Court has not ruled on whether default judgment should be entered 

against the company's CEO as well. 

Consumer Financial Protection Bureau u. Gordon, et al. (C.D. Cal. No. 12-cv-06147) 

(stipulated judgment and order entered against various defendants on February 1, 2013; order 

granting the Bureau's motion for summary judgment against other defendants entered June 26, 

2013; appeal pending). 

This action involved a nationwide mortgage relief scheme in which the CFPB alleged that the 

defendants took advantage of financially distressed homeowners by promising to help them 

obtain loan modifications and charging them advance fees ranging from $2,500 to $4,500. On 

February 1, 2013, the court entered a stipulated final judgment and order for permanent 

injunction as to defendants Abraham Michael Pessar, Division One Investment and Loan, Inc., 

67 While this is outside the reporting period, the information became available before publication. 

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and Processing Division, LLC. On June 26, 2013, the court granted summary judgment in favor 

ofthe CFPB against defendants Chance Edward Gordon and the Gordon Law Firm, P.C., finding 

that those defendants violated the Dodd-Frank Act by falsely representing: (1) that consumers 

would obtain mortgage loan modifications that substantially reduced consumers' mortgage 

payments or interest rates and (2) that defendants were affiliated with, endorsed by, or 

approved by the U.S. government, among other things. The Court also found that Gordon 

violated Regulation 0 by receiving up-front payments, failing to make required disclosures, 

wrongly directing consumers not to contact lenders, and misrepresenting material aspects of 

defendants' services. The court awarded an $11,403,338.63 judgment for disgorgement and 

restitution against Gordon. Gordon filed a notice of appeal of the court's decision on August 23, 

2013. That appeal is currently pending. 

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Fair lending 

As part of its mandate, the CFPB's Office of Fair Lending (Fair Lending) is charged by Congress 

with "providing oversight and enforcement of Federal laws intended to ensure fair, equitable, 

and nondiscriminatory access to credit for both individuals and communities" that are enforced 

by the CFPB, including the Equal Credit Opportunity Act (ECOA) and the Home Mortgage 

Disclosure Act (HMDA). 68 This part of Fair Lending's mandate is accomplished primarily 

through fair lending supervision and enforcement work. Interagency coordination69 and 

outreach to industry groups and fair lending, civil rights, consumer and community 

advocates7° are also important elements of our mandate. In addition, the Bureau published a 

recent fair lending report to Congress71 on the efforts of the Bureau and our fulfillment of our 

fair lending mandate. Published on April 28 2015, the Fair Lending Report of the Consumer 

Financial Protection Bureau72 provides an overview of risk prioritization process; supervision 

tools; recent public enforcement actions; interagency coordination efforts and reporting; and 

outreach activities for all market participants during calendar year 2014. In this Semi-Annual 

Report update, we focus on highlights from our fair lending supervision and enforcement 

activities, and continued efforts in interagency coordination and outreach. 

68 Dodd-Frank Act,§ 1013(c)(2)(A). 

6" Dodd-Frank Act, §1013(c)(2)(B). 

7° Dodd-Frank Act, §1013(c)(2)(C). 

71 Dodd-Frank Act,§ 1013(c)(2)(D). 

72 See Consumer Financial Protection Bureau, Fair Lending Report of the Consumer Financial Protection Bureau (Apr. 

28, 2015), available at http:/ ;files.consumeiiinance.gm·jf/20l504 __ cfph_fair~Jending_reporl.pdf. \'V11ile this 

document is outside the timeframe of this repmting period, it was available as of publication, and so is included 

here. 

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Fair lending supervision and 

enforcement 

Fair lending supervision 

The CFPB's Fair Lending Supervision program assesses compliance with Federal consumer 

financial laws and regulations at banks and non banks over which the Bureau has supervisory 

authority. Supervision activities range from assessments ofthe institutions' fair lending 

compliance management systems to in-depth reviews of products or activities that may pose 

heightened fair lending risks to consumers. As part of its Fair Lending Supervision program, the 

Bureau continues to conduct three types of fair lending reviews at Bureau-supervised 

institutions: ECOA baseline reviews, ECOA target reviews, and HMDA reviews. Our supervisory 

work has focused on the areas of mortgage, auto lending, and credit cards. 

In conducting reviews, CFPB examination teams have observed various factors that indicate 

heightened fair lending risk, including: 

Weak or nonexistent fair lending compliance management systems (CMS); 

Underwriting and pricing policies that consider prohibited bases in a manner that 

violates ECOA or presents a fair lending risk; 

Discretionary policies without sufficient controls or monitoring to prevent 

discrimination; 

Inaccurate HMDA data; and 

Noncompliance with Regulation B's adverse action notification requirements. 

When the CFPB identifies situations where fair lending compliance is inadequate, it directs 

institutions to establish fair lending compliance programs commensurate v.ith the size and 

complexity of the institution and its lines of business. Iffair lending violations have occurred, 

the CFPB will require remediation and restitution to consumers, and may pursue other 

appropriate relief. 

Although the Bureau's supervisory activity is confidential, the Bureau publishes regular reports 

on its website called Supervisory Highlights. These reports provide information to all market 

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participants on broad market and supervisory trends the Bureau observes. The Fall 2014 

edition of Supervisory Highlights73 included information on the Bureau's supervisory 

observations in conducting HMDA7• Data Integrity Reviews (HMDA Reviews) at dozens of bank 

and nonbank mortgage lenders. In the report, we note that examination teams have found that 

many lenders have adequate HMDA compliance systems, resulting in HMDA data with no 

errors or very few errors. At some institutions, however, examination teams have found 

inadequate compliance management systems and severely compromised mortgage lending data. 

On October 9, 2013, the Bureau published its HMDA Resubmission Schedule and Guidelines 

(HMDA Resubmission Standards)7sand a bulletin on HMDA Compliance Management, HMDA 

Resubmission Standards, and HMDA enforcement,76 The Bureau released these publications to 

highlight the importance of accurate HMDA data and effective HMDA compliance management 

systems, and to provide transparency into how the Bureau enforces HMDA. Based on our 

subsequent examination experience, the Bureau provided additional guidance in the Fall 2014 

edition of Supervisory Highlights. 

For the majority of CFPB HMDA Reporters, the CFPB's HMDA Resubmission Standards are 

generally similar to the Federal Reserve Board's HMDA Resubmission Standards. The Bureau's 

October 9, 2013 guidelines and bulletin announced a different resubmission standard for the 

largest CFPB HMDA Reporters, defined as any institution reporting 100,000 (or more) loans on 

its HMDA Loan Application Register (HMDA LAR), given the significance of these institutions' 

impact on access to mortgage credit. 

7:l Supervisory Highlights, Fall 2014 (October 28, 2014) available at 

h tIp: I/ fil e.:>.co nsumerfi na nee .gm·jf I 20141 o ~-dpb _s upcrYisory-highlights __ hlll-20 14. pdf. 

7412 USC 2801-2810. 

75 HMDA Examination Procedures (Oct. 2013), available at: 

h Up:/ j filc::;.consu merfinance .gO\ ·jf /20 1~110 _ cfp h ~.hmda _ _rcsubn1 ission-gu idelines_ fair-lending. pdf. 

76 CFPB Bulletin 2013-11 (Oct. g, 2013), available at: 

http: II files.consume rfi na nee .gm f f/20 1~{1 o _ cfpb_h mda __ com pliancc-bulletin_fair-lending. pdf. 

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In response to feedback from mortgage lenders subject to HMDA's reporting requirements, in 

the Fall 2014 Supervisory Highlights, we announced that in the Bureau's supervisory work, we 

will follow the CFPB's HMDA Resubmission Standards in reviews of 2014 and subsequent 

HMDA data, but will continue to follow the previous standards for reviews of 2013 and earlier 

HMDA data. This distinction will provide CFPB HMDA Reporters with an appropriate 

opportunity to calibrate their HMDA data collection, reporting, and compliance programs to the 

Bureau's HMDA Resubmission Standards published in 2013. Bureau examination teams will 

continue conducting HMDA Reviews using the resubmission thresholds and guidelines that are 

appropriate to the year of the data being reviewed. 

The Winter 2015 edition of Supervisory Highlights?? included information on the Bureau's 

supervisory observations regarding violations related to the failure to consider public assistance 

income or other sources of income protected by Regulation B. During recent examinations, the 

Bureau's examination staff found one or more violations ofthe ECOA and Regulation B related 

to the treatment of protected forms of income including discrimination on the basis of public 

assistance income. Applicants were automatically declined if they relied on income from a nonemployment source, such as social security income or retirement benefits, in order to repay the 

loan. Marketing materials contained written statements regarding the prohibition of nonemployment income and thus may have discouraged applicants who received public assistance 

or other protected sources of income from applying for credit. The relevant supervised entities 

were directed by examination staff to identify applicants who were wrongly denied on the basis 

of their protected income source, as well as potential applicants who were discouraged by the 

marketing materials. Supervision also directed that remediation be made to harmed applicants 

and prospective applicants, including reimbursement of fees and interest; the opportunity to 

reapply; and additional remuneration for any consumers who were improperly denied and 

subsequently lost their homes. 

The Winter 2015 edition also included information regarding adverse action notice deficiencies 

and failure to provide these notices in a timely manner. Regulation B requires a lender to notify 

77 Supervisory Highlights, Fall 2014 (March 11, 2015) available at 

h l t p: / j filc.:>.consnnwrfi na nee .gm / f /20150 3 ~- c fpb. _su pc t:Yi~ory-highl igh ts-\\-i nter-20 15. pdf. 

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an applicant of action taken within 30 days after receiving a completed application regarding the 

creditor's adverse action on the application. 78 In the report, we note that CFPB examiners found 

one or more supervised entities failed to provide the requisite information in denial notices as 

set forth in Regulation B and failed to notify an applicant of action taken within 30 days after 

receiving the completed application. These errors were attributed to weaknesses in the 

compliance audit programs and the monitoring and corrective action component of the 

compliance programs. Finally, the Winter 2015 edition discusses the CFPB bulletin issued on 

November 18, 2014 that provides guidance to help lenders avoid prohibited discrimination 

against consumers receiving Social Security disability income. The bulletin is described in more 

detail in the Fair Lending outreach, speeches, presentations, and publications section below. 79 

Fair lending enforcementso 

The CFPB has the authority to bring enforcement actions pursuant to HMDA and ECOA. 

Specifically, the CFPB has the ability to conduct investigations, file administrative complaints, 

and hold hearings and adjudicate claims through the CFPB's administrative enforcement 

process. The CFPB also has independent litigating authority and can file cases in federal court 

alleging violations of fair lending laws under the CFPB's jurisdiction. Like other Federal bank 

regulators, the CFPB will also refer matters to the DOJ when it has reason to believe that a 

creditor has engaged in a pattern oflending discrimination. Over the past year, the CFPB 

announced one fair lending enforcement action in the context of credit cards. 

78 12 CFR 1002.g(a)(1)(i). 

79 CFPB Bulletin 2014-03 (Nov. 18. 2014) available at 

http: j 1 files.consn merfina nee .gm </ f/ 20 1411_ efph __ hu lleti11._ disability-in come. pdf. 

Bo Section 1016(c)(5) ofthe Dodd-Frank Act requires the Bureau to include in the semi-annual report public 

enforcement actions the Bureau was a party to during the preceding year, 'vhich is October 1, 2013 through 

September 30, 2014, for this report. 

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GE Capital, now known as Synchrony Bank 

On June 19, 2014, the CFPB, as part of a joint enforcement action with the DOJ, ordered GE 

Capital, now known as Synchrony Bank, to provide $169 million in relief to about 108,ooo 

borrowers excluded from debt relief offers because of their national origin. The $169 million 

represents the value of the offer that the consumer did not receive plus interest and indirect 

damages. If GE Capital had written off or sold their debt, that debt will be forgiven. As part of 

the CFPB consent order, GE Capital was also required to refund $56 million to approximately 

638,ooo consumers who were subjected to deceptive marketing practices. s, 

This order represents the federal government's largest credit card discrimination settlement in 

history. As part of that action, the Bureau found and the DOJ alleged that GE Capital excluded 

cardholders with Spanish-preferred indicators on their accounts or with mailing addresses in 

Puerto Rico from two debt collection offers that were provided to other similarly situated 

cardholders between January 2009 and March 2012. 

