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HOLDING THE CFPB ACCOUNTABLE: REVIEW OF 

SEMI-ANNUAL REPORT TO CONGRESS 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

ON 

A REVIEW OF THE CFPB SEMI-ANNUAL REPORT TO CONGRESS 

SEPTEMBER 13, 2012 

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

( 

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

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

TIM JOHNSON, South Dakota, Chairman 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

MICHAEL F. BENNET, Colorado 

KAY HAGAN, North Carolina 

RICHARD C. SHELBY, Alabama 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

JERRY MORAN, Kansas 

ROGER F. WICKER, Mississippi 

DWIGHT FETTIG, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director 

MICHAEL PASSANTE, Professional Staff Member 

ANDREW GREEN, Professional Staff Member 

ANDREW OLMEM, Republican Chief Counsel 

BETH ZORC, Republican Counsel 

DAWN RATLIFF, Chief Clerk 

RIKER VERMILYE, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

THURSDAY, SEPTEMBER 13, 2012 

Page 

Opening statements, comments, or prepared statements of: 

Senator Merkley ............................................................................................... 1 

Senator Shelby .................................................................................................. 2 

Senator Menendez ............................................................................................ 3 

Senator Akaka .................................................................................................. 4 

WITNESS 

Richard Cordray, Director, Consumer Financial Protection Bureau ................... 5 

Prepared statement .......................................................................................... 27 

Responses to written questions of: 

Senator Johnson ........................................................................................ 28 

Senator Shelby ........................................................................................... 28 

Senator Reed .............................................................................................. 37 

Senator Menendez ..................................................................................... 40 

Senator Corker .......................................................................................... 41 

Senator Johanns ........................................................................................ 43 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Semi-Annual Report of the Consumer Financial Protection Bureau .................. 47 

(III)

(1) 

HOLDING THE CFPB ACCOUNTABLE: REVIEW 

OF SEMI-ANNUAL REPORT TO CONGRESS 

THURSDAY, SEPTEMBER 13, 2012 

U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC. 

The Committee met at 10:05 a.m., in room 538, Dirksen Senate 

Office Building, Hon. Jeff Merkley, presiding. 

OPENING STATEMENT OF SENATOR JEFF MERKLEY 

Senator MERKLEY. The hearing of the Committee on Banking, 

Housing, and Urban Affairs will come to order. 

I am delighted that we can have this chance to hear from Richard Cordray, the Director of the Consumer Financial Protection Bureau, and the occasion is his first, I believe, Semi-Annual Report 

to Congress, so a tradition that we will have ahead. 

Chairman Johnson is unavailable to attend this morning’s hearing. He wanted me to personally thank you, Mr. Cordray, for being 

here and to commend you and your team for all of their superb 

work. He also asked that I submit his statement for the record. 

Today is September 13, two days short of the 4-year anniversary 

of the collapse of Lehman Brothers and the monumental efforts 

that started thereafter to prevent our financial system, and with it 

our entire economy, from collapsing, and I think it is appropriate 

to reflect on the many causes that contributed to that, issues of financial supervision, monetary policy failures, challenges with too 

big to fail banks, issues with the GSEs, issues with predatory mortgages with exploding interest rates, banks and nonbank financial 

companies making high-risk bets, interlocking chains of derivatives, regulatory shopping or regulatory arbitrage, credit rating 

agencies with conflicts of interest, securitization of products without adequate disclosure and in some cases with substantial conflicts of interest with sellers betting on the security or swap’s failure. It is a long list. 

But the point is short and simple. There were a large number of 

serious flaws in our financial architecture that came to light in 

2008, serious flaws that the market by itself could not correct. We 

have taken steps to set our Nation’s economy and regulatory system on a different path, but those steps require continuous monitoring and improvements along the way. 

No matter how you slice it, consumer protection failures were at 

the heart of the last financial crisis. They were not the only cause, 

and consumer protection is not the only solution, but it is an essential part of the puzzle. And consumer protection is right, simply on 

2 

the grounds of treating a family fairly, the way any one of us would 

want to be treated when buying a home or car, paying our credit 

card bill, or engaging in any other financial transaction where real 

money for hard-working families is at stake. 

The mission of the Consumer Financial Protection Bureau is to 

do that, to establish a marketplace where firms compete freely and 

fairly so that consumers can make intelligent decisions for themselves. The point is that consumers—students, families, older persons, veterans, servicemembers, minority communities, all of us— 

ought to have a shot at building a strong financial foundation for 

themselves and their families. When we do this, the benefits of our 

consuming and our saving multiply outwards to the economy, helping to build a vibrant, broad-based economy in the 21st century. 

And when we do not, the rest of the economy, built on the backs 

of the financial actions of millions of ordinary families, becomes unstable and unreliable, as we saw in 2008, outright hazardous. 

I think your annual report suggests that we are well on our way 

to building an agency that can fulfill its mission, a mission that before its creation was too often ignored. I think Members of the 

Committee look forward to digging in more deeply on the points 

you will be making today and the important challenge of empowering consumers and creating a financial foundation on which families can thrive. 

With that, I would like to turn over the microphone to Ranking 

Member Shelby for his statement. 

STATEMENT OF SENATOR RICHARD C. SHELBY 

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

Cordray. 

Today, as the Chairman has pointed out, we will hear from Richard Cordray, the Director of the Bureau of Consumer Financial 

Protection. The majority has titled this hearing, ‘‘Holding the 

CFPB Accountable’’. Nevertheless, Mr. Cordray appears before us, 

as always, completely immune from Congressional oversight, except, of course, we are permitted to ask him questions, like today. 

Such questions are especially important now because the Bureau’s 

activities in its first year likely overshadow its activities in the 

years to come. 

Of particular interest here to me is how the Bureau has exercised its authority thus far. For example, recently, the Bureau 

issued a proposed rule on mortgage disclosures. Very deep within 

its 1,100 pages, the Bureau expressed concern over a particular disclosure required by Dodd-Frank. The Bureau said that it found 

that the new disclosure, and I will quote, ‘‘would be difficult to calculate and explain to consumers, would not likely be helpful to consumers, and may distract consumers from more important disclosures,’’ their words. In response to this finding, the Bureau is considering, as I understand it, exempting companies from complying 

with this requirement. 

This problematic statute, however, raises a more fundamental 

question, I think, about how the Bureau will address statutes that 

it determines to be harmful to consumers. In this case, the Bureau 

could ask Congress to amend a statute. Instead, the Bureau has interpreted its exemptive authority, I believe, so broadly that it beVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
3 

lieves it can just ignore the statute, ignore the law. Congress 

needs, I believe, to clearly understand the bounds of this authority 

as interpreted by Mr. Cordray here. After all, if the Bureau can 

easily ignore a statute, it raises the more serious question of 

whether Congress or the Bureau has the final say over what the 

law is. 

Today, I would also like to know more about the limitations on 

the Bureau’s spending authority. For example, Dodd-Frank granted 

the Bureau the power to set its own budget and spending priorities 

without any Congressional oversight. In addition to the funds that 

it receives from the Federal Reserve, the Bureau also controls the 

money in its Victims Relief Fund. Under Dodd-Frank, the Bureau 

is authorized to disburse any money paid into the fund that is not 

paid to the victims. Dodd-Frank only requires that such money be 

used, quote, ‘‘for the purposes of consumer education and financial 

literacy programs.’’ 

This is just another way that I believe that the Bureau is structured differently from any other banking regulators. The OCC, the 

FDIC, and the Federal Reserve do not have such a slush fund. Instead, they turn over the civil penalties that they collect to the 

United States Treasury. Accordingly, I would like to know how the 

Bureau will decide how the money in the fund will be allocated and 

whether such uses comply with the mandate of Dodd-Frank. Unfortunately, without significant reform, I believe there is little Congress can do, even if the Bureau misallocates or misuses these 

funds. Until that time comes, it appears that the most we can hope 

for is a hearing like today where we can merely ask questions. 

Thank you, Mr. Chairman. 

Senator MERKLEY. Are there any other Members of the Committee who wish to make a brief opening statement? Senator 

Menendez. 

STATEMENT OF SENATOR ROBERT MENENDEZ 

Senator MENENDEZ. Thank you, Mr. Chairman. 

I want to take this opportunity to congratulate you, Director, and 

Elizabeth Warren and the hundreds of dedicated Consumer Financial Protection Bureau employees for the work of protecting consumers against big Wall Street banks, credit card companies, payday lenders, debt collectors. I think you and the CFPB have accomplished a remarkable amount in a little over a year of existence. 

You set up a whole agency, hired hundreds of people, not an easy 

task. You got a very clean audit from the Government Accountability Office, which is great for an agency in only its first year of 

existence. You set up an important process to take tens of thousands of complaints from the public about credit cards, mortgages, 

student loans, and other products. You created a simplified mortgage disclosure form so consumers understand what kind of loan 

they are getting into and whether it is good for them, and that was 

widely praised by both borrowers and banks. You listened carefully 

to the stakeholders, including Members of Congress, and have been 

evenhanded in taking their concerns into account. And you began 

enforcing consumer protection laws already with an enormous benefit for consumers in the tens of millions of dollars in the Capital 

One deceptive marketing practice. 

4 

So you have done that despite the fact that many Members have 

fought tooth and nail against the Consumer Financial Protection 

Bureau. They fought to ensure that the agency did not exist. They 

fought for big carve-outs from it. They fought to ensure that no one 

would even become a Director. Even now, there are those who are 

fighting to defund or come up with new ways to overrule the Bureau however they can. 

But I know that the President and Congressional Democrats, including myself, fought hard to create this agency, and dismantling 

it or weakening it would be a terrible mistake. The devastating financial crisis we just went through would not have taken place if 

someone had been standing up for consumers instead of just Wall 

Street. Great consumer protections would have stopped the mortgage lending tricks and traps for consumers. We should hold Wall 

Street lenders and providers of financial services accountable for 

whether they treat consumers fairly, and the Consumer Financial 

Protection Bureau is doing exactly that by setting clear rules of the 

road in the future and enforcing them where you have the power 

to do so. 

So I look forward to this hearing about the progress as well as 

about some issues that I want to raise and about you continuing 

your important mission. 

Thank you, Mr. Chairman. 

Senator MERKLEY. Is there anyone else who would like to make 

an opening statement? 

Without it, then we have the chance to get directly—Senator 

Hagan, do you have an opening statement you would like to make? 

Well, again, welcome, Mr. Cordray. We are delighted to have you 

here and it is your opportunity to make your statement. 

Senator AKAKA. Mr. Chairman. 

Senator MERKLEY. Yes? Oh, Senator Akaka, do you have a statement? 

Senator AKAKA. Yes. 

Senator MERKLEY. Excuse me. 

STATEMENT OF SENATOR DANIEL K. AKAKA 

Senator AKAKA. Thank you very much, Mr. Chairman. Thank 

you for holding this hearing on the Semi-Annual Report to the Congress. 

I must say that in its first year, the CFPB, the Bureau, has 

made great, great strides in educating, empowering, and also protecting our consumers in the financial marketplace. There is still 

much work to do and this hearing will certainly give us an opportunity to know what you have done, what you have been doing, and 

maybe what can be done later on. 

But I wanted to take the time here to tell you I truly appreciate 

what you are doing and your staff, as well, in helping the consumers from Hawaii as well as in the country. So I look forward 

to hearing your testimony. 

Thank you, Mr. Chairman. 

Senator MERKLEY. I would like to remind my colleagues that the 

record will be open for the next 7 days for opening statements and 

any other materials that you would like to submit for the record. 

5 

And with that, Mr. Cordray, you may proceed with your testimony. 

STATEMENT OF RICHARD CORDRAY, DIRECTOR, CONSUMER 

FINANCIAL PROTECTION BUREAU 

Mr. CORDRAY. Thank you, Mr. Chairman, Ranking Member Shelby, and Members of the Committee. Thank you for inviting me to 

testify today about the Semi-Annual Report of the Consumer Financial Protection Bureau. 

As I have said before, I still feel this way every chance we have 

to come at your invitation and speak to you about our work. We 

are eager to do that and we appreciate and respect and understand 

the importance of the oversight. 

Just over 1 year ago, the Consumer Bureau became the Nation’s 

first Federal agency focused solely on protecting consumers in the 

financial marketplace. The Semi-Annual Report we are discussing 

today covers our activities from January 1 through June 30 of this 

year. 

As the report shows, we have been using all the tools at our disposal to help protect consumers across this country. We pledge to 

continue our work to promote a fair, transparent, and competitive 

consumer financial marketplace. 

Through our regulatory tools, we have proposed smarter rules 

that will help fix the broken mortgage market with common sense 

solutions. We are writing rules that simplify mortgage disclosure 

forms and rules that make sure consumers do not receive mortgages that they do not understand or cannot afford. Our rules will 

also bring greater transparency and accountability to mortgage 

servicing. And our careful process is that before we propose a rule, 

a team of attorneys, economists, and market experts evaluates its 

potential impacts, burdens, and benefits for consumers, providers, 

and the market. 

Our push for accountability extends beyond mortgage servicing. 

We are holding both banks and nonbanks accountable for following 

the law. Prior to my appointment, nonbanks had never been federally supervised. The financial reform law specifically authorized us 

to supervise nonbanks in the markets of residential mortgages, 

payday loans, and private student loans. We also have the authority to supervise the ‘‘larger participants’’ among nonbanks in other 

consumer finance markets as defined by rule. So far, we have 

added credit reporting companies to this group. 