The Bureau did not assess penalties with respect to the illegal discrimination, based on a 

number of factors, including that the company self-identified and reported the violation, selfinitiated remediation for the harm done to affected consumers, and fully cooperated with the 

Bureau's investigation, in accordance with the Bureau's Responsible Business Conduct: SelfPolicing, Self-Reporting, Remediation, and Cooperation bulletin. B> This bulletin serves to 

inform market participants that they may proactively self-police for potential violations, 

promptly self-report to the Bureau when they identify potential violations, quickly and 

completely remediate the harm resulting from violations, and affirmatively cooperate with any 

Bureau investigation above and beyond what is required. If a party meaningfully engages in 

these activities, which this bulletin refers to collectively as "responsible conduct," it may 

favorably affect the ultimate resolution of a Bureau enforcement investigation. 

8I See In the Matter of: Synchrony Bank, f/k/a GE Capital Retail Bank (File No. 2014-CFPB-ooo7) in Section 6.2 

above, Enforcement actions, for more information. 

~ http:// fiks.co n.c;u me rfina ncL~ .gov / f /201:3 o6 ··-cfph _ bulletio.~re.sponsihk-cond ucl. pdf. 

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PNC Bank, as successor to National City Bank- settlement administration 

On December 23, 2013, the CFPB and the DOJ filed a joint complaint against National City 

Bank for discrimination in mortgage lending, along with a proposed order to settle the 

complaint. Specifically, the complaint alleged that National City Bank charged higher prices on 

mortgage loans to creditworthy African-American and Hispanic borrowers than similarly 

situated non-Hispanic white borrowers between 2002 and 2008. The consent order filed by the 

agencies on December 23, 2013 and entered on January 9, 2014 by the U.S. District Court for 

the Western District of Pennsylvania required National City's successor, PNC Bank, to pay $35 

million in restitution to harmed African-American and Hispanic borrowers. The consent order 

also required PNC to pay to hire a settlement administrator to distribute funds to victims 

identified by the CFPB and DOJ. 

In order to carry out the Bureau's and DOJ's 2013 settlement with PNC, as successor in interest 

to National City Bank, the Bureau and DOJ have worked closely with the settlement 

administrator and PNC in order to distribute $35 million to minority borrowers who were 

discriminated against. On September 16, 2014, the Bureau published a blog post (available in 

English83 and SpanishB•) announcing the selection ofthe settlement administrator. The post 

provided information to consumers on contacting the administrator and submitting settlement 

forms, including eligibility claims. Under the supervision of the government agencies, the 

settlement administrator has contacted over 90,000 borrowers who are eligible for 

compensation and made over 120,000 phone calls in an effort to ensure maximum 

participation. As of the participation deadline of February 17, 2015, borrowers on 72-4% of the 

affected loans have responded to participate in the settlement. The settlement administrator 

mailed checks to eligible borrowers on May 15, 2015. 8s 

83 http:/ j\\tnv.eonsumerfinance.govjblog/national-city-hank-scttlcment-administrator-wiH-contaet-eligibleborrowcrs-soonj. 

84 http:jj\nnv.consumerfinance.gm·jblog/el-administrador-dc-negociac:ion-del-national-city-bank-pronto-sepond ra-en-contacto-con -los-pre.sta ta rios-elegiblesj. 

Ss While this update falls outside the timeframe of this report, this information was available as of publication, and so 

is included here. 

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Referrals to DOJ 

During this reporting period and pursuant to Section 706(g) of ECOA, the CFPB has also 

referred 10 matters to the DOJ with regard to: 

Discrimination on the bases of receipt of public assistance income, sex, marital status, 

age, race and national origin in mortgage lending; 

Discrimination on the bases of race and national origin in auto finance; 

Discrimination on the basis of marital status in unsecured consumer lending; and 

Discrimination on the bases of receipt of public assistance income, age, marital status 

and sex in student lending. 

Interagency fair lending coordination 

and outreach 

Interagency coordination 

The Bureau's fair lending activity involves close partnerships and coordination among the 

Bureau's Federal and state regulatory and enforcement partners. Fair Lending continues to lead 

the Bureau's fair lending interagency coordination and collaboration efforts by working with 

partners on the Financial Fraud Enforcement Task Force's Non-Discrimination Working Group, 

the Interagency Task Force on Fair Lending, the Interagency Working Group on Fair Lending 

Enforcement, and the FFIEC Subcommittee on HMDA and the Community Reinvestment Act. 

On October 22, 2014, along with federal partners from the FRB, the DOJ, the FDIC, the OCC, 

HUD, and the NCUA, the Office of Fair Lending participated in and presented at the 2014 

Federal Interagency Fair Lending Hot Topics webinar. The webinar covered several fair lending 

topics, including fair lending risk assessments, mortgage pricing risks, and indirect auto lending 

supervision and enforcement activities. The webinar was viewed by approximately 2,500 

registrants. 

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Fair lending outreach, speeches, presentations and 

publications 

The CFPB is committed to communicating directly with industry and fair lending, civil rights, 

consumer, and community groups on its policies, compliance expectations, and priorities. 

Outreach is accomplished through issuance of Interagency Statements, Supervisory Highlights, 

Compliance Bulletins, and blog posts, as well as through the delivery of speeches and 

presentations addressing fair lending and access to credit matters. 

On November 18, 2014, the Bureau issued a bulletin providing guidance to help lenders avoid 

prohibited discrimination against consumers receiving Social Security disability income. 86 The 

bulletin reminds lenders that requiring unnecessary documentation from consumers who 

receive Social Security disability income may raise fair lending risk, and calls attention to 

standards and guidelines that may help lenders comply with the law. 

The Social Security Administration provides certain benefits for individuals with serious 

disabilities, but generally will not provide documentation regarding how long benefits will last. 

Some applicants have reported being asked for information about their disabilities or even for 

doctors' notes about the likely duration of their disabilities. ECOA and Regulation B prohibit 

creditors from discriminating against an applicant because some or all of the applicant's income 

comes from any public assistance program, which includes Social Security disability income. 

Though lenders can consider the source of an applicant's income for determining pertinent 

elements of creditworthiness, the bulletin notes that lenders may face fair lending risk if they 

require documentation beyond that required by lawful applicable agency or secondary market 

standards and guidelines in order to demonstrate that Social Security disability income is likely 

to continue. 

The bulletin discusses current standards and guidelines on verification of Social Security 

disability income, including under the CFPB's Ability-to-Repay rule, HUD's standards for 

Federal Housing Administration-insured loans, the Department of Veterans Affairs (VA) 

86 CFPB Bulletin 2014-03 (Nov. 18. 2014) available at 

http: I I filcs.consumcrfi nancc .gm"jf/ 20 1411 __ cfpb __ bulletin_ disability-income. pdf. 

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standards for VA-guaranteed loans, and guidelines from Fannie Mae and Freddie Mac. The 

bulletin reminds lenders that following the applicable standards and guidelines may help them 

avoid policies and practices that violate ECOA and Regulation B. 

As noted in the Fair Lending Supervision section above, the Bureau also released on October 28, 

2014 the Fall 2014 edition of Supervisory Highlights, which focused on the Bureau's 

supervisory observations in conducting HMDA Data Integrity Reviews (HMDA Reviews) at 

dozens of mortgage lenders. The Bureau also released on March 11, 2015, the Winter 2015 

edition of Supervisory Highlights, which included the following fair lending-related topics: 

consideration of protected forms of income, adverse action notice deficiencies, and the CFPB 

bulletin providing guidance on avoiding discrimination against consumers receiving Social 

Security disability income. 

CFPB leadership and staff continue to deliver testimony, speeches, panel remarks, webinars, 

and in-person presentations to diverse audiences, including Members of Congress and staff, 

industry, national and state fair lending and fair housing groups, and community and consumer 

advocates. 

The Bureau looks forward to continued dialogue with these and other stakeholders on important 

matters related to fair lending and access to credit. 

Home Mortgage Disclosure Act 

On August 29, 2014 the Bureau published in the Federal Register proposed changes to 

Regulation C, which implements HMDA, to improve information reported about the residential 

mortgage market. 87 The rule would shed more light on consumers' access to mortgage credit by 

updating the reporting requirements of HMDA regulations. The Bureau also aims to simplify the 

reporting process for financial institutions. The proposal would improve the quality and type of 

HMDA data as required by the Dodd-Frank Act. The public comment period for the proposed 

87 http: //v1 '' w.gpo.~m·/fdsys/ pkg/FR-20 14-08-29/ pdf/ :2014-18:~5:3. pdf. 

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rule closed on October 29, 2014. The Bureau received approximately 400 comments. The 

Bureau is thoroughly reviewing and considering all the comments received and continues 

working towards potential final rulemaking. 

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Building a great institution: 

update 

The CFPB seeks to promote transparency, accountability, and fairness. Built on these values, the 

CFPB is better able to make consumer financial markets work for consumers, honest businesses, 

and the economy. 

Open government 

The Bureau's mission is to be an agency that helps consumer finance work by making rules more 

effective, by consistently and fairly enforcing the rules, and by empowering consumers to take 

more control of their economic lives. A critical part of making financial markets work is 

ensuring transparency in those markets. The CFPB believes that it should hold itself to that 

same standard and strives to be a leader by being transparent with respect to its own activities. 

To accomplish this, the Bureau utilizes its website, consumerfinancc.gov, as the primary vehicle 

to share information on the operations and decisions the CFPB undertakes every day. 

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Recent information posted on our website that illustrates the Bureau's commitment to openness 

includes:ss 

Freedom of Information Act (FOIA) 

Transparency is at the core of the CFPB's agenda and an essential part of how the CFPB 

operates. The public deserves to know what the CFPB is doing and how we are doing it. 

Over the last few months, the CFPB has posted the Annual FOIA Report for 2015, 

the Chief FOIA Offieer Report for 2015, and Quarterly Reports for the first two quarters 

of fiscal year 2015. 

Leadership Calendars 

The CFPB remains committed to providing information to the public regarding the daily 

work of the Bureau's senior leadership by sharing their daily calendars. The Bureau 

consistently posts the monlh],- calendars of Director Richard Cordray and Deputy 

Director Steven Antonakes to its website. The calendars of past leaders Elizabeth Warren 

and Raj Date are archived on the Bureau's website for the public to view as well. 

Procurement Opportunities 

The Bureau remains committed to publishing its future procurement needs by listing a 

description of the requirement, forecasted solicitation fiscal year and quarter, and 

forecasted acquisition method. 

Procurement Transparency 

The Bureau's Office of Procurement introduced a Contract Transparency Clause in 

February 2011 in each of its solicitations and contracts. The clause gives notice to all 

prospective trading partners that the Bureau will publish contracts on our website to 

enhance the visibility to any interested party in how the public money entrusted to us is 

being spent. Working with the FOIA Office, we will begin to publish awarded contracts 

during the Summer of 2015. 

R8 The open goYernment section of the Bureau's website is eoHsnnH:rfinance.goY open/, and all documents and pages 

referenced in this section may be found there. 

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General Reports 

The CFPB also continues to post a variety of reports to illustrate progress in several areas 

of the Bureau's operations and activities. Recent reports posted to the CFPB's website 

include the 2014 Consumer Response Annual Report, the 2015 Fair Debt Collection 

Practices Annual Report, the Bureau's Arbitration Study Report, the Winter 2015 edition 

of Supervisory Highlights, a report on financial education and well-being, the 

Bureau's annual Human Capital report, annual1017(e)(4) appropriations report, and 

reports on college credit card agreements and medical debt. 

Guidance Updates 

The CFPB periodically provides updates on regulations and guidance. During this 

reporting period, the Bureau posted updates to its Supervision and Examination Manual, 

specifically the RESPA and TIL;\ procedures. Additionally, the Bureau posted 

compliance-related information for issued rules. This included lists for rural counties 

and rural or underserved counties for 2015. 

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Budget 

The Bureau is committed to fulfilling its statutory responsibilities and delivering value to 

American consumers by being accountable and using our resources carefully. The CFPB's 

Operations Division is responsible for coordinating activities related to the development ofthe 

CFPB' s annual budget. The Office of the Chief Financial Officer within the Division has primary 

responsibility for developing the budget, and works in close partnership with the Office of 

Human Capital, the Office of Procurement, the Technology and Innovation team, and other 

program offices to develop budget and staffing estimates in consideration of statutory 

requirements, performance goals, and priorities ofthe Bureau. The CFPB Director ultimately 

approves the CFPB budget. 

How the CFPB is funded 

The CFPB is funded principally by transfers made by the Board of Governors from the combined 

earnings of the Federal Reserve System, up to the limits set forth in the Dodd-Frank Act. The 

Director of the CFPB requests transfers from the Federal Reserve System in amounts that he has 

determined are reasonably necessary to carry out the Bureau's mission. Annual funding from 

the Federal Reserve System was capped at a fixed percentage of the total 2009 operating 

expenses of the Federal Reserve System, equal to: 

w% ofthese Federal Reserve System expenses (or approximately $498 million) in fiscal 

year (FY) 2011; 

n% ofthese expenses (or approximately $547.8 million) in FY 2012; and 

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12% of these expenses (or approximately $597.6 million) in FY 2013 and each year 

thereafter, subject to annual adjustments. 89 

The inflation-adjusted transfer cap for FY 2014 was $608-4 million. The adjusted transfer cap 

for FY 2015 is $618.7 million. The CFPB requested transfers from the Federal Reserve totaling 

$301.8 million to fund CFPB operations and activities through the second quarter of FY 2015. 9o 

Funds received from the Federal Reserve are generally held in an account for the Bureau at the 

Federal Reserve Bank of New York. 

Bureau funds that are not funding current needs of the CFPB, however, are invested in Treasury 

securities. Earnings from those investments are also deposited into the Bureau's account. 91 

If the authorized transfers from the Federal Reserve were not sufficient in FY 2010-2014, the 

CFPB had the authority in those fiscal years to ask Congress for up to $200 million in additional 

funds, subject to the appropriations process. 9• The CFPB did not request an appropriation in FY 

2011, FY 2012, FY 2013 or FY 2014. That authority has now expired. 

Fiscal year 2015 spending through second quarter 

As of March 31, 2015, the end of the second quarter of FY 2015, the CFPB incurred 

approximately $284.5 million in obligations93 to carry out the authorities of the Bureau under 

Federal financial consumer law. Approximately $129 million was spent on employee 

compensation and benefits for the 1,459 CFPB employees who were on-board by the end of the 

second quarter. 

89 See Dodd-Frank Act, Pub. L. No. 111-203, Sec. 1017(a)(2). 

9° The Bureau posts all funding request letters on its website at eonsumerfinance.govjbudget. 

91 See Dodd-Frank Act, Pub. L. No. 111-203, Sec. 1017(b). 

92 See id. Sec. 1017(e). 

93 An obligation is a transaction or agreement that creates a legal liability and obligates the government to pay for 

goods and services ordered or received. 

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In addition to payroll expenses, the largest obligations made through the end of the fiscal year 

were related to contractual services. Some of the Bureau's significant obligations that occurred 

in the first two quarters of FY 2015 included: 

$12.0 million for a one-year building occupancy agreement with the Office of the 

Comptroller of the Currency; 

$10.1 million to the Department of Treasury for information technology infrastructure, 

and other administrative services; 

$10.0 million for a one-year building occupancy agreement with the General Services 

Administration for CFPB's temporary headquarters office space; 

$9.8 million for maintaining ongoing operations of CFPB's consumer contact center and 

enhancements to the case management database; 

$7.7 million to the Department of Treasury for various administrative support services, 

including information technology and human resource systems support; 

$6.1 million for technical litigation support services and products provided through an 

interagency agreement with the Department of Justice; 

$6.0 million for enterprise-wide engineering and system administration contractor 

support; and 

$4.9 million to the Department of Treasury's Bureau of Fiscal Services for cross-leveling 

systems support, such as core financial accounting, procurement, transaction processing 

and reporting, travel and payroll. 

Tables 15 and 16 categorize CFPB obligations incurred through the first two quarters ofF¥ 2015 

by expense category and division/program area: 

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TABLE 15 FY 2015 SPENDING BY EXPENSE CATEGORY 

OtherConlractual. Services $110,270,000 

Equipment $13,132,000 

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TABLE 16 FY 2015 SPENDING BY PROGRAM AREA 

Office of the Director 

Qperi;ltions 

Consumer Education & Engagement 

Supervision, Enforcement, Fair Lending 

External Affairs 

Centralized Services9s 

$3,499,000 

$57,724;000 

$10,785,000 

$72,256,000 

$3,383,000 

$111,341,000 

$tl!4,s1s,ooo >' 

94 Other Programs comprises the costs oft he CFPB Office of Ombudsman, Administrative Law ,Judges, and other 

CFPB programs. 

95 Centralized services include the cost of certain administrative and operational sen ices prmided centrally to other 

Divisions (e.g., building space, utilities, and IT-related equipment and services). 

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"I Civil Penalty Fund 

Pursuant to the Dodd-FrankAct, the CFPB is also authorized to collect and retain for specified 

purposes civil penalties collected from any person in any judicial or administrative action under 

federal consumer financial laws. 96 The CFPB generally is authorized to use these funds for 

payments to victims of activities for which civil penalties have been imposed, and may also use 

the funds for consumer education and financial literacy programs under certain circumstances. 

The CFPB maintains a separate account for these funds at the Federal Reserve Bank of New 

York. 

Civil penalty funds collected in 2015 

In the first quarter of FY 2015, the CFPB collected civil penalties from six defendants totaling 

$23-4 million. In the second quarter, $24.2 million was received from 10 defendants. Civil 

penalties collected in FY 2015 to date97 total $47.6 million. 

TABLE 17: FY 2015 CIVIL PENALTY FUND COLLECTIONS 

U.S. Bank $5,000,000 October 3, 2014 

Flagstar Bank, F.S.B. $10,000,000 October 9, 2014 

Drive Time $8,000,000 November 25, 2014 

96 See Dodd-Frank, Pub. L. No. 111-203, Sec. 1017(d). 

97 As of March 31, 2015. 

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Freedom Stores, Inc. 

American Preferred Lending, 

Inc 

Wells Fargo (Genuine Title 

Matter) 

Flagship Financial Group, LLC 

rota! 

$ 100,000 

$ 

$ 70,00099 

$21,000,000 

$ 225,000 

$~~.64~;q5o 

Civil penalty funds allocated in FY 2015 

Period 4: April1, 2014- September 30, 2014 

January 16, 2015 

February 20, 2015 

February 13, 2015 

March 2, 2015 

On November 28, 2014, the Bureau made its fourth allocation from the Civil Penalty Fund. As of 

September 30, 2014, the Civil Penalty Fund contained an unallocated balance of $112.8 million. 

This amount was available for allocation pursuant to 12 C.F.R. § 1075-lOS(c). 

98Premier Consulting Group, LLC agreed to pay civil penalty of $69,075 in 3 installments of S23,025. TlVO 

insta11ments totaling $46,oso have been received to date. VVc anticipate collecting the remaining $23,025 in 

accordance with the schedule in the order. 

99American Preferred Lending, Inc. is to pay $8s,ooo in CMPs in 3 installments. The first payment of $3s,ooo was 

received on 2/20/15- We anticipate collecting the remaining Sso,ooo in accordance with the schedule in the order. 

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During Period 4, final orders in Bureau enforcement actions imposed civil penalties in 13 cases. 

For three cases with final orders from Period 4, the civil penalties were received after 9/30/14 

and were not included as available funds for allocation in Period 4. Under the Civil Penalty Fund 

rule, the victims of the violations for which the civil penalties were imposed in these 13 cases are 

eligible to receive payment from the Civil Penalty Fund to compensate their uncompensated 

harm.Ioo 

Of those 13 cases, ten cases have classes of eligible victims with no uncompensated harm that is 

compensable from the Civil Penalty Fund, and three cases have classes of eligible victims with 

uncompensated harm. As part of the Period 4 allocation, one case from Period 3 and four cases 

from Period 2 were reviewed, in addition to the Period 4 cases. In these five prior-period cases, 

the Fund Administrator has determined that the classes of victims in these cases do not have 

uncompensated harm that is compensable from the Civil Penalty Fund. 

The three cases with compensable uncompensated harm, Amerisave, Culver Capital LLC, and 

Global Client Solutions, received an allocation from the Civil Penalty Fund. The Bureau 

allocated $1.38 million to the Amerisave victim class, enough to compensate fully that victim 

class's uncompensated harm. The Bureau also allocated $3-4 million to the Culver Capital victim 

class, and $108 million to the Global Client Solutions victim class, enough to compensate 89% of 

those victim classes' uncompensated harm. No funds were allocated to consumer education and 

financial literacy programs. 

There was no remaining unallocated Civil Penalty Fund balance available for future allocation. 

Civil penalties collected on or after September 30, 2014 were deposited in the Fund. The amount 

100 Pursuant to the Civil Penalty Fund Rule, victims' compensable harm is determined by looking to the terms of the 

relevant court or administrative order. If the amount of a victim's compens~ble harm cannot be determined based 

on the terms of the relevant order, the victim's compensable harm generally wil1 be his or her out-of-pocket losses 

that resulted from the '\iolation. To determine the amount of a \-ictim's uncompensated harm that may be 

compensated from the Civil Penalty Fund, the Bureau will take the victim's total compensable harm, and subtract 

out any compensation that the \ictim has received-or is reasonably expected to receive-for that harm. See 12 CFR 

1075.104. 

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in the Fund as of March 31, 2015 will be available for allocation following the conclusion of 

Period 5 in accordance with 12 C.F.R. § 1075.105(c). 

TABLE 18: PERIOD 4 ALLOCATION SUMMARY 

Victim Compensation $1.12,776,305 

Victim Class Allocation: $3,400,434 

Victim Class Allocation: $1 ,380,470 

Victim Class Allocation: $107,995;400 

Programs: $0 

Total Allocation $112,776,305 

Bureau-administered redress 

Dodd-Frank Act section 1055 authorizes a court in a judicial action, or the CFPB in an 

administrative proceeding, to grant any appropriate legal or equitable relief for a violation of 

Federal consumer financial law. Such relief may include redress for victims of the violations, 

including refunds, restitution, and damages. Relief that is intended to compensate victims is 

treated as fiduciary funds and deposited into the "Legal or Equitable Relief Fund" established at 

the Department of the Treasury. 

In the first quarter of FY 2015, the Bureau collected $28.2 million in Bureau-Administered 

Redress funds. A collection of $27.5 million was received from Flagstar Bank and $730,000 was 

received from Franklin Loan Corporation. In the second quarter of FY 2015, the Bureau 

collected $687,033 in Bureau-Administered Redress funds. A collection of $386,280 was 

received from Freedom Stores, Inc and $300,753 was received from J.P. Morgan Chase. In all 

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Bureau-Administered Redress cases, funds will be distributed in accordance with the terms of 

their respective final orders. 

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, Diversity and excellence 

Recruiting and hiring 

The CFPB continues its commitment to recruit and hire highly qualified individuals from 

diverse backgrounds to serve the Bureau's mission. Our recruitment framework is designed to 

build talent pipelines at the Bureau's headquarters in Washington, DC, and in its examiner 

workforce distributed across the country. The Bureau's examiners are organized by regions and 

anchored by key strategic satellite offices in three of the nation's financial hubs- Chicago, IL; 

New York, NY; and San Francisco, CA; and the fourth regional team of examiners is anchored in 

Washington, DC. As of March 31, 2015, there were 1,437 staff on-board and working to carry out 

the CFPB's mission. 

To meet current and future staffing requirements, the Bureau will continue to evolve its talent 

acquisition strategies to build a pipeline of talent through the following methods: 

Recruiting strategically to build a diverse workforce 

The Bureau is committed to recruiting highly-qualified, diverse applicants for CFPB positions. 

The Bureau leverages several sources for recruitment to ensure access to wide candidate pools. 

The Bureau deploys a comprehensive outreach approach and achieves its recruiting goals 

through: 

Leveraging digital platforms to maximize engagement reach, including leveraging the 

Professional Diversity Network- a digital platform that enables us to publish CFPB job 

opportunities to eight distinct diverse target areas; 

External outreach, which includes attendance at professional conferences and university 

events, with a special focus on building relationships and marketing with diverse affinity 

organizations such as the National Black MBA Association, the National Society of 

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Hispanic MBAs, the Association of Latin Professionals in Finance and Accounting, 

Ascend Pan Asian Leaders, and the National Association of Black Accountants; 

Enlisting senior leadership and Bureau champions to promote the Bureau's employer 

identity at outreach events to attract candidates to the CFPB as a "best place to serve"; 

Engaging existing staff as ambassadors of the Bureau and providing them with the tools, 

messages, and resources to reach out to their own professional networks; 

Continuing to utilize professional development programs to build a robust pipeline of 

talent to meet current and emerging workforce needs, including the Federal Pathways 

Program and Presidential Management Fellows Program; and 

Leveraging and promoting flagship programs, such as the Technology and Innovation 

Fellows Program, the Director's Financial Analyst Program, and the Louis Brandeis 

Honors Attorney Program to find the best and brightest entry-level talent, attracting 

candidates not usually available to the Federal government and promoting the Bureau as 

an employer of choice. 

Becoming an employer of choice 

The CFPB continues to build its reputation of being an employer that offers challenging work in 

direct support of American consumers. The Bureau's stimulating mission, willingness to 

innovate and collaborate, and insistence on excellence serve as strong platforms to recruit 

exceptional talent. The CFPB recruits inspired, goal-oriented professionals who derive intrinsic 

value from professional accomplishment. CFPB's employer identity as an agency that protects 

consumers directly reinforces the Bureau's identity as an employer of choice. As awareness of 

the Bureau and its work become prevalent, the image of the CFPB as a great place to work will 

also be enhanced. 