It is important for us to exercise sensible oversight of the consumer finance markets, but it is also important that we empower 

consumers themselves to make responsible financial decisions. Our 

‘‘Know Before You Owe’’ campaign involves us working to make 

mortgages, credit cards, and student loans easier to understand. 

We also developed ‘‘Ask CFPB,’’ an interactive online data base 

with answers to consumers’ most frequently asked questions. We 

also launched a first-ever data base of individual complaints about 

financial products, starting with credit cards. Consumers can use 

the Web site to review and analyze information and draw their own 

conclusions about the customer service provided with these financial products. 

6 

We also think it is important to engage directly with consumers 

so we know more about the struggles and frustrations they encounter in their daily lives. The Bureau has held numerous field hearings across the country so we can talk face to face with consumers 

on a variety of topics. Our Web site has a feature called ‘‘Tell Your 

Story’’, which encourages consumers to share with us their personal stories to help inform our approach in addressing issues in 

the financial marketplace. And, perhaps most significantly, we help 

to resolve consumer disputes with lenders by taking complaints on 

our Web site at consumerfinance.gov, as well as by mail, fax, 

phone, and by referral from other agencies. As of September 3, we 

have received 72,297 consumer complaints about credit cards, 

mortgages, and other financial products and services, and the pace 

of complaints has been increasing over the past year. 

All of these processes—rulemaking, supervision, enforcement, 

and consumer engagement—provide us with valuable information 

about consumer financial markets. We engage in extensive outreach to large and small institutions, including banks and 

nonbanks, to gather the best current information as we make policy decisions. We pride ourselves on being a 21st century agency 

whose work is evidence-based. So we also conduct our own in-depth 

studies on consumer financial products, such as reverse mortgages 

and private student loans. We have issued public requests for information that seek input from consumers, industry, and other stakeholders on issues such as overdraft fees, prepaid cards, and the financial exploitation of seniors. 

The new Consumer Bureau has worked on all these projects 

while being fully engaged in startup activities to build a strong 

foundation for the future. The Bureau has worked to create an infrastructure that promotes transparency, accountability, fairness, 

and service to the public. Our first year has been busy and full, 

and this report reflects considerable hard work done by people 

whom I greatly admire and respect. They are of the highest caliber 

and they are deeply dedicated to public service. We look forward 

to continuing to fulfill Congress’ vision of an agency that helps all 

Americans by improving the ways and means of their financial 

lives. 

Thank you. I will be glad to respond to all questions. 

Senator MERKLEY. Thank you very much for your testimony, and 

as we begin questions, I will ask the Clerk to put 5 minutes on the 

clock for each Member and I will jump in quickly here. 

You note that through those various ways that you solicit consumer feedback, I believe there have been 55,000 or so complaints. 

That is enough that I am sure you started to get a picture of what 

is happening across the country. And out of those complaints, if 

there were three or four issues that seem to rise above the rest in 

terms of citizen concern, what would those be? 

Mr. CORDRAY. Thank you, Mr. Chairman, for the question. Part 

of this reflects the fact that we have been staging in our ability to 

receive consumer complaints on different types of products. So we 

started with credit cards. We have added mortgages. We have now 

added private student loans and deposit accounts and a few other 

items, and we will be adding more as we go. 

7 

In the areas of mortgages and credit cards and student loans, 

which perhaps stick out the most, we have received the most complaints about mortgages. Frankly, I think this probably reflects the 

same thing you and your staff are finding, that people who call and 

contact your offices in need of help, sometimes desperately in need 

of help, are the same types of people who contact us. 

Lots of concerns about difficulties in paying their mortgage, what 

is happening when that occurs, whether there is any possibility of 

working out some sort of provision or plan to deal with the problem 

and the urgent crisis that creates for a family and a household. 

Various problems with mortgage servicers, which are the same 

kind—I know your staff and we experienced the frustration of dealing with some of the mortgage servicers who have, frankly, provided poor customer service. It is a mixed bag. Some of them actually do a decent job and some of them have not done a decent job. 

Those have been a lot of sources of complaints for us. 

On credit cards, I actually think it is notable that, from my 

standpoint, we have received fewer complaints than I would have 

expected. I think some of this has to do with the effects of the 

CARD Act. I think some of it has to do with a greater emphasis 

on customer service by the credit card companies themselves. I 

have been to a few of the processing centers where they take consumer complaints and they are working them very hard. And I 

would also say that they have been quite responsive to the Bureau 

and to the consumers we have directed to them in terms of providing relief. So I want to note that for the record. 

On student loans, it is similar to mortgages, where a lot of people 

are falling behind on student loans. A lot of people have crushing 

debt loads and they are finding it difficult to work with the party 

on the other side to try to understand what their payment options 

are, what their rights are, how they can try to manage the situation, and how they can try to reach an appropriate resolution. 

Senator MERKLEY. Certainly, a piece of your work involves getting the fair playing field and eliminating deceptive or fraudulent 

practices. But another piece of it is on the front end, financial literacy, financial education. I want to note that my colleague, Senator Akaka, has been, I think, very visible and aggressively working to tackle this topic for a very long time and I thank you, Senator Akaka, for your leadership in this area. 

So now with your organization and your mission, which includes 

financial education or literacy, do you have some insights on what 

we should be concerned about or ways we can proceed to help our 

consumers be better at judging the opportunities they see in the 

marketplace? 

Mr. CORDRAY. Thank you, Senator. This has been a particular 

passion for me going back to when I was an official in Ohio and 

we worked on getting it incorporated into the high school curriculum in Ohio, that every student should have personal finance 

education before they graduate from high school. That is now law 

in Ohio, should be law across the country. It is important for that 

to be the case. This is so important for people being functioning 

citizens of our society, that they are able to cope with their financial affairs. It should be a passion of all of ours. 

8 

I have always been quick to say when I have been asked—sometimes people ask me, I am the head of the consumer agency—do 

you not think consumers bear responsibility for their own decisions? I absolutely do. I think we all have to bear responsibility for 

our own decisions. Having said that, there are things we can do to 

make it more feasible for consumers to cope with some of the complexity of this marketplace. 

Our ‘‘Know Before You Owe’’ projects on mortgages, credit cards, 

and student loans are directed at reducing the gap between people’s capability and the difficulty of the decisions they are faced 

with. And I think that financial literacy efforts around the country 

are something that this Nation and the States and local school districts are going to have to pay more attention to. I think it is in 

the interest of employers to have employees who are not distracted 

by having various financial problems that make them risks in the 

marketplace. And I think we have the opportunity to work with 

churches and other institutions that, again, care deeply about the 

well being of their congregations and memberships and want to see 

them succeed, both materially and spiritually. I think this is quite 

important for this country. 

Senator MERKLEY. Well, thank you very much, and with that, I 

am going to invite Senator Shelby to continue. 

Senator SHELBY. Thank you. 

Mr. Cordray, you used the word ‘‘complexity’’ just a second ago. 

We will get into some of this now. The Bureau has proposed eliminating the Dodd-Frank requirement that creditors disclose, quote, 

‘‘total interest percentage’’ on mortgage disclosures. The Bureau 

states, as I understand it, that it is using its, quote, ‘‘exception and 

modification authority’’ under TILA Section 105(a) and (f) and 

Dodd-Frank Section 1032(a). Section 1032(a) does not, however, as 

I am sure you know this, contain the exception and modification 

language that appears in TILA Section 105(a) and (f). Do you believe that there is an exception and modification authority in Section 1032(a)? 

Mr. CORDRAY. It is a very good question, Senator, and it is one 

that some of our lawyers have pored over, and I am sure there are 

lawyers outside the Bureau who have pored over it, as well. We do 

have exception authority under several different provisions of the 

statutes we administer, I believe including—— 

Senator SHELBY. No, my question was, do you have it under Section—— 

Mr. CORDRAY. Yes. 

Senator SHELBY. ——1032(a)—— 

Mr. CORDRAY. Including 1032(a), yes. 

Senator SHELBY. And where is it in 1032(a)? 

Mr. CORDRAY. In 1032(a)—— 

Senator SHELBY. Because I want my staff here to be listening to 

this, I know. 

Mr. CORDRAY. That is fine. Ten-thirty-two (a)—I will just read 

from the statute and try to annotate it as I go—says that the Bureau—the title of the section is ‘‘Disclosures’’ and it states that the 

Bureau ‘‘may prescribe rules to ensure that the features of any consumer financial product or service, both initially and over its term, 

are fully, accurately, and effectively disclosed to consumers in a 

9 

manner that permits consumers to understand the costs, benefits, 

and risks associated with the product or service in light of facts 

and circumstances.’’ 

It then goes on to describe model disclosures. It describes the 

basis for rulemaking. It describes safe harbor, that any covered 

person that uses a model form included with the rule issued under 

this section shall be deemed to be in compliance with respect to 

such model form. And then it talks about trial disclosure programs, 

which gives us some latitude to work up disclosure programs to 

test how consumers actually respond and address those issues. 

Senator SHELBY. Mr. Cordray, let me ask you—— 

Mr. CORDRAY. Yes. 

Senator SHELBY. ——this further question in this area. 

In other words, I assume you believe that the Bureau’s authority, 

from what you were just quoting, to write rules includes the authority to exempt and modify statutory requirements. That is troubling—— 

Mr. CORDRAY. I think that it states—— 

Senator SHELBY. ——because if a statute is clear—— 

Mr. CORDRAY. Yes. 

Senator SHELBY. ——I do not believe you can change that by a 

rule. 

Mr. CORDRAY. Yes. I think that—— 

Senator SHELBY. Do you disagree with me on that? 

Mr. CORDRAY. I think that the verbs you just—— 

Senator SHELBY. No, I asked you a question. 

Mr. CORDRAY. Yes. 

Senator SHELBY. Do you disagree that if the statute is clear, unambiguous, that you cannot change that statute by rule, you or 

anybody else? 

Mr. CORDRAY. OK—— 

Senator SHELBY. No, I asked you a question. Yes or no? 

Mr. CORDRAY. May I answer and explain my answer? 

Senator SHELBY. I hope so. 

Mr. CORDRAY. All right. 

Senator SHELBY. I first want you to answer it and then explain. 

Mr. CORDRAY. Sure. So this is one provision of our statute. As 

you mentioned, the Truth In—— 

Senator SHELBY. Well, you are not answering the question. 

Mr. CORDRAY. The Truth in Lending Act has other provisions. 

Some are more explicit than this. But what is clear is that Congress intends us here to write rules around disclosures and to clarify and interpret the laws that Congress has provided us with. I 

absolutely do not think we should ignore statutes, nor can we and 

we will be subject to judicial review—— 

Senator SHELBY. Ignore or override—— 

Mr. CORDRAY. ——if we do that, so—— 

Senator SHELBY. ——you cannot do that, can you? 

Mr. CORDRAY. Well, I will say, interestingly enough, there are 

many requests for us to consider using our exemption authority or 

our modification authority to consider how provisions of law actually apply in a practical manner to different banks and other institutions, and part of our rule writing function is to take comment 

from individuals and stakeholders across the spectrum and to conVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
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sider how best to apply the law to the rules because we have that 

delegated rulemaking authority. 

I would absolutely agree with the premise of your question, 

which is that the Consumer Bureau cannot ignore or rewrite the 

law. 

Senator SHELBY. I hope you will not. 

Mr. CORDRAY. We do not—— 

Senator SHELBY. I hope you will not—— 

Mr. CORDRAY. We do not believe we have that authority. 

Senator SHELBY. It seems like that is what you are doing. I hope 

that is not what you are doing. If you do, we are going to hold you 

accountable. 

Mr. CORDRAY. And you should do so and I fully welcome that, 

yes. 

Senator SHELBY. I have got 9 seconds, I guess. 

[Laughter.] 

Senator SHELBY. In your testimony on mortgage rules, you state 

that the Bureau has proposed smarter rules that will help fix the 

broken mortgage market with common sense solutions, your words. 

The mortgage rules proposed by the Bureau will impose huge compliance costs. Many of the rules number in the hundreds of pages 

and one rule exceeds a thousand pages. These costly and very complex rules present greater compliance challenges for small banks 

than for large banks, which have, as we all know, large compliance, 

have more money to fight and to play. 

Explain to us why these rules will not put small banks at a competitive disadvantage, because they provide so much for the American people, especially small business. 

Mr. CORDRAY. I share your outlook on that, Senator, and I have 

talked repeatedly to community bank groups and credit union 

groups. And, in fact, we have just—— 

Senator SHELBY. How are you going to deal with it, then, if you 

share my concern? 

Mr. CORDRAY. So, in a number of ways. First, we announced yesterday that we have created a Community Bank Advisory Council 

and a Credit Union Advisory Council to give them a direct pipeline 

to us to talk about the kinds of concerns and issues they have 

about any sort of burdensome regulations and also about regulatory uncertainty, which is another issue that they raise. 

Second, we do have the authority, and this is the exemption authority that you questioned earlier, to potentially exempt smaller 

institutions from rules that do not necessarily make as much sense 

to apply to them, given the community bank business model, which 

is a very responsible, in my view, model of lending and of dealing 

with customers. We have and will exercise that authority where we 

hear from small providers that they have great concern about the 

impact of potential rules and they have a persuasive case to make 

about how their business model does not implicate the concerns of 

that rule. We have used that in our mortgage servicing rules. We 

have used it in our mortgage loan origination rules. And we will 

use it where that is appropriate, again, subject to oversight from 

the Congress and subject to oversight from the courts. 