Enhancing the candidate experience 

CFPB is committed to engaging candidates throughout the hiring process in accordance with 

Federal hiring goals and standards. 

OHC continues to use tailored assessment methods (e.g., structured interviews, work sample 

reviews) to support selections for specific positions, and offers training to hiring managers on 

how to use structured interviews effectively. These candidate assessment strategies continue to 

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enhance the pool of highly-qualified candidates, enable hiring managers to make objective, datadriven employee selection decisions, and build a workforce that demonstrates the key 

competencies necessary for success at CFPB. 

OHC has continued administering its New Employee and Hiring Manager Surveys to identify 

processes that are working well, as well as areas for improvement. 

Staff education, training, and 

engagement 

Since its creation, the CFPB has focused on strong engagement with existing and potential 

Bureau staff, utilizing education, training, and engagement programs. As the CFPB matures, it 

has increased both the reach and depth of these programs. 

Examples during this reporting period include: 

Continue to increase quantity and scope of targeted learning programs for employees 

and leaders; 

Began operating under an interim, two-level performance management system 

negotiated as part of our collective bargaining agreement with NTEU to promote 

achievement of the Bureau's mission by enhancing employee performance and 

engagement through continuous feedback, ongoing collaboration between employees 

and supervisors and a focus on the development of employee skills and competencies; 

Continued to provide guidance and consultations to both employees and leaders on the 

individual development planning process and developmental opportunities, including a 

cross-reference to numerous off-the-shelf learning programs, as well as a career 

development workshop; 

Finalized and began to roll out a comprehensive suite of career planning tools, including 

Skills and Interest Inventories, a Details Marketplace, a guide to Career Paths at the 

Bureau, and other training and development opportunities, to assist employees in their 

career development; 

Finalized an effort to update and enhance CFPB's competency models, including 

validating the proposed competencies and preparing for rollout across the Bureau; 

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Strengthened and expanded the leadership coaching program to include middle 

managers as well as CFPB leadership; 

Offered 17 Lunch and Learn educational sessions on topics of cross-functional interest 

which support the CFPB's values of Serve, Lead, and Innovate and which foster 

successful achievement of our mission; 

Hosted Diversity and Inclusion training events for managers and line-staff along with a 

number of cultural awareness events to raise awareness and develop cultural 

competency skills; 

Extended the Effective Feedback Conversations seminar to both managers and 

employees to support positive and constructive performance feedback, set expectations 

concerning career advancement, and support employee development; 

Continued to deliver internal custom training course for new CFPB supervisors to cover 

basic managerial duties as a Federal supervisor or manager; 

Continued to deliver custom CFPB Leadership and Management Development series 

called the Leadership Excellence Seminars, designed to train all supervisors and 

managers at CFPB on managerial practices and leadership behaviors. Class Sessions are 

delivered in Cohorts, comprised of a mix of all management levels: Supervisors, Middle 

Managers, and Executives; 

Continued to deliver internal custom training courses for CFPB team members on 

Effective Meetings and Effective Teams; 

Enhanced on-line learning and development resources, by adding access to thousands of 

on-line books and materials, video vignettes of lessons learned from specialists, noted 

authors, and business leaders, more online courses that addressed CFPB core 

competencies and basic supervisory skills, and managerial learning references; 

Launched a library of online reference material through the CFPB library; and 

Finalized design of a new Examiner Training Cohort Program to expose new examiners 

to Federal consumer financial laws and CFPB examination procedures and practices 

through formal classroom training, examination experiences, and informal coaching 

from experienced commissioned examiners. 

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In addition, the Bureau continues to identify, cultivate, and sustain a diverse and inclusive work 

environment. The Bureau is committed to developing a culture that encourages collaboration 

and fairness, and leverages diversity throughout the organization so that all individuals are 

equipped to Serve, Lead, and Innovate. 

Diversity and inclusion 

In January 2012, the Bureau formally established the Office of Minority and Women Inclusion 

(OMWI) to ensure that diversity and inclusion continues to inform its work as provided under 

the Dodd-Frank Act. 

OMWI has a three-part mandate: 

1. To be responsible for all matters of the agency relating to diversity in management, 

employment and business activities. 

2. To develop and refine standards for: 

Equal employment opportunity, workforce diversity, and inclusion at all levels of the 

Bureau; 

Increased participation of minority-owned and women-owned businesses in the 

programs and procurement of the agency, including standards for coordinating 

technical assistance to such businesses; and 

Assessing the diversity policies and practices of entities regulated by the agency. 

3. To advise the Director of the CFPB on the impact of the policies and regulations of the 

agency on minority-owned and women owned businesses. 

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Diversity in the CFPB's workforce 

As of March 31,2015, the Bureau had 1.437 total employees. Women represent 47% of the 

Bureau's workforce. The CFPB is committed not only to strong workforce demographics by 

gender, but also to increasing the number of women in leadership positions. Along with gender 

equality, the Bureau aims to increase workforce diversity with greater representation of 

minorities. As Table 19 shows, minorities constituted 35% percent ofthe workforce at the end of 

March 2015. 10 ' 

TABLE 19: CFPB WORKFORCE DIVERSITY AS OF MARCH 2015 

Male 764 53% 

Total Minority 506 35% 

Figure 15 shows the CFPB workforce by race and ethnicity. Of the 1.437 employees at the end of 

the reporting period, 68% self-identify as White, 18% as Black/African-American, 9% as Asian 

American, and 4% as another racial group or belonging to two or more racial groups. In terms of 

ethnicity, 6% of employees self-identify as Hispanic, and 94% as Non-Hispanic. 

101 March 21, 2015 

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FIGURE 15: CFPB WORKFORCE BY ETHNICITY AND RACE AS OF MARCH 2015 

Ethnic Group 

NoncHlspanlc 

Hispanic 80 6% 

Racial Group 

983 

African American 259 18% 

Asian 133 9% 

American Indian or Alaska 

6 0.4% 

Native 

Native Hawaiian or Pacific 2 

Islander 

2 or More Races 40 3% 

Ot!1er 

Workplace Initiatives 

OMWI spearheads the Bureau's efforts to bring diverse perspectives to the CFPB's work by 

ensuring that the talents of employees are maximized and that inclusion strategies are 

incorporated into the policies, practices, and training at the Bureau. One of OMWI's areas of 

focus is on efforts to create an inclusive organizational culture by promoting policies and 

procedures to ensure that the Bureau's workplace is hospitable and welcoming to all employees. 

OMWI's training for managers provide supervisors and managers with the tools to build 

inclusive work environments for all employees. In addition, OMWI has embarked on several 

initiatives to better understand and improve the employee experience. OMvV1 is also working to 

promote greater diversity in hiring and contracting practices at the Bureau. OMWI currently 

offers comprehensive training that will enable managers and employees to both understand and 

appreciate diversity and how to support an inclusive work environment. 

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The CFPB is committed to fostering an environment in which every individual has an equitable 

opportunity to excel and contribute to the mission and goals of the Bureau. OMWI plans to 

optimize training and education to enhance diversity management and leadership skill sets. 

OMWI works closely through the Bureau's executive diversity council consisting of Bureau-wide 

leaders that support and promote diversity and inclusion (D&I) programs throughout the 

Bureau. In conjunction with the council, a staff-level working group through which employees 

may communicate to management on broad-based diversity and inclusion insights and 

challenges, and participate in activities that increase awareness of D&I, is also currently being 

launched. OMWI utilizes its Bureau-wide newsletter to better connect with employees about the 

work of the office and to solicit strategies and recommendations from employees on ways to 

enhance the workplace culture. 

OMWI continues to provide diversity and inclusion training to Bureau employees to expand 

awareness, knowledge and cultural competencies to aid understanding of the value of a diverse 

workforce to the CFPB mission. OMWI provides a two day comprehensive diversity and 

inclusion training to all managers to help them develop awareness, knowledge and skills for 

managing a diverse workforce, for creating inclusive teams and for incorporating consideration 

for diversity and inclusion in the work products for the benefit on consumers. 

The office will launch a mentoring program to equip employees with the tools necessary to 

navigate their career path. OMWI works closely with OHC, and the Office of Civil Rights (OCR), 

in analyzing annual employee survey results, exit survey trends, and workforce analytics to 

determine trends and areas of opportunity. 

Workforce diversity 

OMWI is responsible for promoting diverse and inclusive hiring practices at the Bureau. OMWI 

continues to collaborate with OHC and OCR to develop tools to monitor and analyze the 

diversity of applicants and hires. OMWI participates in recruitment and outreach events in 

order to attract a diverse pool of qualified candidates emphasizing diversity from a wide range of 

American society. OMWI has developed strategic partnerships with colleges, universities, 

professional organizations and affinity groups that we believe will continue to connect us to a 

diverse applicant pool. 

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This year OMWI has focused on: 

Conducting listening sessions for Bureau employees to hear concerns about diversity, 

inclusion, equality, and fairness and issuing a report with recommendations; 

Developing and administering diversity and inclusion training programs for employees 

at all levels to increase awareness and understanding of diversity and inclusion issues in 

the workplace, including a two day workshop for supervisors and managers; 

Collaborating with OHC and OCR to conduct robust structured interview training and 

reduce bias in hiring, including tips on recruitment, interviewing, managing unconscious 

bias, and promoting inclusion; 

Collaborating with the CFPB's Hispanic Outreach working group to develop multifaceted 

and targeted recruitment strategies; 

Partnering with OHC to conduct analysis of the Annual Employee Survey (AES) to 

measure differences in perception among demographic groups; 

Providing subject matter expertise to the Performance Management Working Group on 

attending to diversity and inclusion in the development of the new performance 

management policy; 

Increasing the OMWI's impact on Bureau-wide hiring through a series of recruitment, 

hiring, and relationship building events; 

Working in a consulting capacity 'o\"ith Divisions to incorporate consideration for 

diversity and inclusion in their strategic plans and on the implementation of their 

diversity and inclusion goals; and 

Streamlining information sharing by elevating OMWI and the Office of Civil Rights to 

work in the Office of the Director under a new umbrella organization called the Office of 

Equal Opportunity and Fairness. The consolidation raises the profile of the offices, 

reiterates the importance ofthese functions to the Bureau, and enhances collaboration 

and information sharing between these offices and within the Bureau. 

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OMWI continues to collaborate with OHC and OCR to ensure that our policies support the 

hiring, retention and development of a diverse and inclusive workforce. OMWI participates in 

recruitment and outreach events in order to attract a diverse pool of qualified candidates 

emphasizing diversity from a wide range of American society. OMWI has developed strategic 

partnerships with colleges, universities, professional organizations and affinity groups that we 

believe will continue to connect us to a diverse applicant pool. OMWI has assisted with the 

development of internal systems and processes, as well as training, to ensure that the CFPB has 

the benefit of a diverse and qualified pool of candidates for all job openings. OMWI has 

formulated internal working groups that include members from each office to address specific 

areas for potential growth. 

Diversity and inclusion at regulated entities 

Under the Dodd-Frank Act, OMWI is required to create standards for assessing the diversity 

and inclusion policies and practices of the entities regulated by the CFPB. OMWI continues to 

coordinate with fellow OMWI Directors at the FDIC, FRB, NCUA, OCC, and SEC to develop 

interagency standards. Draft standards were published in Fall 2013 and the agencies received 

public comment and feedback. OMWI Directors are currently working on finalized standards for 

release to the public. 

Minority-owned and women-owned business initiatives 

OMWI and the Bureau's Procurement Office (Procurement) are committed to greater economic 

empowerment for women and minorities and aim to promote procurement opportunities for 

minority-owned and women-owned businesses. 

OMWI and Procurement have engaged in outreach efforts to raise awareness of procurement 

opportunities available at CFPB. These include: 

Creating and developing relationships with key business stakeholders, industry groups, 

and trade groups; 

Speaking at and attending supplier diversity events and co-locating with other federal 

partners at events when available; 

Holding an in-house, monthly OMWI Supplier Diversity Procurement Workshop in an 

effort to assist and educate small businesses on CFPB's needs and the general Federal 

procurement process; 

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Hosting monthly workshops at CFPB to introduce potential vendors to the CFPB and to 

provide information on how to do business with the CFPB; and 

Distributing literature and educational materials aimed at minority- and women-ov.-ned 

businesses. 

The CFPB is a regular participant in an interagency working group consisting of other OMWI 

staff from the FDIC, FHFA, FRB, Treasury, NCUA, OCC, and SEC. Procurement is currently 

measuring obligations for certain small business contracts awarded to minority-owned small 

disadvantaged businesses, women-owned small businesses, service disabled veteran-owned 

small businesses, and HUBZone small businesses. As of the end of the second quarter in FY 

2015, 102 the Bureau awarded 9% of contract dollars to small businesses. As shown in Table 20, of 

the total contract dollars awarded in FY 2015, 2% went to small disadvantaged businesses. 

Additionally, 3% of total contract dollars went to woman-owned small businesses. In December 

2014, the General Services Administration awarded a $99 million construction contract, on 

CFPB's behalf, to renovate the Bureau's headquarters building in Washington, DC. Thus, it is 

expected that CFPB's small business percentage will be affected in FY 2015. 

TABLE 20 CONTRACT DOLLARS AWARDED TO SMALL BUSINESS BY TYPE 

Small business $14,584,065 

Woman-owned small business $4,134,225 

owned small business 

HubZone small business $137,349 

102 Data source is from the Federal Procurement Data System (FPDS) for IT 2015 through March 31, 2015. The data 

was pulled, and is current, as of May 12, 2015. FPDS data is subject to an OMB annual validation each January for 

the pre\·ions fiscal year. 

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*Dollars may apply to multiple socio-economic categories. 

Coordinating with OMWI, Procurement uses its external website to provide a forecast of 

procurement opportunities. Procurement and OMWI jointly present important tips for potential 

businesses at the CFPB monthly workshops and provide email addresses to foster 

communication between the office and potential small business vendors. Many small minorityowned and women-owned businesses may find trying to do business with the Federal 

government difficult and unclear. In an effort to increase transparency and enhance 

understanding, the CFPB has developed a number of practical resources for women-owned and 

minority-owned businesses. OMWI has created brochures and pamphlets for diverse suppliers. 

These materials include information on historical obligations by products and service categories, 

a forecast of future procurements, and information on small business set-asides. OMWI works 

with Procurement to make these resources available digitally and update them regularly on the 

CFPB's website.1o3 

The two offices have also extended outreach efforts both locally and nationally, including 

presence at the Reservation Economic Summit and the 25th Annual Government Procurement 

Conference, in addition to the monthly OMWI Supplier Diversity Procurement Workshops held 

at the Bureau's headquarters. Finally, in furthering OMWI's mandate to ensure fair inclusion 

among its suppliers, OMWI and Procurement have developed a contractual provision requiring 

contractors, and subcontractors when applicable, "good-faith efforts" to ensure, to the 

maximum extent possible, the "fair inclusion of women and minorities in the[ir] workforce", as 

required under Section 342(c)(2)-(3) of the Dodd-Frank Act. In addition, Director Cordray has 

approved a CFPB Supplier Diversity Statement, reaffirming the Bureau's commitment to 

providing an environment of inclusion amongst qualified, diverse suppliers. The Statement can 

be seen in full on CFPB's external website. 

External Affairs/Consumer Education and Engagement 

In collaboration with External Affairs and Consumer Education and Engagement, OMWI 

conducts outreach to consumer groups, advocacy organizations, and other stakeholders to 

103 http:/ j\\l\w.consumcTflnancc.govjdoing-busincss-with-us/. 

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develop strong and productive partnerships. The offices collaborate to reach consumers and 

potential candidates at recruiting events, community outreach events and others events. They 

also engage in meetings with these groups to discuss concerns and issues such as how policies 

may impact consumers, and how they may increase their participation in contracting 

opportunities for minority and women-owned businesses and to learn about the consumer 

experience firsthand. OMWI will continue to develop productive relationships with the 

representatives of the communities that we serve. 

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APPENDIX A: 

More about the CFPB 

GENERAL INFORMATION: 

Email address: info@Jconsumerfinance.gov 

Phone number: (202) 435-7000 

WEBSITE: 

\\'1\'\\'.consurnerfinancc.g:o'· 

MAILING ADDRESS: 

Consumer Financial Protection Bureau 

ATTN: Employee name, Division, and/or Office Number 

1700 G Street, NW 

Washington, DC 20552 

CONSUMER COMPLAINTS AND QUESTIONS: 

Webpage: consumerfinance.gm'jcomplaint 

Toll free number: (855) 411-CFPB (2372) 

TrY /TDD: (855) 729-CFPB (2372) 

Fax number: (855) 237-2392 

Hours of operation: 8 a.m. - 8 p.m. EST, services in 180+ languages 

Consumer Financial Protection Bureau 

PO BOX4503 

Iowa City, Iowa 52244 

WHISTLEBLOWERS: 

Email: whistlehlmYcrGI'constm1erfinance.gm· 

Toll free number: (855) 695-7974 

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PRESS & MEDIA REQUESTS: 

Email: press~1lconsumert!nance.gov 

OFFICE OF LEGISLATIVE AFFAIRS: 

Legislative Affairs: (202) 435-7960 

CFPB OMBUDSMAN'S OFFICE: 

Email: CFPBOmbudsman@cfpb.gov 

Webpage: consumcrfinancc.govj ombudsman 

Toll free number: (855) 830-7880 

TrY number: (202) 435-9835 Fax number: (202) 435-7888 

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APPENDIX B: 

Statutory reporting 

requirements 

This Appendix provides a guide to the Bureau's response to the reporting requirements of 

Section 1016(c) of the Dodd-Frank Act. The sections of the report identified below respond to 

Section 1016(c)'s requirements. 

A discussion of the significant problems Consumer challenges in 

faced by consumers in shopping for or obtaining financial products 55-60 obtaining consumer financial products or and services -shopping 

services challenges 

A justi!ipation of the ~ureau's budget Budget: 

2 App~ndil( \,.; Financiahar:icl request for the previ()Us year b1lll:Qat rep~f!s · 

A list of significant rules and orders 

adopted by the Bureau, as well as other 

significant initiatives conducted by the Appendix C -Significant 3 Bureau, during the preceding year, and rules, orders, and initiatives 161-69 

the plan of the Bureau for rules, orders, or 

other inttiatives to be undertaken during 

the upcoming period 

An analysis <:>f c;ornplaints about consumer Consumer~(\8~n~$l~ 

4 

finMcialproi:lucts or seryjces thet the obt!ilihtr:'!g finallci~l J'lrodui<ts B~,tNjau has received enif e(lliacted in its 11-~s all~ lletvlce$ ·"" Ct:jQsum,er centraf dati! base on cl)rnplalnts during the concerns · preeedingyear 

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A list, with a brief statement of the issues, Enforcement actions 103-19 

5 of the public supervisory and enforcement 

actions to which the Bureau was a party Fair lending enforcement 124-27 

during the preceding year actions 

The action!\ taken regarqlng rules, orders, 

Appendi~ Q -.Actions .taken 

regarding rule~, ord~rl>, a.nd 

170-72 6 and supervisory actions with respect to supervisory actions. with 

covered persons 1<\/hich .are not credit respect !.0 Cl?Jierecf person~> 

unions or depository institutions which are.l'lot cre<~it unions 

or depository institutions 

An assessment of significant actions by Appendix E- Significant 

7 State attorneys general or State state attorney general and 173-74 regulators relating to Federal consumer regulator actions financial law 

8 An anaJysis of the Bureau's efforts to fulfill FairJenging 120,3() its fair lending mission 

An analysis of the Bureau's efforts to 

9 increase workforce and contracting Diversity and excellence 144-56 diversity consistent with the procedures 

established by OMWI 

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APPENDIX C: 

Significant rules, orders, 

and initiatives104 

Section 1016(c)(3) requires "a list of significant rules and orders adopted by the Bureau, as well 

as other significant initiatives conducted by the Bureau, during the preceding year and the plan 

of the Bureau for rules, orders or other initiatives to be undertaken during the upcoming 

period." 

Below is a list of rules and other initiatives that the Bureau proposed, adopted or finalized 

during the preceding year.ws Rather than limiting the list to significant items, the Bureau has, in 

order to be transparent and provide complete information about its activities, included a more 

expansive set of rules and initiatives: w6 

Final Policy Statement: Disclosure of Consumer Complaint Narrative Data; 107 

Request for Information Regarding the Consumer Complaint Database; 108 

104 Many links in this section are to documents published in the Federal Register. However, links to final rules, 

proposed rules and guidance documents may also be found on the CFPB's website, 

consu merfinancc.gov/regulat ions/ and consumerfinance.govjguidance. 

10" The preceding year is defined as April1, 2014- March 31, 2015. 

w6 To better inform the public, this Appendix contains a discussion of a broad range of rulemakings, orders, and 

initiatives, which may not be defined as "significant" for other purposes. Items are listed in chronological order of 

Federal Register publication, beginning with the most recently-published document. 

107 http:/ jW\\ \r.gpo.Rm·jfdsys/ pkg; FR-2015-0:{-24/pdf/2tn5-06722.pdf. 

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Request for Information Regarding Credit Card Market; 109 

Proposed Rule: Submission of Credit Card Agreements under the Truth in Lending Act 

(Regulation Z); 110 

Final Rule: Amendments to the 2013 Integrated Mortgage Disclosures Rule under the 

Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act 

(Regulation Z) and the 2013 Loan Originator Rule under the Truth in Lending Act 

(Regulation Z);lll 

Proposed Rule: Amendments Relating to Small Creditors and Rural or Underserved 

Areas Under the Truth in Lending Act (Regulation Z); 112 

Request for Information Regarding an Initiative on Safe Student Banking; 113 

Final Rule: Appraisals for Higher-Priced Mortgage Loans Exemption Threshold 

Adjustment; 11• 

Final Rule: Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption 

Threshold; us 

Final Rule: Home Mortgage Disclosure (Regulation C) Adjustment to Asset-Size 

Exemption Threshold; 11 6 

108 http:J/www.gpo.gm·jfds)·sjpkg/FR-2015-0:l-24/pdf/201S-06707.pdf. 

109 http:/ jwww.gpo.gov/fds~·s; pkg/FR-201.5-03-19/ pdfj2ors-o6~~5Lpdf. 

110 http: i jwww.gpo.gO\-jfdsys/pkg/FR-2015-02-26/pdi/20 15-03879. pdf. 

1H http:/ /WW\\' .gpo.gtn)fdsys/pkgjFR-20 l{)-02-19/pdf/20 15-01321. pdf. 

112 http:/ jwwvr.gpo.gm·/fdsys/pkg/FR-2015-02-11/pd(/20 15-021:25. pdf. 

113 http:/ /W\\W.gpo.gm)fdsys/pkg/FR-20 IS-02-1;3/pd f/2015-02982. pdf. 

114 http:/ ;\nvw.gpo.gcwjfdsys/pkg/FR-2014-t2<~o/pdfj2014-30419.pdf. 

us http: 1 /"' 1 w.gpo.gov /fdsys/ p kg/FR -2 o 14-12-2 9/ pdf i 2014-3 0405. pdf. 

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Proposed Rule: Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) 

and the Truth in Lending Act (Regulation Z); 117 

Proposed Rule: Amendments to the 2013 Mortgage Rules under the Real Estate 

Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation 

Z);"B 

Final Rule: Amendments to the 2013 Mortgage Rules Under the Truth in Lending Act 

(Regulation Z);"9 

Proposed Rule: Amendments to the 2013 Integrated Mortgage Disclosures Rule Under 

the Real Estate Settlement Procedures Act (Regulation X) and Truth in Lending Act 

(Regulation Z) and the 2013 Loan Originator Rule Under the Truth in Lending Act 

(Regulation Z); 120 

Final Rule: Amendment to the Annual Privacy Notice Requirement Under the GrammLeach-Biiley Act (Regulation P); 121 

Proposed Policy: No-Action Letters;122 

Proposed Plan: Proposed Language Access Plan for the Consumer Financial Protection 

Bureau; 123 

u6 http:/ jwww.gpo.goY/fdsysjpkf',/FR-20l4-I2-29/pdf/2014-30404.pdf. 

117 http; f j\\l\ 'r'· .gpo.gm)fdsys/pkg/FR-:W14-12-23/pdf/2014-27286.pdf. 

11 8 http:/ ;'www.gpo.goY/fdsys/pkg/FR-2014-12-15/pdf/20 14-28167. pdf. 

119 http;/ j\vww.gpo.gm)fdsys/pkg/FR-2014-11-0J/pdf/20 14-25503.pdf. 

120 http:// \\WW .gpo .govj fdsys/ pkg/I'R -2014-10-29/ pdf/ 2014-24 739. pdf. 

121 http:/ j\\WW.gpo.gm"jfdsysjpkg/FR-2014-10-28/pdf/2014-25299· pdf. 

122 http:/ jwww.gpo.gov/ fdsysjpkg/PR-20 14-10-16/pdf/2014-24645· pd L 

103 hll p:! /111111 .gpo.gO\/lClsys/pkg/FR-20!4-!0-08/pdf/2014-241'22.pdf. 