I think that this is appropriate because I have acknowledged and 

very much believe small providers did not create the problems that 

11 

led to the financial crisis. We should not solve the financial crisis 

by heaping unnecessary burdens upon them. Of course, the devil is 

always in the details of that, and we are working hard on those details as we go. 

We just exempted thousands of small providers from our new remittance rule. They will not have to comply with it if they do fewer 

than 100 transactions per year. That was interpreting the ‘‘normal 

course of business’’ phrase that Congress used in the law. And we 

will continue to listen carefully to them and try to react and respond to them where we have authority to do so. 

That is our outlook and perspective and I am happy to come and 

speak to you any time you and your colleagues have concerns in 

that regard because I regard that as an important issue for us. 

Senator SHELBY. Thank you, Mr. Chairman. 

Senator MERKLEY. Senator Reed. 

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

thank you, Mr. Cordray, for your excellent work. 

By my rough count, either you or your colleagues have been before the Committee about 26 times. I mean, I know Holly Petraeus 

has been here a number of times leading the section with respect 

to military personnel, doing a superb job. So your interaction with 

Congress is quite frequent and, I think, represents your not only 

willingness, but understanding of the need to communicate with us 

and our understanding of the need to supervise your activities. 

The second point I want to mention, that you mentioned, is the 

‘‘Know Before You Owe’’ program. One of the great powers that you 

wield is the power of informing consumers about choices they can 

make. When you go to ECON 101, one of the assumptions is both 

buyers and sellers have, quote, ‘‘perfect knowledge’’ of what is 

going on. And, frankly, one of the observations that, obvious from 

the crisis of 2008, 2009, was that it was a one-sided operation. Consumers had very little knowledge of products. There was no real serious attempt to inform them, et cetera. But I think what you are 

doing there is actually going to make markets more efficient and 

more competitive, and as a result, benefit not only the consumers, 

but the markets in general. So with those points, let me get to a 

specific question. 

You recently settled your first major enforcement action, which 

was with respect to the credit card operations of a bank, refunded 

$140 million to potential victims. So consumers got a rebate, essentially, from this mispractice. You required additional penalties of 

$25 million to your agency and also $30 million to OCC. And you 

have also published a compliance bulletin that puts other institutions on notice about deceptive marketing practices. 

Can you explain your approach to this enforcement action? And 

since this is the first one, I think it is appropriate for you to comment on it. And also, it appears to me and you might confirm that 

the individual entity essentially agreed that what they were doing 

was not consistent with the law. Is that fair? 

Mr. CORDRAY. Thank you, Senator, for the question. Let me talk 

a little bit about our approach to enforcement, and I always have 

to be a little careful in this area because specific investigations are 

nonpublic and it would not be fair to companies that are being investigated to talk about those investigations when they may not 

12 

amount to anything in the end and they do not have a chance to 

speak for themselves. 

First, among the things that I think this first resolution illustrates is our intention to give broad, but as specific as possible notice to all participants in the market about the concerns that we 

see that are potentially violations of law. And this particular occasion involved deceptive and misleading marketing of products, 

which is clearly in violation of longstanding law. But what that actually means in marketing particular products can be a little difficult or a gray area sometimes for people. I do not think it was 

here. But that is why we also issued a compliance bulletin to give 

people notice that they should think about their own programs and 

look at this in light of this. We also made the consent order very 

specific about particular problems that were identified here so that 

others would know whether they are running afoul of that or not. 

Second, I think this illustrates that we are trying to be very cooperative with our fellow Federal agencies, the other prudential 

regulators. I think it is important for us to go hand in glove as we 

address institutions, and we do not want institutions to have to be 

confused or have to deal with a situation where somebody is saying 

one thing, somebody is saying another thing. It is not good for any 

of us. It is not good for them. 

A third point I would make is that we attempted to shape the 

restitution to consumers so it would be as easy as possible for consumers to receive that restitution. There are many instances where 

consumers are entitled to some sort of relief but it is difficult for 

them to get to it. They are not aware of it. It is a hard process to 

get through. We want to make that easy. 

The other thing I want to say, and I want to say this very clearly 

and publicly because it got lost in the shuffle because of the attention to our first enforcement action, the institution here, Capital 

One, responded, in my view, extremely responsibly to the problem 

when it was identified. When we spoke to their leading officials 

about what we had found, they were as distressed and concerned 

about it as we were and they stepped up immediately to take it 

head on, not to try to deny responsibility, not to try to minimize 

it, not to try to suggest somebody else was to blame, even though 

it involved third-party vendors. They addressed it. They resolved it. 

And they also then reviewed their other practices. If I were the 

head of such an institution, I would hope that is the way I would 

have handled the situation. I thought it was quite commendable. 

Some of that got lost in the shuffle. I wanted to have a chance to 

say that publicly. 

Senator REED. So their responsible behavior has sort of set a 

standard, also, with respect to this enforcement action. And in addition, your hope, I presume, from what you said, is that by identifying, this will give the opportunity for other companies in the field 

to self-correct and to adopt the same level of responsibility and 

business practice as Capital One. 

Mr. CORDRAY. We very much want and intend them to do that. 

They also are aware that we have supervisory authority and we 

will be looking closely at similar issues at other institutions, yes. 

Senator REED. Thank you. 

Senator MERKLEY. Senator Crapo. 

13 

Senator CRAPO. Thank you, Mr. Chairman, and Mr. Cordray. 

I am hearing a lot of concern about how Dodd-Frank will reduce 

the credit availability in the housing market because of some of the 

proposed rules, particularly for a qualified mortgage, the increased 

liability, and for the qualified residential mortgage that requires 

the 20 percent downpayment. What kind of analysis and coordination is being undertaken to understand the impact of the cost and 

availability of mortgage credit between the interaction of the QM 

and the QRM proposed rules? 

Mr. CORDRAY. OK. Thank you for asking the question. It is an 

important question right now. It is one of the issues that involves 

a lot of time and effort at the Bureau, but rightly so. We are required by law—Congress passed the law, we implement it—to write 

various mortgage rules that will attempt to improve some of the 

problems that were perceived in the mortgage market that helped 

lead to the financial meltdown and the resulting recession and crisis. There is no question that that was a problem, and part of the 

problem was you are regulating part of the mortgage market, but 

nonbanks who were very active in the market were not regulated. 

That was never going to work as a model. 

The rule you are asking about in particular, the qualified mortgage rule, has to do with determining that there is an assessment 

made, a responsible assessment, of the ability to repay the mortgage before it is made. You would think that might not be necessary. Why should a lending institution have to be told to pay attention to whether the borrower who they are lending money to is 

going to repay the loan? But in the lead-up to the financial crisis, 

we saw many, many mortgage loans made with no documentation, 

no assessment of the financial situation, often falsification of that, 

in part because there was not sufficient oversight and there were 

not rules of the road in place that governed the whole market. 

We are mindful of the fact that part of our charge in the law is 

that we are supposed to and we want to pay attention to access to 

credit for consumers. It does not do anybody any good for us to develop an elaborate set of protections if nobody is going to then lend 

money to consumers. That does not help consumers and it would 

be a failure on our part. 

That is part of the reason why, on the Qualified Mortgage Rule, 

which we are due to finalize by January, we have slowed down a 

little bit. We put it out for further comment. We have sought more 

data upon which to make judgments. We absolutely do not want to 

make a judgment that is going to freeze up or further constrict 

credit in the mortgage market. We have gotten more data, collaborating with FHFA and others, and we are going to use that to 

make the assessment here. 

The final thing I would say is we need to keep in mind that the 

biggest hit to access to credit for consumers and for small businesses and everybody in our economy has been the financial crisis 

of 2007–2008. It has caused many institutions to fold. It has dried 

up credit in our local communities. We need to make sure that that 

does not happen again, to the extent we can prevent it. And cleaning up the mortgage market, I think, is critical to making sure that 

we accomplish that. At the same time, we need to be mindful that 

people do not go overboard here. We need to be able to give conVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
14 

fidence to lenders that they are able to lend, and we need to have 

a market that can function. We still do not have a very good functioning market today, 4 years after the financial crisis, and it is the 

crisis that caused that. We need to remember that. 

Senator CRAPO. Well, I appreciate your attention to trying to address these risks that we now understand were serious problems. 

But again, getting back to the core issue, we do not want to create 

a further problem in our effort to address the risks. You know, you 

indicated this. In another way, Secretary Geithner recently testified that as we move forward, we must take care not to undermine 

the housing market, which is showing signs of recovery but is still 

weak in many areas. So we do need to address these risks, but we 

need to do so in a way that does not restrict the availability of 

credit unduly. 

I have asked you before to convene a Small Business Advocacy 

Review Panel. I am going to ask you again. It seems to me that 

to try to minimize the unintended consequences, that the CFPB 

should convene a Small Business Panel to discuss the impact of the 

proposed rule. And given the potentially significant impact of the 

qualified mortgage rule, in particular, on the housing market and 

the Bureau’s recent notice that you are going to step back and take 

a little more time to look at this, it seems that this will be a perfect 

opportunity to move ahead and do, as I think the statute requires, 

and initiate a Small Business Advocacy Review Panel. 

Mr. CORDRAY. That is a fair point. By the way, I very much agree 

with the statement you quoted from Secretary Geithner and I very 

much agree with your comments on the statement. In terms of the 

QM rule, the SBREFA Panel does not apply because it originated 

with the Fed, not with us. We did, though, hear the concern and 

we recently convened an opportunity for many small providers to 

give us direct input on the rule, especially for that purpose. We 

also have the notice and comment period where everybody can comment and many, many are doing so. So, again, it is our intent that 

we write this rule carefully, that we be mindful of the fragility of 

the mortgage market. 

I also want to say, for the record, the 20 percent downpayment 

that you mentioned, that is not part of our proposal. It is nothing 

that we have proposed; that would not make sense as some sort of 

rule that would be imposed on the mortgage market. I am not supposed to speak too much about proposals before we finalize them, 

but that will not be part of our—— 

Senator CRAPO. Well, I understand that the Federal Reserve—because the Federal Reserve started the rule, that there is a technical 

argument that the Small Business Advocacy Review Panel requirement does not apply, but it just seems to me that you have got the 

time. You should take the time. And I do not understand why there 

is the resistance to going ahead and conducting a Small Business 

Review Panel. 

Mr. CORDRAY. Yes. We are not at all sure that we had the time, 

given the January deadline, to engage in the entire process. However, we did convene a panel to get the small business community’s 

input because we want to have the input, and we have done that 

and continue to do that. We are trying to meet the spirit of that 

without blowing past the January deadline, which I think would be 

15 

bad for the mortgage market because we are trying to resolve some 

of the regulatory uncertainty here. Congress has imposed the deadline. We take that seriously. We intend to meet it. We consider that 

is law that binds us. And I am happy to have our staff talk further 

with your staff about that concern, if you would like. 

Senator CRAPO. Thank you. 

Senator MERKLEY. Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

Mr. Cordray, thank you so much for what you are doing. I just 

wanted to talk about the unbanked and banked. What I have been 

trying to do is to reduce the numbers of unbanked and underbanked and have more of them work with the institutions. Yesterday, the FDIC released its national survey of unbanked and underbanked households. They reported that the percentage of unbanked 

households increased from 2009 to 2011. I was disappointed, of 

course, because of the increase, to learn the number of unbanked 

households increased by more than 800,000. Director Cordray, 

could you please discuss the Bureau’s efforts to increase access to 

mainstream financial institutions for the Nation’s nearly ten million unbanked and 24 million underbanked households. 

Mr. CORDRAY. Thank you, Senator. This is a very urgent concern, 

I think, for anybody who is mindful of the real consumer experience in the financial marketplace. There are many millions of 

Americans who have no bank account or access to the banking system. Some of them are actually barred from the banking system because of previous difficulties. There are many others who have a 

bank account but find for a variety of reasons that they prefer to 

utilize many unbanked services in order to get cash, in order to pay 

bills, in order to meet the sort of necessities of life, and do not, 

therefore, have the same protections in doing so that they would 

have within the banking system. 

I was present yesterday at the FDIC for the unveiling of that report. Chairman Gruenberg, who is unfailingly thoughtful in this regard, invited me and several of our staff who were there to hear 

their presentation of the report. Unfortunately, they only started 

doing the report in 2009. It would have been interesting to see 

what the numbers might have been prior to that. My sense is probably that the number of unbanked and underbanked has increased 

in a significant way over the past 6 years because of the financial 

crisis and the difficult situation that it put many people in. 

But what is interesting here to me is the answer for many individuals will be to find ways to get them into the banking system 

and they will be better off in the sense that they are more protected and those are somewhat more regularized relationships, not 

one-off transactions. But there are going to be millions of Americans, tens of millions of Americans, for whom that is not likely to 

be the answer for any of a number of reasons. We are trying to understand those reasons, but we are also mindful at the Bureau that 

we do not only oversee banks. 

We also oversee nonbanks, including some of those providers, so 

payday lenders and other nonbank providers of services to people 

that they are going to in large numbers, and we want to be careful 

about what we can do to extend more consumer protections to 

those many Americans, often low- and moderate-income, and in 

16 

what ways does the bank and nonbank system sort of work together. We are not only looking at the banking system. We are different from the other banking agencies in that regard. We are looking across the spectrum and we care about it all. 

We have created an Office of Financial Empowerment at the Bureau. Cliff Rosenthal is now heading that and he is a veteran of 

the community development credit union movement, and is taking 

a strategic approach to these issues. But for us, it is going to involve cooperation, particularly with the FDIC, who has taken a notable interest in this area, and others both here in Washington and 

across the country. 

It is a difficult problem. It will be a difficult problem to address 

and solve, but it is one that we very much are interested in making 

progress on. 

Senator AKAKA. Thank you very much. I am glad to hear your 

efforts thus far on that. 

Another area that I have been concerned about and very close to 

my heart has been the servicemembers of our country—— 

Mr. CORDRAY. Yes. 

Senator AKAKA. and I want to say thank you so much for having 

Mrs. Holy—Holly Petraeus come to Hawaii—— 

Mr. CORDRAY. Maybe ‘‘holy.’’ 

Senator AKAKA. Yes, and she did an excellent job. The first meeting we have had, we invited all the top officials of the military and 

they appeared and she conveyed what she thought needed to be 

done and my concerns for trying to protect the service personnel 

who have been targets for some of the institutions you mentioned. 

So I want to say thank you for permitting her to do that, and she 

has done a great job. 

At the Joint Base Pearl Harbor-Hickam, concerns were raised 

about the impact of the Permanent Change of Station orders. My 

question to you is, could you please provide us with an update on 

the PCS—that is the Permanent Change of Station—issue and let 

us know whether you have started to see any effects from the interagency guidance released in June. 

Mr. CORDRAY. Thank you, Senator, and thank you for your very 

kind but, I am sure, accurate remarks about Director Petraeus; everybody fights over her time within the Bureau and we also try to 

share her with all of you. She has been to dozens of military bases 

across the country since becoming the Director of our Office of 

Servicemember Affairs. She has brought back many concerns, not 

only to us, but to the Department of Defense, and the Department 

of Veterans Affairs. Many of these are being addressed, in part because of the respect people have for her and her work. 

On the Permanent Change of Station orders, in particular, there 

has been some significant response to that. The problem for anybody less familiar with it is that, in the military, they face a particular problem at times. They get peremptory orders that they 

have to move. Their Permanent Change of Station moves from one 

place to another. They may or may not have an easy time of selling 

their home to be able to make that move. In this climate, it has 

been more difficult. Sometimes, they are having to make very hard 

decisions about leaving their family behind because the home is underwater and they cannot easily sell it, going off alone—sometimes 

17 

for years—or selling the home at a considerable loss, and they have 

not been able to qualify for some of the programs that are meant 

to try to minimize some of those struggles for people. 

So because of Mrs. Petraeus’s efforts, the HAMP program was recently modified to recognize the Permanent Change of Station as 

a hardship that could qualify servicemembers and their families for 

consideration in the modification programs. We recently issued 

guidance and all of the Federal regulators joined in that supervisory guidance to all institutions to be mindful of their responsibilities under the law, both to respect the Service Members Civil Relief Act, rights of servicemembers, and also to be forthcoming in 

considering how they can address this situation and that options 

are being presented, that they are being presented early, that they 

are working closely with the servicemembers, that they are clear 

that they understand what can be done, and that they make efforts 

to modify loans, as appropriate, in order to recognize this peculiar 

hardship that servicemembers have that regular civilians often do 

not have. 

So she is a one-man gang on these issues. She has got a good 

team behind her. And she is getting good cooperation from other 

parts of the Government to address them. 

Having said that, there is a lot of hard work going on every day. 

We are doing that work in consumer response. I know your offices 

are doing that work, where particular individuals have a problem 

and we are trying to do our best to help them deal with the problem. 

Senator AKAKA. Thank you. I really appreciate that. My time has 

expired, Mr. Chairman. 

Senator MERKLEY. Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman, and thank you, Director, for being here. I appreciate you answering our questions. 

I am continuing to read stories about the underbanked in our 

country, and I know that we always have unintended consequences 

when we pass legislation and, quote, try to ‘‘help’’ folks. I know another story came out today, things like when we passed interchange rules here, it ended up increasing costs for especially lowerincome consumers. They move out of banks into payday lenders 

and other kinds of institutions, and I know that you have jurisdiction over both. 

What are you doing inside the agency? I mean, all of us want to 

make sure that people have appropriate credit availability. What 

are you doing inside the agency to strike that balance, because 

there is no question that we have passed laws here that really hurt 

the very people that you are trying to help in many cases, as you 

just mentioned, and that is the low- and moderate-income citizens. 

Mr. CORDRAY. So thank you, Senator. And as I said, it is a difficult problem. It is one that we are trying to address with some 

new tools that we now have. So among other things, we did create, 

as I said, an Office of Empowerment, which is focused very specifically on these problems and taking a wide range of input and getting a wide range of perspectives from around the country about 

how people are trying to deal with these problems in different communities, often not always in coordination or collaboration with—— 

18 

Senator CORKER. Let me just—and I do not want to spend too 

much time, I know you talked a little bit with Senator Akaka about 

this, but—— 

Mr. CORDRAY. Yes. 

Senator CORKER. ——when members of your agency are dealing 

with the issues that they are dealing with, are they cognizant of 

the fact that, many times, when they go into a certain issue, they 

are really making people even more unbankable? Are they aware 

of that? Without getting into a lot of actions, is there an awareness 

within the agency that that can take place? 

Mr. CORDRAY. Yes, and I would say it seems to me that we are 

probably more aware of it than any agency has been before, because once those people—if people leave the banking system, they 

do not leave our jurisdiction and they are still subject to our oversight and we still feel the responsibility to try to address their 

problems. So if they have a short-term need and they go outside 

of the banking system to resolve it with a payday lender or a pawn 

broker or whomever it may be, that is all within our realm. So it 

is not just that they go out of sight, out of mind. That is relevant 

to us. 

We are supervising both banks and nonbanks on a common 

basis, say, in the short-term credit market and in other ways, in 

the mortgage market, in the mortgage servicer market. So I do 

think we are pretty mindful of that, although we are always interested to hear if your staff have some issues that they are seeing 

that they want to raise to our attention. We get those issues 

through the consumer response area regularly, on a daily basis—— 

Senator CORKER. Let me ask you about the consumer response 

area. 

Mr. CORDRAY. Yes. 

Senator CORKER. I am glad you brought that up. I notice you all 

have a Web site where people make complaints against institutions 

and you list all of those complaints publicly, and there is a huge 

list of those. And I understand how you would want to have complaints registered. What is the purpose in putting those up publicly, and in putting those up publicly, do you all actually verify 

that they are real? I mean, all of us as elected officials have people 

who make claims about us that are untrue and they are on the 

Internet and all of that—— 

Mr. CORDRAY. We do, Senator—— 

Senator CORKER. ——and it seems like to me that you are encouraging that same kind of behavior, and I am just wondering 

what the purpose of having that public Web site is. 

Mr. CORDRAY. I am familiar with the phenomenon, as well, Senator. 

[Laughter.] 

Mr. CORDRAY. But the purpose—— 

Senator CORKER. Well, I thought all those things said about you 

were true, but go ahead. 

[Laughter.] 

Mr. CORDRAY. I am sure, in someone’s mind, they are. 

[Laughter.] 

Mr. CORDRAY. In terms of what we are doing with the data base, 

we are receiving complaints by the thousands, and so that is a cerVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
19 

tain snapshot of what is going on out there for consumers. We 

share your concern. We do not want to be putting up garbage data. 

Senator CORKER. Well, why are you putting it up, then? 

Mr. CORDRAY. Well—— 

Senator CORKER. I guess my question is, unless—do you go out, 

when somebody sends a complaint and you put it up publicly, 

which makes it real, are you first checking out that complaint to 

make sure it is real, or are you just allowing it to be a gossip board 

for people to take out their vengeance on organizations that may 

well deserve it, but I am sure in some cases do not? 

Mr. CORDRAY. Right. And, of course, those gossip boards now 

exist all over the Internet, so it is a different era than 20 years 

ago—— 

Senator CORKER. But you are validating this. 

Mr. CORDRAY. That is not what we are trying to do. 

Senator CORKER. Yes. Yes. 

Mr. CORDRAY. So we do verify the customer relationship. We remove duplicates—— 

Senator CORKER. Before they go up? 

Mr. CORDRAY. Oh, yes. 

Senator CORKER. Before the complaints go up? 

Mr. CORDRAY. Yes. 

Senator CORKER. Good. 

Mr. CORDRAY. And if it is not within our jurisdiction, it is something we refer to another agency, we do not report it. And the data 

we are reporting is aggregated data, so it is a snapshot. It is a picture. There was some concern about it when we first started to do 

it. It is something that other parts of the Government have done 

to some degree, the Highway Safety Administration and the Consumer Product Safety Commission. I think people are starting to 

understand what we are trying to do, which is that we find this 

information, and we do, very useful to trying to understand and inform our work. We think the public should have access to the information and it may well inform them in terms of customer relationships and customer service. 

We do find it somewhat incentivizing for companies to think 

harder about how they can serve their customers better. As I said, 

we have gotten a tremendous response from the credit card companies thus far in terms of responsiveness to consumer problems, 

and, frankly, in some ways, they have showed very well in this 

process. 

Senator CORKER. You are mentioning—you are really helping me 

move along here—you mentioned referring to other agencies—— 

Mr. CORDRAY. Yes. 

Senator CORKER. ——and it made me recall that when you were 

in here last, one of the things that hurts consumers is bad behavior 

by other consumers, right? In other words—— 

Mr. CORDRAY. Yes. 

Senator CORKER. ——when we have fraud by one consumer, it 

actually drives up the cost for another consumer. And you mentioned last time you were here, I remember very explicitly, that if 

you saw fraudulent behavior on behalf of consumers, that you were 

going to report that to other agencies, because you acknowledged 

20 

when you were here that that is very damaging to other consumers 

who play by the rules. How much of that have you done? 

Mr. CORDRAY. So in terms of referring matters for potential 

criminal prosecution and the like, which we have the authority to 

do, to the Justice Department—I cannot really speak publicly 

about—— 

Senator CORKER. Just give me sort of the range of order of magnitude of those referrals. 

Mr. CORDRAY. Well, I would say, first of all, there are a number 

of situations involving fraud being committed by individuals that 

we ourselves are investigating and will address, and one of our 

other first enforcement actions that is now public was against a 

few individuals that are engaged in a fraudulent foreclosure rescue 

scheme that is covering people in 25 or more States, a very significant problem and the kind of thing that we want to stamp out 

around the country. Not easy to stamp it out, but we will work to 

do so. 

So if we see instances of wrongdoing by anyone in the course of 

our work, we have an obligation to report those that rise to the 

level of being reportable and we will do that. I do not have numbers for you and I do not think I am supposed to discuss any individual cases in that regard. 

Senator CORKER. No, and certainly, I was not even asking that. 

But I would just say that, again, it hurts consumers that play by 

the rules when that activity takes place and—— 

Mr. CORDRAY. I agree. 

Senator CORKER. ——we have a situation right now where foreclosures are taking 378 days. And again, if people are not supposed 

to be foreclosed on, they should not. On the other hand, that delay 

among those who are not paying is creating issues for those consumers who play by the rules. 

I know my time is up. I will say that, in closing, I do hope that— 

I know you have put the qualified mortgage issue off until after the 

election, so—agencies and politicians both put things off until after 

the election, I have noticed. I hope that as you look at that, I think 

it is important for consumers to have lenders who have safe harbors. In other words, they know that if they have done the things 

that they should do, they do not end up with a rebuttable presumption down the road that really ends up driving up costs. So I hope 

as you look at that after the election, you certainly will take that 

into account. 

I thank the Chairman for being so generous with time. 

Mr. CORDRAY. We are looking at it right now, Senator, and we 

will take that concern into account as we are receiving the same 

types of input and advice from many, many sources on the safe 

harbor issue. 

Senator MENENDEZ [presiding]. Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

Mr. Cordray, I have been working with the Indian Tribes and 

many Tribal communities are concerned about the financial literacy and financial empowerment of their Tribal members, and I 

am so delighted to know that you are moving on empowerment, as 

well. For the American Indians, I am trying to get them to do more 

thinking about financial literacy. My question to you, Mr. Cordray, 

21 

is what could the CFPB do to promote financial literacy to Indian 

Country, particularly with the flow of funds from the Corbell and 

Keepseagle settlements that are occurring? 

Mr. CORDRAY. Thank you, Senator, for the question. This is an 

issue that has been brought to our attention by a number of Senators and others. We regularly are engaging with Tribal representatives to understand some of the particular issues for Native Americans around the country. 

We were alerted that there are issues. There are two fairly large 

settlements, the two you referred to, where funds are going to be 

flowing into Native Americans across the country and there are already some scams that are popping up around when people know 

that funds are flowing, they tend to try to get their hands into 

them. We have been engaged in consumer education and financial 

literacy efforts around where we know those funds are going to be 

flowing. We have staff who, I believe, next week are going to be in 

Arizona and New Mexico working on that issue. And we are coordinating with others, including others in the Federal Government 

and locally, to figure out how we can best help avoid what would 

be a tragedy of people who have fought to receive funds because 

they were wronged and then find that those are going to be diverted to fraudulent operators who are aggressive with their scams. 

We also have been working through our Office of Intergovernmental Affairs, which I think is the appropriate level for us since 

Tribal Governments, that is an appropriate respect and level at 

which to address those issues, on the kinds of issues and problems 

they have raised with us that are maybe unique to the Native 

American community. And we will continue to listen. We will continue to try to address those issues with them. 

Senator AKAKA. Thank you, also, for your earlier comment on 

community banks and credit unions. I would like to say that yesterday’s announcement of the important appointment of Donna 

Tanoue of Honolulu to the Consumer Advisory Board, and Bernard 

Balsis of the HILO to the Credit Union Advisory Council, I am 

pleased that they will help share their expertise and experience. 