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Proposed Rule: Defining Larger Participants of the Automobile Financing Market and 

Defining Certain Automobile Leasing Activity as a Financial Product or Service;'"4 

Final rule: Defining Larger Participants of the International Money Transfer Market;'"S 

Final Rule: Electronic Fund Transfers (Regulation E);'26 

Proposed Rule: Home Mortgage Disclosure (Regulation C);' 2 ' 

Final Rule: Truth in Lending (Regulation Z) Annual Threshold Adjustments (CARD Act, 

HOEPA and ATR/QM);',s 

Proposed policy statement: Disclosure of Consumer Complaint Narrative Data; 129 

Final Rule: Application of Regulation Z's Ability-to-Repay Rule to Certain Situations 

Involving Successors-in-Interest;'3° 

Final Rule: Rules of Practice for Issuance of Temporary Cease-and-Desist Orders;''' 

Request for Information Regarding the Use of Mobile Financial Services by Consumers 

and Its Potential for Improving the Financial Lives of Economically Vulnerable 

Consumers; 13 2 

t'28 http / /W\\"""\\'.gpo.gO\'Ifd.-..:ys/pkg/FR-2014-0B-l5/Pdf/2014-183;j8.pdf. 

129 http:; hsww,gpo.gm·/fdsys/pkgjFR-2014-08-04/pdf/20l4-18;~55·Pdf. 

13 1 http //\1 \\W.gpo.gm)fds\s/pkg/FR-2014-0()-lR/ pdf/2014-14228. pdf. 

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Proposed Rule: Amendment to the Annual Privacy Notice Requirement Under the 

Gramm-Leach-Bliley Act (Regulation P);'33 

Proposed Rule: Amendments to the 2013 Mortgage Rules under the Truth in Lending 

Act (Regulation Z);'34 

Proposed Rule: Electronic Fund Transfers (Regulation E); 135 and 

Proposed Rule: Minimum Requirements for Appraisal Management Companies. 136 

In the upcoming period, the Bureau also intends to propose or adopt the following rules and 

orders, and conduct the following initiatives: 

Rules finalizing the restatement of regulations implementing consumer financial 

protection laws transferred from other regulatory agencies to the Bureau by the DoddFrank Act; 

Continue work to address issues in connection with implementation ofthe Dodd-Frank 

Act's mortgage requirements and implementation of the Bureau's 2013 Mortgage Rules; 

Continue work toward a final rulemaking to implement the Dodd-Frank Act 

amendments to HMDA; 

Continued expansion of the Bureau's capacity to handle consumer complaints with 

respect to all products and services within its authority; 

Enforcement of Nondiscrimination on the Basis of Disability in Programs Receiving 

Financial Assistance from the Bureau; 

l3:.t http:/ /\\·ww .gpo.gm -j fdsys j p k?;/FR -20 l4-0 6-12/ pdf /2014 -1;j552. pdf. 

'33 http: ;;,,·ww.gpo.govjtdsys/pkg/FR-2014-0.')·1:J/pdf/2014-10713. pdf. 

1

34 http:/ hn\·W.?,po.g:OY/fdS) ·sjpkgjFR-2014-05-06/pd f/20 14-10207. pdf. 

1

36 http: I /V\ \\ w.gpo.gm·jfd~ys/ pkg/ FR-2014-04-(H) /pdfj2014-0686o.pdf. 

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Propose additional rules to further define the scope of the Bureau's nonbank supervision 

program; and 

Working jointly with the FRB, rules finalizing a Board proposal regarding the Expedited 

Funds Availability Act as implemented by Regulation CC. 

The Bureau has issued the following bulletins and guidance documents over the past year: 137 

Bulletin on Treatment of Confidential Supervisory Information; 138 

Bulletin on Social Security Disability Income Verification;"9 

Bulletin on Marketing of Credit Card Promotional APR Offers; 14° 

Interagency Guidance Regarding Unfair or Deceptive Credit Practices; 141 

Bulletin 2014-01 on Mortgage Servicing Transfers; 14 2 

Policy Guidance on Supervisory and Enforcement Considerations Relevant to Mortgage 

Brokers Transitioning to Mini-Correspondent Lenders; 1

43 and 

137 The pas~ year is defined here as April1, 2014- March 31, 2015. The Bureau posts all bulletins and guidance 

documents on its website, htlp:/ /WW\'-',consumerfinance.gov. 

1

38 CFPB Bulletin 2015-01 was published on the Bureau's website on January 27, 2015. 

http://files.consumerfinance.gm·/f/20l50l~cfpb __ eompliance-bulletin_.treatment-of-confidential-supervisoryinformation.pdf. 

139 CFPB Bulletin 2014-03 was published on the Bureau's website on November 18, 2014. 

http:; j files.consumerfi na nee .govj f/20 l41l_cfpb __ hullet i n_disa bility-incomC. pdf. 

14° CFPB Bulletin 2014-02 was published on the Bureau's website on September 3, 2014. 

http: I /files.consu mert1na nee .govj f f 2 01409_ cfpb __ hulletin_market ing-credit-ca rd-promotiona l-a pr-offers. pdf. 

141 This document was issued jointly by the FRB, CFPB, FDIC, NCUA, and OCC on August 22, 2014. 

http: //\mow .gpo.gov /fdsys/ pkg/FR-20 14-08-29/ pd f/2014-18353. pdf. 

142 CFPB Bulletin 2014-01 was published to the Bureau's website on August 19, 2014. 

http: I /fileB.consunwrfina nee .goY/ f/20 1408_cfpb_bulletin_mortgage-sc!Ticing-transfer. pdf. 

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Application of Regulation Z's Ability-to-Repay Ru]e to Certain Situations Involving 

Successors-in-lnterest.1

44 

The Bureau has issued the following orders to remedy violations of Federal consumer 

financial protection law over the past year: 145 

In the Matter of: Flagship Financial Group, LLC; 146 

In the Matter of: American Preferred Lending, Inc.; 147 

In the Matter of: New Day Financial, LLC;148 

In the Matter of: Continental Finance Company, LLC;149 

In the Matter of: JPMorgan Chase Bank, NA.;zso 

In the Matter of: Wells Fargo Bank, NA.;'S' 

1'!:l This document was published on the Bureau's website on July 11, 2014. 

http; I /fites.eonsumerfina nee.goY /f/ 201407 _cfpb,_g11 idance_m ini .. eorrespondent,..lenders. pdf. 

144 This final rule was published on the Bureau's website on July 8, 2014. 

http://files.consumerl!nanee.go,·/f/20I407._cfpb_bulletin_mortgage-lending-rules_successors.ptlf. 

145 April I, 2014- March 31, 2015. 

146 File No. 2015-CFPB-ooo6. Consent order entered February 12, 2015. 

http:/ /files.consumemnance.gov(f/201502_cfpb_consent-order_!lagship-t1nancial-gro1!p.pdf. 

147 File No. 2015-CFPB-ooos. Consent order entered February 12, 2015. 

http:/ /files.co-nsumerfinanee.gov/f/2015D2 __ cfpb __ consent-order_american-preterred~lending.pdL 

1

48 File No. 2015-CFPB·0004. Consent order entered February 10, 2015. 

htl p: / jfiles.consumerfinance .gm·/f (201502_ cfpb_consent -order _newday-financial. pdf. 

149 File No. 2015-CFPB-ooo3. Consent order entered February 4, 2015. 

http:/ /file.s.eonsumerfinanct•.goY/f/20l502._;cfpb_consent-order.,.continental-finance.pdf. 

1

5° File No. 201S·CFPB·0001. Consent order entered January 22, 2015. 

http://fi1es.consnmcrfina!we.gov/f/20150l_cfpb_conscnt-ordrr_jp~morgan~chase-bank~na.pdf. 

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In the Matter of: DriveTimeAutomotitJe Group, Inc. and DT Acceptance Corp.;'s2 

In the Matter of: Manufacturers and Traders Trust Company;153 

In the Matter of: Lighthouse Title,Inc.;'s4 

In the Matter of· Flagstar Bank, F.S.B.;'ss 

In the Matter of: U.S. Bank N.A.; 1

s6 

• In the Matter of: First Investors Financial Services Group, Inc.; 157 

In the Matter of· USA Discounters, Ltd.;1ss 

In the Matter of: Amerisave Mortgage Corporation, et al.;~-;9 

'5' File No. 2015-CFPB-ooo2. Consent order entered January 22, 2015. 

htlp://files.consmnerfinance.g<.w/f/20lSOl_cfpb._"const~nt-order __ wells~fargo-bank-na.pdf, 

15 2 File No. 2014-CFPB-0017. Consent order entered November 19 .• 2014. 

h lt p: I /files.eonsu mern nathX~ .gm·/ f/ 2 01411 ·-cfph __ ton.sent ~order_ d rh ·etime. pdf. 

153 File No. 2014-CFPB-oo16. Consent order entered October 9, 2014. 

http: I ;me~ .con.su merrinance.gO\) f/20141 o _._.cfpb. __ consent -order._m-l. pdf. 

154 File No. 2014-CFPB-o015. Consent order entered September 30, 2014. 

http://files.consumeriinanee.gov/f/~01409_dpb_cons.:Jlt-order_lighthol!S"-tit1e.pdf. 

155 File No. 2014·CFPB-oo14. Consent order entered September 29, 2014. 

http:/ /files.c·.onsu m erfi na !HX~.go,/f/ 20 1409~- cfpb, _ _con.sent-order_tl<'lgstar. pdf. 

'56 File No. 2014-CFPB-oo"'1· Consent order entered September 25, 2014. 

http:/ /fik~s.eonsumerfina11(~e.gtw/f/2014D9 __ cfpb_eonsent-order_us-bank.pdf. 

'57 File No. 2014-CFPB-oo12. Consent order entered August 20, 2014. 

http: I 1 files.mnsumeriinance.gm ·jf/ 201408 _cfpb_ consent -order _fi rst-i nwstors.pdf. 

158 File No, 2014-CFPB-oou. Consent order entered August 14, 2014, 

http:/ /filcs.consumcrlinancc.g0\)f/201408_dpb_.conscnt·ordcr_usa-discounters.pdf, 

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In the Matter of: Colfax Capital Corp., et al.; 16o 

In the Matter of: ACE Cash Express, Inc.; 161 

In the Matter of: Synchrony Bank,f/kja GE Capital Retail Bank; 162 

In the Matter of: Stonebridge Title Services, Inc.;'63 

In the Matter of: JRHBW Realty, Inc., djbja RealtySouth; TitleSouth, LLC;'64 and 

In the Matter of: Bank of America, NA., and FIA Card Services, N.A. 16S 

'59 File No. 2014-CFPB-0010. Consent order entered August 12, 2014. 

h l t p: I j file.s:.coJtsu merftnanee .gov/ f/20 14 o-8 __ cfph._ eo n:-;{'n t -order._ a rneris;;n ·e. pdf. 

I6o File No. 2014-CFPB-ooo9. Consent order entered July 29, 2014. 

h Up: /,lfilt""s .consum erfi nance .go\ ·j f/2o 1407 _.cfpb .... (~onsent -order __ rome-fi na nee. pdf. 

161 File No. 2014-CFPB-oooB. Consent order filed on July 10, 2014. 

http:// file~.consume rfina nee .govj f/ 20 1407.--efpb __ co nseJit-ordec.ace-cas h-eKpre:ss. pdf. 

162 File No. 2014-CFPB-ooo7. Consent order filed on June 19, 2014. 

h 1 tp: / /files.con.su mcrfinn net;' .gov/f/ 20 1406_cfpb~ t'O nsent-order,_synch rony -hank. pdf. 

' 6" File No. 2014-CFPB-ooo6. Consent order filed on June 12, 2014-

http: j I fi les.consu merfi na nee .goY/ f I 2014 o6. __ cfpb_consent-order_ stonehridgr-t itle~serviees. pdf. 

164 File No. 2014-CFPB-ooos. Consent order filed May 28, 2014, 

h lt p: j / fi les.consu mertina net' .g(A /f/ 20 140:1 ___ cfpb __ consent ~ordt~r __ ret~ It) ·~south -and-tit! e-south. pdf. 

1

65 File No. 2014-CFPB-ooo4. Consent order filed April9, 2014. 

http:// filcs.con.sumerfinance.gm'/f/201404 __ cfpb ... ba nkofamcrica~ xonscnt-ordcr, pdf. 

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APPENDIX D: 

Actions taken regarding rules, 

orders, and supervisory actions 

with respect to covered persons 

which are not credit unions or 

depository institutions 

Section 1016(c)(6) requires a report on "the actions taken regarding rules, orders and 

supervisory actions with respect to covered persons which are not credit unions or depository 

institutions." Between Apri11, 2014 and March 31, 2015, the Bureau has taken the following 

actions with respect to such covered persons: 

The Bureau's Supervisory Highlights publications provide general information about the 

Bureau's supervisory activities at banks and nonbanks without identifying specific 

companies. The Bureau published four issues of Supervisory Highlights between March 

31,2014 and March 31, 2015; 166 

166 Spring 2014: http:/ jwv .. :w.consumerfinance.gm-jreports/supenisory-highlights-spring-2014/; Summer 2014: 

http:/ j\\'WW .consumerfinancc.goY/ reports/superYisory-highlights-summer-2014/; Fall 2014: 

http:/ /'nn\' .consumerfinance.goY/reports/super\"isory-highlights-fall-2014/; and Winter 2015: 

http: I I fi1 es.consumerfi na nee .goY/ f I 20 1503 __ cfpb _su pcrYisory-high lights-win ter-20 15. pdf. 

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In the Matter of: JRHBW Realty, Inc., doing business as RealtySouth; TitleSouth, LLC 

(File No. 2014-CFPB-0005) (consent order filed May 28, 2014);'67 

In the Matter of Stonebridge Title Services, Inc. (File No. 2014-CFPB-ooo6) (consent 

order filed on June 12, 2014); 168 

In the Matter of: ACE Cash Express, Inc. (File No. 2014-CFPB-ooo8) (consent order 

filed on July 8, 2014); 169 

In the Matter of: Colfax Capital Corp., et al. (File No. 2012-CFPB-ooog) (consent order 

entered July 29, 2014); 17° 

In the Matter of: Amerisave Mortgage Corporation, et al. (File No. 2014-CFPB-0010) 

(consent order entered August 12, 2014);m 

In the Matter of: USA Discounters, Ltd. (File No. 2014-CFPB-0011) (consent order 

entered August 14, 2014);112 

In the Matter of: First Investors Financial Services Group, Inc. (File No. 2014-CFPBoo12) (consent order entered August 20, 2014);173 

In the Matter of: Lighthouse Title, Inc. (File No. 2014-CFPB-0015) (consent order 

entered September 30, 2014); 174 

167 http:/ /files.consumedinance.gov/f/201405_cfpb_consent-order_realty-south-and-title-south.pdL 

!68 http:/ jfiles.consunlerfinance.gm·jf/201406_efpb_eonsent-order_stonebridge-title-services.pdf. 

t69 http: j /files .consu mertlna nee .gov,ff/ 201407 _dpb _consent -order_ace-eas h-express. pdf. 

17° http:// files.consumerfi nance.goY /f J 201407 _ cfp b _consent -order_rome-fina nee. pdf. 

171 http:/ /files.consnmerfinance.gm/f/201408_cfph_consent-order_amerisaYe.pdf. 

172 http: I /files.consu merfi na nce.gov/f/20 14 o8 _"cfpb _consent -order_ usa-discounters. pdf. 

173 htlp:/ /fi1cs.consurncrfinancc.gm)f/201408_cfpb_consC'nt-order_first-in\'estors.pdL 

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In the Matter of: DriveTime Automotive Group, Inc. and DT Acceptance Corp. (File No. 

2014-CFPB-0017) (consent order entered November 19, 2014); 175 

In the Matter of· Continental Finance Company, LLC (File No. 2015-CFPB-0003) 

(consent order entered February 4, 2015); 176 

In the Matter of: NewDay Financial, LLC (File No. 2015-CFPB-ooo4) (consent order 

entered February 10, 2015);177 

In the Matter of: American Preferred Lending, Inc. (File No. 2015-CFPB-0005) 

(consent order entered February 12, 2015); 178 and 

In the Matter of: Flagship Financial Group, LLC (File No. 2015-CFPB-ooo6) (consent 

order entered February 12, 2015). 179 

'74 http: If files.consu me rfiuance .govl f I 20 1409.Jfpb _consent -ordecJigh tho use-title. pdf. 

175 http: I I files.consumerfi na nee .goY/f j 20 1411~ cfpb _consent -order_ d rh·etime. pdf. 

176 http: j / files.eonsu merfina nce.gm ·; f j 201502 _ efpb _consent-order_ con ti nenta1-finance. pdf. 

177 http: j I files .consu merfi na nee .goY /f/ 20 1502_ cfpb_ consent -order _newday-fina neia L pdf. 

1

78 http: I /files.consu merfina nee. go" If/ 20 1502_ cfpb _consent -order_ american-preferred-lending. pdf 

1

79 http: I I files. co nsumerfina ncc.gov If I 20150 2_ efp b_ couscn t -ordcr_flagsh i p-financial-group. pdf 

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APPENDIX E: 

Significant state attorney 

general and regulator actions 

Dodd-Frank Section 1016(c)(7) requires "an assessment of significant actions by State attorneys 

general or State regulators relating to Federal consumer financial law." The reporting period for 

this information is April1, 2014- March 31, 2015. 

For purposes ofthe Section 1016(c)(7) reporting requirement at this early period in the Bureau's 

development, the Bureau has determined that any actions asserting claims pursuant to Section 

1042 of the Dodd-Frank Act are "significant." The Bureau is aware of the following State 

Attorney General actions that were initiated during the reporting period and that asserted 

Dodd-Frank Act claims: 

People of the State of Illinois, by Lisa Madigan, Illinois Attorney General, v. CMK 

Investments, INC djbja All Credit Lenders, Inc., an Illinois Corporation, No. 

2014CHo4694 (Cir. Ct. Cook Cnty. Mar. 18, 2014), removed No. 14-cv-02783 (N.D. Ill. 

Apr. 17, 2014); 

People of the State of Illinois, by Lisa Madigan, Illinois Attorney General, v. Alta 

Colleges, Inc., a Delaware Corporation, Westwood College, Inc., a Colorado 

Corporation djbja Westwood College and Westwood College Online; Wesgray 

Corporation, a Colorado corporation djbjaj Westwood College-River Oaks and 

Westwood College-Chicago Loop; Elbert, Inc., a Colorado Corporation djbja 

Westwood College-DuPage; and El Nell Inc., a Colorado corporation djbja Westwood 

College-O'HareAirport, No. 2012CH01587 (Cir. Ct. Cook Cnty. Mar. 20, 2014), removed 

No.1-cv-3786 (N.D. Ill. May 22, 2014); 

Benjamin M. Laws key, Superintendent of Financial Services of the State of New York, 

v. Condor Capital Corporation and Stephen Baron, No. 14 CV 2863 (S.D.N.Y. Apr. 25, 

2014); 

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State of Mississippi ex rei. Jim Hood, Attorney General of the State of Mississippi v. 

Experian Information Solutions, Inc., No. 14-1212(4) (Ch. Ct. Harrison Cty. May 16, 

2014), removed No. 14-cv-00243-LG-JMR (S.D. Miss. June 12, 2014); and 

Consumer Financial Protection Bureau, State of North Carolina, ex rei. Roy Cooper, 

Attorney General, and Commonwealth of Virginia, ex rei. Mark R. Herring, Attorney 

General v. Freedom Acceptance Corporation Military Credit Services, LLC, Leonard B 

Melley, Jr., and John F. Melley, No. 2014-CV-00643 (E.D. VA. Dec. 18, 2014). 

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APPENDIX F: 

Reports 

The CFPB published the following reports from Apri11, 2014 through March 31, 2015, which 

may be found at consumerfinanee.gcl\·jreports/: 

April4, 2014: Office of Minority and Women Inclusion Annual Report; 

April22, 2014: Mid-Year Update on Student Loan Complaints; 

April22, 2014: Mortgage Closings Today: A Preliminary Look at the Role ofTechnolo!,'Y in 

Improving the Closing Process for Consumers; 

April3o, 2014: Fair Lending Report of the Consumer Financial Protection Bureau; 

May 7, 2014: Snapshot of Older Consumers and Mortgage Debt; 

May 20, 2014: Data Point: Medical Debt and Credit Scores; 

May 22, 2014: Supervisory Highlights: Spring 2014; 

May 28, 2014: Semi-Annual Report of the Consumer Financial Protection Bureau; 

,July 3, 2014: Report on the Use of Remittance Histories in Credit Scoring; 

July 16, 2014: ConstmJer Response: A Snapshot of Complaints Received; 

July 17, 2014: 2014 Finaneial Literacy Annual Report; 

July 29, 2014: Plain Writing Act Compliance Report 2014; 

July 31, 2014: Data Point: Checking Account Overdraft; 

August 21, 2014: lluilcling Financial Capability in Youth Employment Programs; 

August 26, 2014: Financial Wcllness at Work: A Review of Promising Practices and Policies; 

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September 17, 2014: SupciTisory Highlights: Summer 2014; 

September 17, 2014: Using Publidy Available Information to Proxy for Unidentified Race and 

Ethnicity; 

September 30, 2014: Manufactured-housing consumer finance in the United States; 

October 16, 2014: Annual Report of the CFPB Student Loan Ombudsman; 

October 28, 2014: Supervisory Highlights: Fall2014; 

November 5, 2014: A snapshot of debt collcdion complaints submitted by older consumers; 

November 6, 2014: Equal Employment Opportunity (EEO) Progress StatLIS Report for Fiscal 

Year (FY) 2013; 

November 13, 2014: Study of prepaid account agreements; 

November 17, 2014: Financial Report of the Consumer Financial Protection Bureau Fiscal 

year 2014; 

December 4, 2014: Semi-Annual Report of the Consumer Financial Protection Bureau; 

December 10, 2014: 2014 CFPB annual employee sutTey; 

December 11, 2014: Consumer credit reports: A study of medical and non-medical 

collections; 

December 14, 2014: College credit card agreements: Annual report to Congress; 

December ;p, 2014: Growing Our Human Capital: Human Capital Annual Report to 

Congress; 

December 31, 2014: Report of the Consumer Financial Protection Bureau Pursuant to Section 

1017(c)(4) of the Dodd-Frank Act; 

January 13, 2015: Consumers' mortgage shopping experience: A first look at results from the 

National Survey of Mortgage Borrowers; 

January 27, 2015: Financial well-being: The goal of financial education; 

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February 9, 2015: Snapshot of reverse mortgage complaints December 2011 December 

2014; 

Fellruary 19, 2015: Consumer v6ices on credit reports and scores; 

March 10, 2015: Arbitration Study Report to Congress, pursuant to Dodd-Frank Wall Street 

Reform and Consumer Protection Act~ 1028(a); 

March 11, 2015: Supervisory Highlights: 'Winter 2015; 

March 19, 2015: Consumer Financial Protection Bureau Independent Audit of Selected 

Operations and Budget; 

March 26, 2015: Fair Debt Colledion Practices Act CFPB Annual Repmt 2015; and 

March 30, 2015: Consumer Response Annual Report January 1- December 31, 2014. 

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APPENDIX G: 

Congressional testimony 

Senior CFPB staff has testified before Congress a total of 53 times since the Bureau began in 

2011, including on the following seven occasions between April1, 2014 and March 31, 2015, 

which may be found at http:/ jwww.consumerfinance.gm·jncwsroomj?type~testimony: 

April 8, 2014: Meredith Fuehs before the House Committee on Financial Services. ''Who's in 

Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom"; 

June 4, 2014: Rohil Chopra before the Senate Committee on the Budget. ''The Impact of 

Student Loan Debt on Borrowers and the Economy''; 

.June 9, 2014: Richard Cordray before the Senate Committee on Banking, Housing and Urban 

Affairs. ''The Consumer Financial Protection Bureau's Semi-Annual Report to Congress''; 

,June 18, 2014: Richard Cordray before the House Committee on Financial Services. "The 

Semi-Annual Report oft he Consumer Financial Protection Bureau"; 

July 30, 2014: Richard Cordray before the House Committee on Financial Sen~ces 

Subcommittee on Oversight and Investigations. "Allegations of Discrimination and Retaliation 

and the CFPB l\lanagcmcnt Culture"; 

September 9, 2014: Richard Cordray before the Senate Committee on Banking, Housing and 

Urban Affairs. "Wall Street Reform: Assessing and Enhancing the Financial Regulatory System''; 

and 

March:{, 2015: Richard Cordray before the House Committee on Financial Scn·iccs. ''The 

Semi-Annual Report of the Bureau of Consumer Financial Protection". 