That includes years of working for Hawaii’s banks and credit 

unions. So I want to thank you very much for moving in that direction, as well. 

That is what makes me appreciate what you are doing. You are 

moving in, for me, in a great direction to help all kinds of consumers, and so it is growing on you and your staff, as well, and 

your staff has been doing an excellent job, too. 

So thank you, Mr. Chairman, for the time of these questions. 

Senator MENENDEZ. Thank you, Senator Akaka. 

Director, let me ask you, in the Capital One case, was there 

about $150 million that consumers got in some form reimbursed? 

Mr. CORDRAY. Yes. There was $140 million that was covered by 

the issues that we were addressing and addressing then jointly 

with the OCC, and then there was a different issue that the OCC 

had raised that was really outside of our jurisdiction where there 

was additional relief gained, which is the benefits of cooperation, 

both to address all of that together and from the standpoint of the 

institution, to be able to put all of that behind it at once. 

22 

Senator MENENDEZ. But for your agency, do you think that this 

action would have taken, consumers would have been saved the 

$140, $150 million? 

Mr. CORDRAY. I do not have any way of assessing that, Senator, 

but I can say that I do think that—— 

Mr. CORDRAY. Was it your agency that pursued this in the first 

instance? 

Mr. CORDRAY. I do think it matters greatly to have an agency 

whose sole focus is on consumer protection and not have to balance 

that against other very significant responsibilities, which is—— 

Senator MENENDEZ. Was it your agency that pursued this in the 

first instance? 

Mr. CORDRAY. It was, yes. 

Senator MENENDEZ. You know, in your confirmation process, 

your modesty is a challenge. 

[Laughter.] 

Mr. CORDRAY. I will have to work on that, Senator. 

Senator MENENDEZ. When we do something right, it is not a 

problem to acknowledge it. So I raised that question simply because, for those who are detractors of the agency, here is an example of consumers being saved $150 million by the instigation of this 

agency. And but for the agency, I personally doubt—I will answer 

the question myself—very much whether consumers would have 

been protected in that respect, not to mention the message it sends 

to the rest of the industry to do the right thing. So I appreciate 

that. 

As you, I think, may know, I have introduced the Prepaid Card 

Consumer Protection Act, and I want to applaud the agency for 

starting the process of regulating prepaid cards and I look forward 

to working with the agency to enact provisions similar to those in 

my bill. But consumers’ use of prepaid cards has exploded in the 

past few years, especially among underbanked consumers, and 

many of them—having already regulated credit cards, debit cards, 

and gift cards—this area is largely unregulated and many of them 

have incredibly excessive fees and work to the detriment of consumers, particularly as it relates to even knowledge of what they 

are getting in. So I would like to get a sense from you of what 

progress you are making at the Bureau analyzing this issue and 

when do you anticipate moving forward on it. 

Mr. CORDRAY. Good. I am glad to have that question. Prepaid 

cards are actually a very actively innovative segment of the financial market. There are, as you indicated and we have seen already, 

a wide range of different product offerings that range from pretty 

responsible and very possibly an improvement for consumers over 

other options to pretty terrible and definitely exploitative of consumers and it is a little wild and wooly right now. 

I also would say that in light of the dynamic where rules were 

written to protect consumers more specifically on credit cards and 

then Congress ended up passing the CARD Act, we are quite interested in having a dialog back and forth. We have actually taken 

an affirmative step. We are going to write rules about prepaid 

cards. We have already issued an anticipatory Notice of Proposed 

Rulemaking to begin to gather information on that. We recognize 

that these cards are becoming quite pervasive. A lot of people are 

23 

using them, particularly some of the people who are low- and moderate-income, but many people are using them and they like the 

safety of knowing they will not end up somehow in debt on such 

a card, although that is not a given with some of the products 

being offered, and we are going to move forward in that area. 

It may be that we will implement this by rule. It may be you will 

choose to move forward with legislation. We welcome it all and we 

are glad to talk back and forth about what we are trying to accomplish, what the base of knowledge is that we are developing in 

terms of actual practices and concerns and have that discussion. 

We do intend that people who use prepaid cards—and I think, 

for many people, they may not always know the difference between 

a debit card, a prepaid card, a credit card, or an ATM card, for that 

matter. They are all in their wallet. They all have a shifting set 

of capabilities. And we want consumers to be protected in the use 

of all of those. 

Senator MENENDEZ. Well, we certainly want consumers to be protected and that is the focus of our legislation. And I agree with you, 

many consumers do not know the difference between a prepaid 

card and a debit card and a credit card, and so we will look forward 

to working with your staff at the agency. I mean, I am happy to 

see us achieve the goal, whether that goal can be achieved through 

regulatory fashion, or if it must be legislative, so be it. But we will 

look forward to working with you. 

I also have long advocated national standards for banks that collect homeowners’ mortgage payments, including, as the Subcommittee Chair on Housing, chairing a hearing on that issue 

about 2 years ago. What progress is the Bureau making in creating 

national mortgage servicing standards? 

Mr. CORDRAY. We are making, Senator, good progress on that 

front. We have a proposed rule that is out for comment now that 

would provide broad protections in this area, which has been such 

a troubled area, and specific requirements for mortgage servicers 

for how they need to address the kinds of problems that we have 

all seen. Those rules will be finalized by January. Some portions 

of the rules implement things that Congress required us to do and 

others go beyond and are attempting to provide the kind of protections, both process-wise and substantively, that consumers need in 

this area. There may be scope for yet further work in this area. We 

are getting as much done as we can by January. 

We also have begun examining mortgage servicers, sending in 

teams to actually examine them on the ground, both bank mortgage servicers and nonbank mortgage servicers. We have taken the 

occasion to actually meet face to face with a number of mortgage 

servicers to convey to them our seriousness about this issue, our 

understanding that this has been one of the major areas of consumer harm over the past 5 years and counting for people who are 

suffering in these difficult circumstances, and that they need to be 

improving their processes and coming up to snuff now, not waiting 

for rules to take effect, not waiting for us to come around on our 

examination schedule, but getting it right themselves up front, and 

we are trying to signal pretty specifically what kinds of things they 

are supposed to be doing. 

24 

But none of this should come as any surprise to people. These 

issues have been out there and have been surfaced for years. The 

settlement discussions with the State Attorneys General and the 

Justice Department surfaced them further. They are all the same 

issues. They know what they need to do. It is merely a question 

of whether they are going to invest the time and effort and money 

and attention to do it. And if they do not, we are going to be coming to look at them. They are all on notice of that. And they need 

to, again, get up to snuff. 

Senator MENENDEZ. You are looking at this, also, in the context 

of the AG consent settlement agreements and the OCC and the Fed 

consent orders? 

Mr. CORDRAY. Yes. One of the things we are mindful of is that 

it is a complicated area where there has been a fair amount of activity. So there is the AG–Justice Department–HUD settlement, 

which imposes some requirements for a specific amount of time on 

certain specific parts of the portfolio but does not have general applicability. There are FHFA guidance to Fannie Mae and Freddie 

Mac, which have been very helpful in the area. There are the OCC, 

Fed, and banking orders that have been very specific about improvements that need to be made and have made an enormous difference. 

We are trying to harmonize all of that and not end up going in 

different directions, which would not be fair to servicers and would 

not be beneficial to deliver value for consumers if we simply create 

more confusion. There has been a lot of interagency discussion and 

coordination on this. There will continue to be. And I think we are 

going to have some good results come January, and I think there 

may be further work to be done after that, but we will see. 

Senator MENENDEZ. Good. Two final questions. One is the law requires the Bureau to be cognizant of the regulatory burdens of its 

action, specifically when it comes to smaller institutions. And along 

these lines, can you tell the Committee how your agency is crafting 

regulations and providing regulatory guidance in a way that makes 

compliance simple and workable, for example, community banks 

and small nondepository regulated entities. 

Mr. CORDRAY. So, Senator, I personally have been pushing hard 

on this at the Bureau. I put myself way out on a limb willingly in 

saying very loudly and clearly that smaller community banks and 

credit unions did not cause the financial crisis. They have a good, 

solid business model that has proved itself by tradition and by experience and we want to be mindful of that as we go about imposing, or implementing new rules. 

We are trying to look at that on a rule-by-rule basis as to what 

an appropriate threshold might be to set for—perhaps certain institutions do not have to address the rules at all, because below a certain level, it is more burden than it is benefit to consumers. There 

may be ways in which we can tweak some of the rules so certain 

things that they alert us to as special burdens maybe can apply differently to the smaller institutions. 

We have to, at the same time, be mindful of the fact that consumers deserve protection and they deserve protection across the 

board. So it is a balance there, but it is one that we are going to 

continue to take a lot of input on because of the sort of philoVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
25 

sophical approach that I just outlined that I have and I think the 

Bureau has toward this. 

On the remittance rule, we are going to have a small provider 

guide that is attempting to boil this all down to sort of plain 

English, straightforward, easier to follow guidance than perhaps 

the kind of rules that get published in the Federal Register. We are 

going to be hearing from them and responding to them in terms of 

questions and concerns they have. We are coming out with some 

pieces of guidance that they have asked about. 

And we are going to stay with it. We are not just going to publish 

rules and then forget about it and say, that is somebody else’s 

problem now. It is our problem, too, that the rules get implemented 

and they actually deliver value for consumers and that they are 

balanced toward not providing undue burden for providers where 

the benefit does not correspond. 

Senator MENENDEZ. I appreciate that view, I think which is in 

the context of what the law specifically asks for. 

Finally—this may have been asked, but I may have missed it— 

how many complaints has the Bureau received from consumers so 

far about mortgages, credit cards, banks, debt collection, and other 

financial services? 

Mr. CORDRAY. Well, as of September 3, I quoted a number in my 

opening statement that was 72,000—I may not have it quite 

right—72,297, something like that, complaints, which is, you 

know—I got it right—that is a significant number and it is also a 

number that is increasing over time. I think our annualized rate 

of complaints, as of this moment, is 120,000 per annum. So it has 

been ramping up. 

We have no idea when that will level off or where it will level 

off. It could be several hundred thousand. It could be over a million. We just do not know. There has never before been a consumer-facing bureau like this and we are trying to be aggressive 

about interacting with consumers, their advocates and other stakeholders around the country. So we will see. 

Right now, the most complaints are coming in on mortgages. We 

are getting more mortgage-related complaints, including servicing 

complaints, than we are credit card complaints and than we are 

the other products. It makes some sense. The mortgage market is 

the biggest consumer finance market out there and those concerns 

are heart and soul to people. You have the possibility they might 

lose their house or be in arrears on their largest single financial 

obligation, ruining their credit. It is obviously an urgent thing for 

people, so not unexpected. 

But the volume we are receiving is heavy. It is getting heavier 

and it is hard work for us to keep up with it. 

Senator MENENDEZ. And, finally, how are you ultimately—I do 

not know if you have a—can you describe the process when you receive that consumer complaint? What exactly happens? Is there a 

success rate, or can you give us the rate of when those that are 

verified versus those that are not—do you have any quantification 

of that? 

Mr. CORDRAY. We have been working on how we report this and 

how we understand it, and actually, we have made several modifications along the way. We started off by reporting ‘‘Complaints 

26 

Closed With Relief’’ and ‘‘Complaints Closed Without Relief’’. We 

got a fair amount of input from industry that they thought that 

was not specific enough and in some ways was somewhat unfair because there is both monetary relief, where sometimes the consumer 

gets dollars back, and there are other kinds of relief that can also 

be meaningful to people, such as clearing up the problem, removing 

the allegation that there is a debt, getting the credit report cleaned 

up, which sometimes matters a lot more to people than the $75 or 

$100, although that matters to a lot of people. So we have tweaked 

this and changed it a few times, including most recently June 1, 

and we are trying to go back and reapply those categories to what 

happened before. 

As we go, we are getting more and more data. It is better data 

in the sense that it is more refined, more polished, and I will be 

candid about that. We are better now than we were 6 months ago. 

We were better then than we were 6 months before that. We will 

be better in 6 months than we are now. But those are the kinds 

of things that we are trying to do. 

In terms of how we handle the complaints, we began with a very 

interactive back and forth between us and the institution. There 

are many complaints that are resolved both positively and negatively. The consumer then has an opportunity to contest that resolution, which sometimes they do, sometimes they do not, to provide 

more information. And we will then investigate complaints that are 

not resolved at that point. 

And we are also finding this is helpful to us because it does identify some patterns of potential violations, which we look at both in 

our examination role and in our enforcement role. But we are pretty careful about that. We are not just taking unverified, raw information—anybody can say anything about anybody, as some of your 

colleagues identified earlier, but we are trying to be careful about 

what does it really mean? What does it actually tell us is going on 

in the marketplace? 

I am told—our crack staff wanted me to tell you that we believe 

we have received over 3,000 consumer complaints thus far from the 

State of New Jersey. It is sometimes hard to tell, because if they 

come by email, you do not always know where they are from. But 

there is a robust appetite out there for people who need and want 

and are seeking help and we are trying to meet it. 

Senator MENENDEZ. Well, there certainly is a robust appetite to 

sort of, like, level the playing field and have an honest and transparent system and we believe you are well on your way. 

With the thanks of Chairman Johnson and the Members of the 

Committee, we thank you for your testimony, look forward to our 

continuing engagement with you. 

And with that, the hearing is adjourned. 

[Whereupon, at 11:30 a.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 

27 

PREPARED STATEMENT OF RICHARD CORDRAY 

DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU

SEPTEMBER 13, 2012 

Chairman Johnson, Ranking Member Shelby, and Members of the Committee, 

thank you for inviting me to testify today about the Semi-Annual Report of the Consumer Financial Protection Bureau. 

Just over 1 year ago, the Consumer Bureau became the Nation’s first Federal 

agency focused solely on protecting consumers in the financial marketplace. The 

Semi-Annual Report we are discussing today covers our activities from January 1 

through June 30 of this year. 

As the report shows, we have been using all of the tools at our disposal to help 

protect consumers across this country. We pledge to continue our work to promote 

a fair, transparent, and competitive consumer financial marketplace. 

Through our regulatory tools, we have proposed smarter rules that will help fix 

the broken mortgage market with commonsense solutions. We are writing rules that 

simplify mortgage disclosure forms and rules that make sure consumers do not receive mortgages that they do not understand or cannot afford. Our rules will also 

bring greater transparency and accountability to mortgage servicing. And our careful process is that before we propose a rule, a team of attorneys, economists, and 

market experts evaluates its potential impacts, burdens, and benefits for consumers, 

providers, and the market. 

Our push for accountability extends beyond mortgage servicing. We are holding 

both banks and nonbanks accountable for following the law. Prior to my appointment, nonbanks had never been federally supervised. The financial reform law specifically authorized us to supervise nonbanks in the markets of residential mortgages, payday loans, and private student loans. We also have the authority to supervise the ‘‘larger participants’’ among nonbanks in other consumer finance markets 

as defined by rule. So far, we have added credit reporting companies to this group. 

It is important for us to exercise sensible oversight of the consumer finance markets, but it is also important that we empower consumers themselves to make responsible financial decisions. Our ‘‘Know Before You Owe’’ campaign involves us 

working to make mortgages, credit cards, and student loans easier to understand. 

We also developed ‘‘AskCFPB,’’ an interactive online database with answers to consumers’ frequently asked questions. We also launched the first-ever database of individual complaints about financial products, starting with credit cards. Consumers 

can use the Web site to review and analyze information and draw their own conclusions about the customer service provided with these financial products. 

We also think it is important to engage directly with consumers so we know more 

about the struggles and frustrations they encounter in their daily lives. The Bureau 

has held numerous field hearings across the country so we can talk face to face with 

consumers on a variety of topics. Our Web site has a feature called ‘‘Tell Your 

Story’’, which encourages consumers to share with us their personal stories to help 

inform our approach in addressing issues in the financial marketplace. And, perhaps 

most significantly, we help to resolve consumer disputes with lenders by taking complaints on our Web site at consumerfinance.gov, as well as by mail, fax, phone, and 

by referral from other agencies. As of September 3, we have received 72,297 consumer complaints about credit cards, mortgages, and other financial products and 

services, and the pace of complaints has been increasing over the past year. 

All of these processes—rulemaking, supervision, enforcement, and consumer engagement—provide us with valuable information about consumer financial markets. 

We engage in extensive outreach to large and small institutions, including banks 

and nonbanks, to gather the best current information as we make policy decisions. 

We pride ourselves on being a 21st-century agency whose work is evidence-based. 

So we also conduct our own in-depth studies on consumer financial products, such 

as reverse mortgages and private student loans. We have issued public requests for 

information that seek input from consumers, industry, and other stakeholders on 

issues such as overdraft fees, prepaid cards, and the financial exploitation of seniors. The new Consumer Bureau has worked on all of these projects while being 

fully engaged in start-up activities to build a strong foundation for the future. The 

Bureau has worked to create an infrastructure that promotes transparency, accountability, fairness, and service to the public. Our first year has been busy and full, 

and this report reflects considerable hard work done by people whom I greatly admire and respect. They are of the highest caliber and they are deeply dedicated to 

public service. We look forward to continuing to fulfill Congress’ vision of an agency 

that helps all Americans by improving the ways and means of their financial lives. 

Thank you. 

28 

RESPONSES TO WRITTEN QUESTIONS OF 

CHAIRMAN JOHNSON FROM RICHARD CORDRAY 

Q.1. Director Cordray, the Committee is interested in your work relating to prepaid cards. On your agency’s Web site, it states that 

‘‘With very few exceptions, most prepaid card providers who claim 

to offer a way to build your credit history report your activities only 

to a lesser-used credit reporting agency, not one of the three major 

credit reporting agencies used by most lenders.’’ Can you inform 

the Committee specifically who are these exceptions and are they 

beneficial to consumers in building their credit? 

A.1. In the Advance Notice of Proposed Rulemaking (ANPR) published in May 2012, the Bureau sought public input and data concerning the efficacy of credit reporting features on prepaid cards. 

In the same ANPR, the Bureau also expressed an interest in understanding how such services are marketed to consumers. 

In reviewing the responses to the ANPR and through meetings 

with industry participants, the Bureau has found no evidence of effective credit building through transactional use of a prepaid card. 

None of the information we reviewed points to demonstrable consumer success in building credit by transacting on a prepaid card. 

Issuers that had been making such claims have stopped marketing 

this feature completely, or caveat that the use of transactional data 

for credit building is a test program in pilot phase with one of the 

credit bureaus. 

The language on our Web site reflects the nonexhaustive nature 

of our market review and there may be providers that we have not 

yet identified. However, in our analysis and review of the prepaid 

market to date, the Bureau has major concerns about the ‘‘credit 

building’’ service, and we remain unaware of any effective solution 

that enables prepaid card customers to build credit by using their 

prepaid card to transact in the marketplace. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SHELBY 

FROM RICHARD CORDRAY 

Q.1. Mr. Cordray, during the hearing I stated that the Bureau has 

proposed eliminating the Dodd-Frank requirement that creditors 

disclose the ‘‘Total Interest Percentage’’ on mortgage disclosures. In 

its proposed rule the Bureau states that it is using its ‘‘exception 

and modification authority under TILA Section 105(a) and (f) and 

Dodd-Frank Section 1032(a)’’ to eliminate this requirement. Section 

1032(a) does not, however, contain the ‘‘exception and modification’’ 

language that appears in TILA Section 105(a) and (f). I asked 

whether you believe that the Bureau has exception and modification authority under Section 1032(a) independent of TILA Section 

105(a) and (f). You responded yes to my question. 

Please provide a legal analysis explaining the basis for your belief that the Bureau has exception and modification authority 

under Section 1032(a) of Dodd-Frank, independent of any other 

statute, including TILA. 

A.1. Section 1032(a) of the Dodd-Frank Act provides that the Bureau may prescribe rules to ensure that the features of any consumer financial product or service, both initially and over the term 

of the product or service, are ‘‘fully, accurately, and effectively disVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00032 Fmt 6602 Sfmt 6602 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
29 

closed to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or 

service, in light of the facts and circumstances.’’ Thus, section 

1032(a) authorizes the Bureau to prescribe rules to ensure the 

overall effectiveness of disclosures regarding a product or service, 

which may result in rules that alter, perhaps significantly, specific 

statutory provisions. 

In the TILA–RESPA integrated mortgage proposal, the Bureau 

relied on a number of statutory grants of authority, including section 1032(a), to support the proposed requirements, including some 

that would have the effect of modifying statutory requirements. 

The authority granted to the Bureau under section 1032(a) is consistent with the goals of the TILA–RESPA proposal, which combines two different mortgage disclosure regimes into a single set of 

disclosures that fully, accurately, and effectively inform consumers 

of the nature and costs of mortgage loans in a manner that permits 

them to understand the associated costs, benefits, and risks. Of 

course, when prescribing rules under section 1032(a), the Bureau 

will consider the available, relevant evidence (such as consumer 

testing) about consumer awareness, understanding of, and responses to disclosures or communications. 

Q.2. Mr. Cordray, recently Lt. Governor of California, Gavin 

Newsom, asked the U.S. Department of Justice to investigate and 

prosecute groups representing Wall Street investors and the mortgage industry for making statements that mortgage lending may 

become costlier in parts of the country where municipalities are 

weighing eminent domain proposals. 

Do you believe that a company that refuses to make or buy loans 

that are secured by properties in jurisdictions that repudiate mortgage contracts has engaged in an abusive, unfair, or deceptive practice or otherwise violated any of the ‘‘Federal Consumer Financial 

Laws’’? 

A.2. Whether the refusal of a lender to make loans in a particular 

jurisdiction violates any Federal consumer financial law (including 

the prohibition on acts or practices which are unfair, deceptive, or 

abusive) depends on a careful and thorough assessment of all the 

relevant facts and circumstances as well as legal precedents. 

Q.3. Mr. Cordray, in the remittance transfers rule the Bureau stated that it expects some businesses may stop offering this service 

as a result of this rule. Unfortunately, it appears that the Bureau’s 

prediction will come to fruition. The ICBA recently stated that the 

rule will ‘‘force many community banks to no longer offer remittance services to customers.’’ 

Can you explain how a costly regulation that forces small banks 

out of this market and concentrates market share in larger financial institutions is good for consumers? 

Will you consider phasing in the final rule to ensure that the industry has time to provide meaningful information to those consumers who would like to send remittances? 

A.3. The Bureau is aware of concerns that the rule could lead some 

remittance transfer providers to choose to exit the business or significantly reduce their product offerings to consumers. That is why 

we continue to take steps to alleviate these concerns while mainVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00033 Fmt 6602 Sfmt 6602 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
30 

taining the rule’s valuable new consumer protections. The Bureau 

addressed many institutions’ concerns through the authorization 

for estimates contained in the original rule, as well as by the normal course of business safe harbor adopted by the Bureau in August. Additional compliance and implementation concerns were 

raised by industry in requests for guidance and other communications after the rule was finalized earlier this year. As a result, the 

Bureau expects to issue a proposal next month to refine three narrowly targeted elements of the rule. The proposal is expected to address the following three topics: 

• Situations in which a sender provides an incorrect account 

number to a remittance transfer provider. As the Bureau announced during the Bureau’s webinar on the remittance rule 

on October 16, 2012, the CFPB plans to propose revisions to 

the rule’s error resolution provisions. Specifically, the proposal 

will address the way the rule applies to situations in which a 

sender provides an incorrect account number to a remittance 

transfer provider and that information results in a remittance 

transfer being deposited into the wrong account. The CFPB intends to propose that where the provider can demonstrate that 

the consumer provided the incorrect information, the provider 

would be required to attempt to recover the funds but would 

not be liable for the funds if those efforts are unsuccessful. 

• Disclosure of third party fees and foreign taxes. The CFPB 

plans to propose revisions to the rule’s disclosure provisions 

concerning foreign taxes and fees assessed by the financial institution receiving the transfer. The proposal would provide additional flexibility around these requirements, including by 

permitting providers to base fee disclosures on published bank 

fee schedules and by providing further guidance on foreign tax 

disclosures where certain variables may affect tax rates. 

• Disclosure of regional and local taxes assessed in foreign countries. The CFPB also plans to propose that the obligation for 

providers to disclose foreign taxes imposed on remittance 

transfers is limited to taxes imposed at the national level, and 

does not encompass taxes that may be imposed by foreign, subnational jurisdictions. 

The Bureau expects to issue a notice of proposed rulemaking 

next month to explain the changes in detail and to seek public comment. After considering the public comments, the Bureau will issue 

a final rule as quickly as possible. The Bureau anticipates proposing to extend the effective date on the original rule until 90 

days after the supplemental rule is issued. Based on current expectations, this would mean that the proposed effective date for the remittances rule will be during the spring. 

The Bureau will continue to work with industry and others to facilitate preparations for implementation during the intervening period. The Bureau expects to move quickly once the proposal is 

issued to ensure that the new consumer protections afforded by the 

rule can be effectively implemented and delivered to consumers as 

soon as possible. 

31 

Q.4. Mr. Cordray, in the remittance transfers rule the Bureau requires the disclosure of foreign taxes, despite the fact that this is 

not required by the Dodd-Frank Act. 

What will be the cost to a community bank to figure out all the 

foreign tax laws that might apply for every country around the 

world? 

A.4. As the Bureau stated in adopting the final rule, EFTA section 

919(a)(2)(A)(i) requires a remittance transfer provider covered by 

the rule to disclose the amount to be received by the designated recipient. Thus, the final remittance rule requires providers to disclose all fees and taxes specifically related to the remittance transfer, regardless of the entity that charges them, as these elements 

have a direct impact on the amount made available to the designated recipient. Many community banks—those that perform 

fewer than 100 such transfers per year—will qualify for the normal 

course of business safe harbor and will therefore not need to provide this information. For those that do not qualify for the safe harbor, the Bureau understands that some remittance transfer providers, including community banks, may face difficulties in disclosing fees assessed by a recipient’s financial institution and foreign taxes applicable to a transfer. Therefore, the Bureau plans to 

propose revisions to the rule’s disclosure provisions concerning foreign taxes and recipient institution fees. The proposal would provide additional flexibility around these requirements, including by 

permitting providers to base fee disclosures on published bank fee 

schedules and by providing further guidance on foreign tax disclosures where certain variables may affect tax rates. Under the proposal, disclosure of foreign taxes imposed on remittance transfers 

would be limited to taxes imposed at the national level, and would 

not encompass taxes that may be imposed by foreign, subnational 

jurisdictions. 

Q.5. Mr. Cordray, a recent rule by the Bureau would mandate that 

loan officers offer a plain vanilla mortgage with no-points and nofees, unless ‘‘consumers are unlikely to qualify for such a loan.’’ 