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APPENDIX H: 

Speeches 

Director Richard Cordray or Deputy Director Steven Antonakes spoke at the following public 

events between Aprill, 2014 and March 31, 2015: 18° 

April 3, 2014: Remarks by Richard Cordray at the American Bar Association in Washington, 

DC; 

Apri14, 2014: Remarks by Richard Cordray at the Green lining Institute's Economic Summit in 

Oakland, CA; 

April 7, 2014: Remarks by Richard Cordray at the Federal Reserve Bank of Chicago in Chicago, 

IL; 

April 8, 2014: Remarks by Richard Cordray at the ,Jump Start Coalition Awards Dinner in 

Washington, DC; 

Apri123, 2014: Remarks by Richard Cordray at the Mortgage Closing Forum in Washington, 

DC; 

May 9, 2014: Remarks by Richard Cordray at the Federal Reserve Bank of Chicago in Chicago, 

IL; 

May 19, 2014: Remarks by Richard Cordray at the 2014 Boulder Summer Conference on 

Financial Decision Making in Boulder, CO; 

I8o All speeches by CFPB senior staff are available at: http:/ jw\nr.consumctfinancC'.govjncwsroom/?typl'=Specch-2. 

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May 29, 2014: Remarks by Richard Cordray at the Financial Literacy and Education 

Commission Meeting in Washington, DC; 

June 9, 2014: Remarks by Steven Antonakes at the American Bankers Association Regulatory 

Compliance Conference in New Orleans, LA.; 

June 11, 2014: Remarks by Richard Cordray at the Mobile Request for Information Field 

Hearing in New Orleans, LA; 

June 16, 2014: Remarks by Richard Cordrav at the Marian J. Mohr Memorial Library in 

Johnston, RI; 

June 18, 2014: Remarks by Steven Antonakes at the Consumer Advisory Board Meeting in 

Reno, NV; 

July 9, 2014: Remarks by Richard Cordray at the U.S. Programme for International Student 

Assessment Financial Literacy Data Release in Washington, DC; 

July 16, 2014: Remarks by Richard Cordray at the Consumer Response Field Hearing in El 

Paso, TX; 

August 18, 2014: Remarks by Richard Cordray at the Association of Military Banks of America 

Fall Workshop in Washington, DC; 

September 18, 2014: Remarks by Richard Cordray at the Auto Finance Field Hearing in 

Indianapolis, IN; 

September 29, 2014: Remarks by Richard Cordray at the Society for Financial Education and 

Professional Development in Arlington, VA; 

October 2, 2014: Remarks by Richard Cordray at the President's Advisory Council in 

Washington, DC; 

Odober 8, 2014: Remarks by Richard Cordray at the Forum on Access to Checking Accounts 

in Washington, DC; 

October 10, 2014: Richard Cordray's Prepared Lecture on Economic Rights as Civil Rights at 

Michigan State UniYcrsity in East Lansing, MI; 

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October 24, 2014: Prepared Remarks by Richard Cordray at the University of Michigan Law 

School in Ann Arbor, MI; 

November 5, 2014: Prepared Remarks by Richard Cordray the Financial Literacy and 

Education Commission Meeting in Washington, DC; 

November 6, 2014: Prepared Remarks by Richard Cordray at the Bank On 2.0 Conference in 

Washington, DC; 

November 13, 2014: Prepared Remarks by Richard Cordray at the Prepaid Products Field 

Hearing in Wilmington, DE; 

November 20, 2014: Prepared Remarks bv Richard Cordray at The Clearing House in New 

York, NY; 

December 5, 2014: Prepared Remarks by Richard Cordray at the Columbus Metropolitan 

Library in Columbus, OH; 

Deeember11, 2014: Prepared Remarks by Richard Cordray at the Medical Debt Collection 

Hearing in Oklahoma City, OK; 

January 13, 2015: Prepared Remarks by Richard Cordray at the Brookings Institute in 

\Vashington, DC; 

January 16, 2015: Prepared Remarks by Richard Cordray at Operation HOPE in Atlanta, GA; 

January 28, 2015: Prepared Remarks by Richard Cordray at the Financial Services 

Roundtable Event on Financial Education in Washington, DC; 

February 10, 2015: Prepared Remarks by Richard Cordray at the National Credit Union 

Administration Webinar; 

February 18, 2015: Prepared Remarks by StcYen Antonakcs at The Exchequer Club in 

Washington, DC; 

February 19, 2015: Prepared Remarks by Richard Cordray at the Consumer Ad,isory Board 

Meeting in Washington, DC; 

February 23, 2015: Prepared Remarks by Richard Cordray at the National Association of 

Attorneys General in \Vashington, DC; 

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February 23, 2015: Prepared Remarks by Richard Cordray at the Retirement Savings Event in 

Washington, DC; 

February 25, 2015: Prepared Remarks by Richard Cordray at the Financial Literacy and 

Education Commission Meeting in Washington, DC; 

March 3, 2015: Prepared Remarks b)· Richard Cordray at the President's Advisory Council in 

Washington, DC; 

March to, 2015: Prepared Remarks lw Richard Cordray at the Arbitration Study Field Hearing 

in Newark, NJ; 

March 20, 2015: Prepared Remarks by Richard Cordray at the Ruby Hutchinson Memorial 

Lecture in Sydney, Australia; 

March 25, 2015: Prepared Remarks by Steven Antonakcs to the Consumer Bankers 

Association in Washington, DC; and 

March 26, 2015: Prepared Remarks by Richard Cordray at the Field Hearing on Payday 

Lending in Richmond, VA. 

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APPENDIX 1: 

Financial and budget reports 

The CFPB has published the following financial reports from January 1, 2012 through May 15, 

2015, 181 which are all available at consumerfinance.govjbudget: 

January 20, 2012: CFO update for the first quarter of FY 2012; 

May 11, 2012: CFO update for the second quarter of FY 2012; 

July 27,2012: CFO update for the third quarter ofFY 2012; 

November 15, 2012: Financial Report of the CFPB- FY 2012; 

December 15, 2012: CFO Update for the fourth quarter of FY 2012; 

February 15, 2013: CFO Update for the first quarter of FY 2013; 

May 15, 2013: CFO Update for the second quarter of FY 2013; 

August 15, 2013: CFO Update for the third quarter of FY 2013; 

December 15, 2013: Financial Report ofthc CFPB- FY 2013; 

December 15, 2013: CFO Update for the fourth quarter of FY 2013; 

Fcbruat-y 14, 2014: CFO Update for the first quarter of FY 2014; 

181 While the reporting period for this report ended March 31, 2015, the Bureau includes this information through 

May 15, 2015, in an effort to be transparent and because it is available prior to publishing. 

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May 15, 2014: CFO Update for the second quarter of FY 2014; 

August 15, 2014: CFO Update for the third quarter of FY 2014; 

November 15, 2014: Financial Report of the CFPB - FY 2014; 

November 15, 2014: CFO Update for the fomih quarter of FY 2014; 

February 18, 2015: CFO Update for the first quarter of FY 2015; and 

May 25, 2015: CFO Update for the second quarter of FY 2015. 

The CFPB has published the following Budget Documents, which are all available 

at consumerfinance.gov /budget: 

Fiscal Year 2012 Budget in Brief; 

Fiscal Year 2012 Congressional Budget .Justification; 

Fiscal Year 2013 Budget in Brief; 

FY 2013 Budget .Justification; 

CFPB Strategic Plan, Budget, and Performance Report- April 2013; 

CFPB Strategic Plan, Budget, and Pelformance Report- March 2014; and 

CFPB Strategic Plan, Budget, and Performance Report February 2015. 

The CFPB has published the following funding requests to and funding acknowledgements from 

the Federal Reserve Board, from January 1, 2012 through July 28, 2014, which are all available 

at consumelfinance.gov /budget: 

January 6, 2012: Funding Acknowledgement from the Federal Reserve Board; 

March 30, 2012: Funding Request to the Federal Reserve Board; 

April 5, 2012: Funding Acknowledgement from the Federal Reserve Board; 

July 2, 2012: Funding Request to the Federal Reserve Board; 

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July 9, 2012: Funding Acknowledgement from the Federal Reserve Board; 

October 2, 2012: Funding Request to the Federal Reserve Board; 

October 18,2012: Funding Acknowledgement from the Federal Reserve Board; 

January 7, 2013: Funding Request to the Federal Reserve Board; 

January 16, 2013: Funding Acknowledgement from the Federal Reserve Board; 

April 2, 2013: Funding Request to the Federal Reserve Board; 

April 8, 2013: Funding Acknowledgement from the Federal Reserve Board; 

October 7, 2013: Funding Request to the Federal Reserve Board; 

October 15, 2013: Funding Acknowledgement from the Federal Reserve Board; 

January 7, 2014: Funding Request to the Federal Reserve Board; 

January 22, 2014: Funding Acknowledgement from the Federal Reserve Board; 

April 7, 2014: Funding Request to the Federal RcsetTc Board; 

April11, 2014: Funding Acknowledgement from the Federal Reserve Board; 

July 9, 2014: Funding Request to the Federal Reserve Board; 

July 28, 2014: Funding Acknowledgement from the Federal Reserve Board; 

October 8, 2014: Funding Request to the Federal Reserve Board; 

October 15, 2014: Funding Acknowledgment from the Federal ReserYe Board; 

January 14, 2015: Funding Request to the Federal Reserve Board; and 

Januar-y 16, 2015: Funding Acknowledgment from the Federal Reser\'e Board. 

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APPENDIX J: 

CFPB organizational chart 

_ .. __ 

-==-

·--..,,., 

- ......... "'·-·--

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APPENDIX K: 

Defined terms 

ACRONYM 

ARC 

BUREAU 

CAB 

CARD ACT 

CBAC 

CE 

CEE 

CFPA 

CFPB 

COMMISSION 

CONSUMER 

RESPONSE 

CUAC 

DODD-FRANK ACT 

DOJ 

ECOA 

ECP 

DEFINED TERM 

The CFPB's Academic Research Council 

The Consumer Financial Protection Bureau 

The CFPB's Consumer Advisory Board 

Credit Card Accountability Responsibility and Disclosure Act of 2009 

The CFPB's Community Bank Advisory Council 

The CFPB's Office of Consumer Engagement 

The CFPB's Division of Consumer Education and Engagement 

Consumer Financial Protection Act of 2010 

The Consumer Financial Protection Bureau 

The U.S. Financial Literacy and Education Commission 

The CFPB's Office of Consumer Response 

The CFPB's Credit Union Advisory Council 

Dodd-Frank Wall Street Reform and Consumer Protection Act 

The U.S. Department of Justice 

Equal Credit Opportunity Act 

Examiner Commissioning Program 

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ED 

EFTA 

EITC 

EMPOWERMENT 

FAIR LENDING 

FCRA 

FDCPA 

FDIC 

FEDERAL RESERVE 

BOARD 

FFIEC 

FHFA 

FOIA 

FRB 

FTC 

FY 

GLBA 

HHS 

HMDA 

HUD 

ICP 

JAG 

The U.S. Department of Education 

Electronic Fund Transfer Act 

Earned Income Tax Credit 

The CFPB's Office of Financial Empowerment 

The CFPB's Office of Fair Lending and Equal Opportunity 

Fair Credit Reporting Act 

Fair Debt Collection Practices Act 

The U.S. Federal Deposit Insurance Corporation 

The U.S. Board of Governors of the Federal Reserve System 

The U.S. Federal Financial Institutions Examination Council 

The U.S. Federal Housing Finance Agency 

Freedom of Information Act 

The U.S. Board of Governors of the Federal Reserve System 

The U.S. Federal Trade Commission 

Fiscal Year 

Gramm-Leach-Biiley Act 

The U.S. Department of Health and Human Services 

Home Mortgage Disclosure Act of 1975 

The U.S. Department of Housing and Urban Development 

Interim Commissioning Policy 

Judge Advocate General 

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M&T 

MOU 

NCG 

NCUA 

OA 

OAA 

OCA 

occ 

OEEO 

OFE 

OHC 

OJT 

OMWI 

OSA 

PROCUREMENT 

RESPA 

SCRA 

SL&D 

T&l 

TILA 

TREASURY 

Manufacturers and Traders Trust Company 

Memorandum of Understanding 

National Corrective Group 

The National Credit Union Administration 

The CFPB's Office of Older Americans 

The CFPB's Office of Administrative Adjudication 

The CFPB's Office of Community Affairs 

The U.S. Office of the Comptroller of the Currency 

The CFPB's Office of Equal Employment Opportunity 

The CFPB's Office of Financial Education 

The CFPB's Office of Human Capital 

On-the-Job Training 

The CFPB's Office of Minority and Women Inclusion 

The CFPB's Office of Servicemember Affairs 

The CFPB's Office of Procurement 

Real Estate Settlement Procedures Act of 1974 

Servicemembers Civil Relief Act 

Supervision Learning and Development 

The CFPB's Office of Technology and Innovation 

Truth in Lending Act 

The U.S. Department of the Treasury 

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uwcs 

VITA 

Union Workers Credit Services 

Volunteer Income Tax Assistance 

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