How will loan officers determine whether a consumer is likely to 

qualify for a plain vanilla mortgage at the time of the offer? 

What are the penalties and legal liabilities for entities that fail 

to offer the plain vanilla mortgage? 

A.5. The Dodd-Frank Act contains a provision that would generally 

prohibit the imposition of any upfront discount points, origination 

points, or fees on consumers for mortgage loans in which a creditor 

or loan originator organization (i.e., mortgage brokerage firm) pays 

a loan originator a transaction-specific commission. As an alternative to this complete prohibition, the Bureau proposed in August 

2012, pursuant to authority granted by the Dodd-Frank Act, to 

allow loans that include such points and fees if the creditor also 

makes available to the consumer a comparable, alternative loan 

that does not include those points and fees. The purpose is to allow 

the consumer to compare two similar mortgage options—i.e., one 

with points and fees, and one without but with a higher interest 

rate—to see and understand the different ways to pay for the same 

mortgage product. 

32 

To be comparable, the alternative loan would generally have the 

same terms and conditions as the loan that includes points and 

fees; however, the alternative loan would not necessarily be ‘‘plain 

vanilla’’ because no restrictions would be imposed on, for example, 

the loan term, the amount of the interest rate, whether the rate 

is fixed or adjustable, or whether the payments are fully amortizing. 

As noted, the proposal provides that the creditor would not need 

to make available the alternative loan if a consumer is unlikely to 

qualify for that loan. Under the proposal, the creditor would need 

to have a good faith belief that the consumer is unlikely to qualify 

based on its own current pricing and underwriting policy. In making this determination, the creditor could rely on information provided by the consumer, even if that information is subsequently determined to be inaccurate. We specifically sought comment on how 

this aspect of the proposal might be improved, and are in the process of considering and evaluating the feedback received as we develop the final rule. 

If a creditor or loan originator were to fail to comply with the applicable requirements of the final rule, liability and penalties would 

be determined under sections 108 and 130 of TILA, 15 U.S.C. 1607, 

1640. 

Q.6. Mr. Cordray, last month the Bureau released a mortgage servicing rule that includes new rules on loss mitigation, even though 

RESPA, the underlying statute, does not cover loss mitigation. Instead, the Bureau relied upon a Dodd-Frank Act amendment to 

RESPA, which allows the Bureau to write rules ‘‘appropriate to 

carry out the consumer protection purposes of this Act.’’ 

Given the broad language of that amendment to RESPA, what 

are the limits of your authority under RESPA? 

Would the Bureau ever need Congress to amend RESPA in the 

future, or can you exercise this new authority to make any changes 

you deem necessary? 

A.6. RESPA imposes obligations upon servicers when servicing federally related mortgage loans that are intended to protect borrowers. As amended by the Dodd-Frank Act, this includes a prohibition against failing to take timely action to respond to borrowers’ 

requests to correct errors relating to ‘‘avoiding foreclosure, or other 

standard servicer’s duties.’’ RESPA section 6(k)(1)(E) also states 

that a servicer of a federally related mortgage shall not fail to comply with any obligation found by the Bureau, by regulation, to be 

appropriate to carry out the consumer protection purposes of 

RESPA. 

Each of the provisions proposed in the mortgage servicing rulemaking, including the loss mitigation procedures, addresses the 

consumer protection purposes of RESPA as described in the Notice 

of Proposed Rulemaking. The Bureau is limited to issuing regulations consistent with the authorities granted by Congress. The 

Legal Authority section to the Notice of Proposed Rulemaking more 

fully describes the scope of the Bureau’s legal authority to amend 

RESPA. 

Q.7. Mr. Cordray, the mortgage servicing rule released by the Bureau last month expanded the obligations required for mortgage 

33 

servicers by amending RESPA. Since RESPA has a private right of 

action, consumers will now have a Federal private right of action 

against a servicer for any alleged failure to engage in proper loss 

mitigation. 

Do you have any concerns that exposing servicers to more lawsuits will make banks less willing to lend, especially to riskier consumers? 

Did you conduct any economic analysis on how much this rule 

will increase the cost of mortgages by exposing banks to more lawsuits? 

A.7. One of the clear lessons of the mortgage crisis has been that 

good loss mitigation practices provide better outcomes for consumers and mortgage investors. Despite this, many servicers, who 

stand in between those parties, have not undertaken the work necessary to implement good loss mitigation practices to achieve those 

better outcomes. 

To correct this problem, the Bureau proposed to establish loss 

mitigation procedures, which are designed to ensure that borrowers 

receive information about loss mitigation options available to them 

and the process for applying for those options. Under the proposed 

rule, borrowers would be evaluated for all options for which they 

may be eligible, have an opportunity to appeal decisions by the 

servicer regarding loan modification options, and be protected from 

foreclosure until the process of evaluating the borrower’s complete 

loss mitigation application has ended. Further, servicers would be 

required to produce a record of decisions and, in the case of loss 

mitigation, the reasons for denial. The Bureau’s proposed mortgage 

servicing rules would create reasonable, commonsense, and transparent procedures that would be used to hold servicers accountable. 

Under the proposal, a private right of action would exist for failure 

to follow these procedures. 

The Bureau carefully considered the benefits, costs, and impacts 

of each significant provision of the proposed rule, including the loss 

mitigation procedures. As stated in the proposed rule, absent rules 

governing the loss mitigation process, investors and guarantors 

may structure loss mitigation efforts as vague discretionary activities, eliminate loss mitigation efforts altogether, or worse, significantly reduce mortgage market activity, potentially curtailing general access to credit. The Bureau recognized the benefits, costs, and 

impacts of the private right of action associated with the proposed 

loss mitigation procedures and with certain other proposed amendments to Regulation X. The Bureau notes that the regulatory analyses in the proposal generally assume that firms comply with a 

proposed rule and therefore incur the costs associated with compliance. Any other approach would require the Bureau to reduce the 

costs of compliance by a specified factor. In other words, the costs 

of civil liability would require the Bureau to determine the probability that a firm in compliance with the proposed rule would face 

additional lawsuits based on a violation of the loss mitigation procedures. This probability would have to reflect both any increase in 

lawsuits asserting violation of the proposed loss mitigation procedures and any reduction in lawsuits asserting violations of existing 

legal requirements to the extent that such reduction were to result 

from compliance with the proposed loss mitigation provisions. 

34 

For example, compliance with the proposed reasonable information management procedures may reduce lawsuits asserting that 

servicers have failed to comply with applicable law with respect to 

sworn affidavits and notarized documents in connection with foreclosure proceedings. Similarly, compliance with the proposed loss 

mitigation procedures may reduce lawsuits asserting claims based 

on a servicer conducting a foreclosure sale when a borrower has accepted an offer of a loss mitigation option and is performing pursuant to such option. The Bureau lacked data with which to estimate 

this probability at the time of the proposal, but specifically sought 

comment and data on issues effecting its consideration of benefits 

and costs and will evaluate the information received and continue 

its own internal analyses in preparing the final rule. 

Q.8. Mr. Cordray, the recent settlement with Capital One resulted 

in the Bureau and the OCC collecting civil money penalties of $25 

million and $35 million, respectively. By law, the OCC must give 

its entire penalty to Treasury. In contrast, the Bureau’s civil money 

penalty will go to its own slush fund. The Bureau will then have 

unilateral authority to decide how to allocate the $25 million. 

Will any portion of the $25 million obtained by the Bureau go to 

Treasury? 

A.8. In the Dodd-Frank Act, Congress authorized the Bureau to use 

civil penalties only for payments to victims, and, in certain circumstances, consumer education and financial literacy programs. 

In particular, §1017(d)(2) provides: 

Amounts in the Civil Penalty Fund shall be available to 

the Bureau, without fiscal year limitation, for payments to 

the victims of activities for which civil penalties have been 

imposed under the Federal consumer financial laws. To 

the extent that such victims cannot be located or such payments are otherwise not practicable, the Bureau may use 

such funds for the purpose of consumer education and financial literacy programs. 

Q.9. Please provide a break-down of how the Bureau will distribute 

these funds and the procedures the Bureau used to decide how to 

allocate these funds. 

A.9. The Bureau has made available on its Web site an overview 

of the Civil Penalty Fund: http://files.consumerfinance.gov/f/ 

201207lcfpblcivillpenaltylfundlfactsheet.pdf. 

As that document notes, the Bureau has created a Civil Penalty 

Fund Governance Board, which is responsible for ensuring that the 

Civil Penalty Fund is administered in a manner that is consistent 

with the Dodd-Frank Wall Street Reform and Consumer Protection 

Act. In addition, the Civil Penalty Fund Governance Board is responsible for developing policies and procedures, including appropriate internal controls, to ensure that money deposited in the Civil 

Penalty Fund is distributed in a manner that: 

• Supports the Bureau’s mission, responsibilities, policies, and 

priorities; 

• Complies with the Dodd-Frank Act and all other applicable 

laws and regulations, as well as internal CFPB policies and 

35 

procedures and legal opinions of the CFPB’s Office of General 

Counsel; 

• Protects against waste, fraud, and abuse; 

• Provides appropriate transparency regarding the use of CPF 

monies, including the manner of distribution, any associated 

administrative expenses, and, where applicable, the mechanism for identifying individual victims; 

• Ensures appropriate and robust oversight of contractors; and 

• Enhances program efficiency through regular operational analyses and development of appropriate performance metrics. 

The Bureau has also posted the criteria it will use in making 

available Civil Penalty Fund monies for Consumer Education and 

Financial Literacy programs: http://files.consumerfinance.gov/f/ 

201207lcfpblcivillpenaltylfundlcriteria.pdf. The Bureau will 

use the Federal procurement process for these programs. 

Q.10. Mr. Cordray, in past Congressional testimony you were 

asked whether the CFPB is considering how several mortgage rules 

are going to work together and the steps you are taking to analyze 

and mitigate the cumulative impact of these rules on the affected 

small businesses. In response you stated that you have solicited for 

comment the potential impact of these proposed rules and have 

asked for data illustrating the impact on small business. Your response indicates that you believe that small businesses will have 

the ability to respond to each of these rulemakings. The TILA/ 

RESPA rule alone, however, is 1,100 pages in length and contains 

155 requests for comment or additional data. 

Do you expect that small- and medium-size banks will have the 

ability to read and respond to all of these requests? 

What will you infer if you do not receive a response to one of 

these requests? 

What additional data are you obtaining on your own during the 

comment periods of each of these rules? 

A.10. We recognized the challenge in responding to so many mortgage rulemakings at one time, and developed summaries of each 

proposal released this summer that were specifically designed to 

help small- and medium-sized businesses identify and respond to 

the most critical elements of each proposal. We believe these were 

a useful complement to the longer documents, which as required by 

law provide general background, a detailed discussion of each element of the proposal, and our analyses of its impacts on covered 

persons and consumers, in addition to the proposed regulation text 

and commentary. 

The Bureau received hundreds of comments in response to the 

proposed rules that were issued over the summer, including comments from small- and medium-sized banks and their trade associations. The Bureau will base its final rules on a careful evaluation of all available information. 

In all of the proposals, the Bureau explicitly requested data to 

support analyses regarding the impacts of the rules and of specific 

provisions. Some commenters have provided quantitative and qualitative information, although we have received limited firm or 

transaction-specific data in response to these requests. In addition, 

36 

the Bureau described its own efforts to gather additional data germane to several of the rules: loan-level data from other Federal 

agencies; data about closings from selected institutions; and data 

from a new national database. We have received some of this data 

and, where appropriate, the Bureau is using it to supplement other 

existing sources as we continue to analyze the impacts of the rules. 

Q.11. Mr. Cordray, in conjunction with the Capital One settlement 

you issued a compliance bulletin on the marketing of credit card 

add-on products. 

Why did the Bureau decide to issue a bulletin on the marketing 

of credit card add-on products instead of issuing a proposed rule? 

Going forward, how will you determine whether to issue guidance (whether through a bulletin or other announcement) or a proposed rule? 

A.11. The Capital One action was based on the conduct of that institution. However, complaints received by the Bureau indicate— 

and the Bureau’s supervisory experience confirms—that consumers 

have been misled by the marketing and sales practices associated 

with credit card add-on products offered by other institutions. Such 

practices violate current law. Consequently, the Bureau issued a 

compliance bulletin as a means of highlighting existing compliance 

requirements for the industry and providing insight into Bureau 

supervisory expectations. Notably, the bulletin does not impose any 

new requirements. Going forward, the Bureau will continue to use 

the rulemaking process for adopting new requirements, while providing guidance through bulletins and other methods regarding 

compliance with existing requirements. 

Q.12. Mr. Cordray, the Bureau stated in a procedural rule that the 

Bureau will supervise a nonbank company if the Bureau determines that the company is engaging, or has engaged, in conduct 

that poses a risk to consumers with regard to the offering or provision of consumer financial products or services. 

What conduct do you believe would constitute a ‘‘risk to consumers’’ that would warrant supervision by the Bureau? 

What particular systems, policies or metrics have you developed 

to determine whether a ‘‘risk to consumers’’ has occurred and what 

are the metrics you have created to assess such risks? 

A.12. As an initial matter, we note that the Bureau has published 

a proposed rule to establish procedures to implement section 

1024(a)(1)(C) of the Dodd-Frank Act; the Bureau has not yet published a final rule establishing these procedures. Under section 

1024(a)(1)(C), Congress authorized the Bureau to supervise a 

nonbank covered person when: 

the Bureau has reasonable cause to determine, by order, 

after notice to the covered person and a reasonable opportunity for such covered person to respond, based on complaints collected through the system under section 

1013(b)(3) or information from other sources, that such 

covered person is engaging, or has engaged, in conduct 

that poses risks to consumers with regard to the offering 

or provision of consumer financial products or services. 

37 

1 12 U.S.C. §5511(b). 

The Bureau is authorized to require reports from, and conduct 

examinations of, nonbank covered persons subject to supervision 

under section 1024. 

Next, as you mentioned, the proposed rule is procedural; it is not 

a substantive rule. The proposed procedures relate to, inter alia, 

issuing the notice required by section 1024(a)(1)(C), providing a 

covered person with a reasonable opportunity to respond, and establishing a framework for the Bureau’s consideration of any response. Congress did not define ‘‘risk to consumers’’ in the DoddFrank Act, thus, the Bureau set forth, by statutory guidance, the 

factors it employs in making 1024(a)(1)(C) determinations. This 

guidance includes, for example, the Bureau’s key objectives under 

the Dodd-Frank Act, such as protecting consumers from unfair, deceptive or abusive acts or practices; ensuring consistent enforcement of Federal consumer financial law; and ensuring that markets 

for consumer financial products and services are fair, transparent, 

and competitive. 1 Thus the Bureau may consider, among other factors, whether a nonbank covered person has engaged in conduct 

that would pose risk to consumers because it involves unfair, deceptive, or abusive acts or practices, or because the conduct otherwise violates Federal consumer financial law. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED 

FROM RICHARD CORDRAY 

Q.1. A recent U.S. PIRG report highlighted some troubling practices with prepaid debit cards and other third party distribution arrangements for student financial aid. Do you have plans to look at 

such practices in more detail? Has the CFPB received consumer 

complaints in this area? 

A.1. The Bureau has been engaged actively in this issue on multiple fronts by working closely with other agencies, accepting consumer complaints, and producing information for consumers. 

The Bureau works closely with other banking regulators and provided input to the Federal Deposit Insurance Corporation (FDIC) 

about their oversight activities in the student lending industry. In 

August, the FDIC reached a settlement with a provider of third 

party distributors of student financial aid. 

To coincide with the announcement of the settlement, the Bureau 

issued a consumer advisory to all students expecting to receive 

scholarship and student loan proceeds onto—what appears to be— 

a school-endorsed debit card. For back-to-school season, the Bureau 

released a ‘‘Student Banking 101’’ guide to help newly enrolling 

students make smarter banking choices. 

The Bureau also works closely with the Department of Education, who administers loan programs under Title IV of the Higher Education Act, on ways to enhance compliance and protect consumers The Bureau will continue to provide technical assistance on 

consumer financial markets for private student lending to the Department of Education as necessary. 

The Bureau receives complaints on deposit products, including 

student checking accounts, through our consumer response portal 

38 

and we will continue to monitor these complaints to identify risks 

in the marketplace. 

Q.2. We continue to see student loan debt rise and borrowers 

struggling with delinquency and default. How many borrowers 

have sought assistance from the CFPB’s Student Loan Ombudsman? What have been the major problems for borrowers? How have 

they been resolved? 

A.2. A few weeks ago, the Bureau released the Annual Report of 

the CFPB Student Loan Ombudsman detailing the problems reported by private student loan borrowers. Since March 2012, the 

Bureau has received approximately 2,900 complaints on private 

student loans. With 95 percent of the complaints about servicing, 

the report notes a strong resemblance to issues reported in the 

mortgage servicing market. A breakdown of the complaints: 

• 65 percent relate to servicing, including complaints about fees, 

billing, deferment, forbearance, fraud, and credit reporting. 

• 30 percent are about problems consumers face when they are 

unable to pay, including complaints about default, debt collection, and bankruptcy practices. 

• 5 percent concern getting a loan, including problems with origination, marketing, and borrower confusion about loan terms 

and conditions. 

The median amount of monetary relief awarded, for those cases 

in which a consumer received monetary relief, was $1,572. 

Q.3. The CFPB recently introduced the second version of its Financial Aid Comparison Shopper. What sort of feedback has the CFPB 

received about this tool? Have families been able to take advantage 

of the Shopping Sheet for this school year? If not, when will it be 

fully functional? 

A.3. In July, Education Secretary Arne Duncan and CFPB Director 

Richard Cordray announced the final version of a ‘‘Financial Aid 

Shopping Sheet’’, which assists families when making comparisons 

between college financial aid offers. The final version reflects the 

Bureau’s close collaboration with the Department of Education, as 

well as broad input provided directly by consumers on the proposed 

form. 

To help facilitate better decision making on student loans, the 

Bureau developed a beta tool for testing that would allow students 

and families to use their Shopping Sheets to estimate their future 

debt burdens and other information. During the beta test, the Bureau received a substantial amount of constructive feedback from 

users. For example, a survey conducted by an association representing college admissions counselors found that over 80 percent 

of their members said the tool was ‘‘useful’’ and that nearly half 

would recommend the tool to students/families without any modifications. 

Now that the final version of the Financial Aid Shopping Sheet 

has been released, the Bureau plans to modify the beta version of 

the tool to be compatible with the Shopping Sheet. The Bureau 

hopes to produce a new version of this tool after gathering further 

input from consumers and schools in the upcoming year. 

39 

Q.4. The CFPB has been working with the prudential regulators to 

address mortgage servicer practices that may pose risks to military 

homeowners who receive Permanent Change of Station (PCS) orders. Could you please provide an update on the PCS issue? Has 

the Interagency Guidance on Mortgage Servicing Practices Concerning Military Homeowners with PCS Orders released on June 

21, 2012, had any effect so far? Please explain. 

A.4. As a result of effective interagency work, the Bureau, along 

with other Federal regulators, issued joint guidance that addressed 

mortgage servicer practices that may pose risks to military homeowners. The guidance helps ensure compliance with consumer laws 

and regulations covering military homeowners who have received 

Permanent Change of Station (PCS) orders. Holly Petraeus and her 

staff in the CFPB’s Office of Servicemember Affairs also worked 

with the Department of Treasury to provide more opportunities for 

mortgage assistance to military homeowners under the Home Affordable Modification Program (HAMP) and with the Federal Housing Finance Authority (FHFA) in connection with Fannie Mae’s 

and Freddie Mac’s announcements that Permanent Change of Station orders could be classified as a qualifying hardship for mortgage loan modification or other assistance. Additionally, the Bureau worked with the FHFA in connection with Fannie Mae’s and 

Freddie Mac’s new short sale guidelines for servicemembers with 

PCS orders. This policy, which went into effect on November 1, 

2012, allows servicemembers who are being relocated due to PCS 

orders to be automatically eligible for short sales, even if they are 

current on their existing mortgages, and they will be under no obligation to contribute funds to cover the shortfall between the outstanding loan balance and the sale price of their primary residences, if the property was purchased on or before June 30, 2012. 

Since the release of the Bureau’s PCS guidance, we have seen an 

increase in the volume of servicemember-related mortgage complaints, possibly due to the publicity generated as a result of the 

release. Upon investigating these complaints, we have observed 

mixed results from mortgage servicers. Although most servicers initially appeared uninformed regarding this issue, once contact was 

made by the Bureau and the guidance was provided to them, many 

became much more responsive to this subset of consumers. We 

found that some servicers created executive-level review boards 

dedicated to assisting these consumers, manned by representatives 

who quickly became familiar with the guidance. On the other hand, 

some servicers continue to struggle to comply with the guidance 

even upon subsequent recontact with the Bureau. As the guidance 

notes, if the Bureau were to ‘‘determine that a servicer has engaged 

in any acts or practices that are unfair, deceptive, or abusive, or 

that otherwise violate Federal consumer financial laws and regulations, the [Bureau] will take appropriate supervisory and enforcement actions to address violations that harm consumers and seek 

all appropriate corrective actions, including requiring the mortgage 

servicer to strengthen its programs and processes.’’ 

The Bureau will continue to monitor these complaints and determine what additional steps can be taken to assist military homeowners who receive PCS orders. 

40 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR MENENDEZ FROM RICHARD CORDRAY 

Q.1. Director Cordray, I have long advocated national standards for 

banks that collect homeowners’ mortgage payments, including 

chairing a hearing on that issue about 2 years ago. 

Will the national standards include requiring early in-person outreach to delinquent borrowers to try to help save their homes? 

A.1. As discussed in the proposed mortgage servicing rules, the Bureau agrees that early contact with delinquent borrowers is crucial 

to helping those borrowers understand options that may be available to retain their homes, as well as the ramifications of the foreclosure process. 

The proposed rules would require servicers to provide delinquent 

borrowers with two notices. First, under the proposed rules, 

servicers would be required to notify or make good faith efforts to 

notify a borrower orally that the borrower’s payment is late and 

that loss mitigation options may be available, if applicable. 

Servicers would be required to take this action within 30 days after 

the payment due date, unless the borrower satisfies the payment 

during that period. Second, servicers would be required to provide 

a written notice with information about the foreclosure process, 

housing counselors and the borrower’s State housing finance authority, and, if applicable, information about loss mitigation options 

that may be available to the borrower not later than 40 days after 

the payment due date, unless the borrower satisfies the payment 

during that period. Servicers could incorporate in-person outreach 

procedures to comply with these proposed requirements. The Bureau continues to evaluate the proposed timing and content of 

these notices in light of the numerous comments it has received on 

the proposed rules. 

The proposed notices were designed primarily to encourage delinquent borrowers to work with their servicer to identify their options for avoiding foreclosure. The Bureau recognizes that not all 

delinquent borrowers who were to receive such notices would respond to the servicer and pursue available loss mitigation options. 

However, the Bureau believes that the notices would ensure, at a 

minimum, that all borrowers have an opportunity to do so at the 

early stages of a delinquency. We believe it is generally more useful 

to borrowers to begin discussions with servicers early, in order to 

identify which options may be best for their families. 

Q.2. The CFPB’s draft loan origination rule includes provisions 

that it claims would ‘‘help level the playing field’’ between bank 

and nonbank mortgage origination employees. However, the SAFE 

Act requires nonbank mortgage originators to take prelicensing and 

continuing education courses and a licensing exam—whereas the 

proposed rule includes none of these requirements for people who 

work at banks. Why didn’t the CFPB establish prelicensing course 

requirements and an exam for individuals that lack at least a few 

years of direct experience in mortgage loan origination, particularly 

for individuals doing substantive loan origination work? Why didn’t 

the CFPB require all mortgage loan origination employees complete 

at least the 3 hours in continuing education courses in Federal 

laws and regulations and the 2 hours in continuing education ethVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00044 Fmt 6602 Sfmt 6602 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
41 

ics courses that are required of all nonbank employees covered 

under the SAFE Act? 

A.2. The proposed rule would require banks as well as other entities that would be subject to this portion of the rule to provide periodic training to ensure that each of its loan originators has the necessary knowledge of State and Federal legal requirements that 

apply to the loans that the individual loan originator will originate. 

The training would have to cover the particular responsibilities of 

the loan originator and the nature and complexity of the loans that 

the particular loan originator originates. 

The intention of the proposed rule was to accomplish the same 

goals as the prelicensing and continuing education that the SAFE 

Act imposes for State-licensed loan originators, which are to ensure 

that that loan originators have adequate knowledge to perform 

loan origination activities, and that they continue to update and refresh that knowledge. However, it was also meant to reflect limitations in the Bureau’s authority and to respond to concerns of other 

Federal regulators that the Bureau should not impose training requirements that are duplicative of requirements the regulators already impose for loan originators such as banks and credit unions. 

Accordingly, under the proposed rule continuing education classes 

approved for State-licensed loan originators are sufficient to meet 

the proposed standard, but the proposed rule also permits other 

training courses and methods that are tailored to the particular 

loan origination activities of the bank loan originator. 

The proposed rule does not include a requirement for loan originators employed by banks to pass the standardized test that applicants for State licenses must pass. As the proposal discussed, the 

Bureau has been seeking evidence to show whether or not existing 

bank practices, as well as the proposed training requirements, are 

adequate to ensure that the knowledge of bank loan originators is 

comparable to that of loan originators who pass the standardized 

test. This is an issue the Bureau is considering as it develops the 

final rule. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR CORKER 

FROM RICHARD CORDRAY 

Q.1. Dodd-Frank made a change, as you are likely aware, to the 

definition of ‘‘high cost loan.’’ Under Dodd-Frank’s new rules, a 

high cost loan is any loan where the APR exceeds the average 

prime rate by 6.5 percent for loans greater than $50,000 in size, 

of 8.5 percent for loans under $50,000. Unfortunately for many in 

the manufactured housing industry, the nature of how these loans 

work means that the lenders are bumping up against the triggers 

quickly. For example, many lenders will help a borrower roll the 

upfront closing costs and document costs into the underlying loan, 

but since these costs are fixed and the loans are for low dollar 

amounts, it makes the APR high and so these loans can’t be made. 

As you know, the Bureau has significant authority to raise the 

HOEPA APR and the points and fees triggers. Is this something 

the Bureau is actively considering? What steps do you anticipate 

the Bureau taking to ensure that access to small balance loans, 

such as those needed to purchase affordable and manufactured 

42 

housing, is not diminished? Are you concerned that these high cost 

loan triggers are problematic for loans that are low balance? 

Should Congress do something about this if it is a problem from 

a statutory perspective? 

A.1. We are carefully analyzing all of these questions as we work 

on the final rule. Our proposal sought comment and data on whether any adjustments should be made to the APR triggers for HOEPA 

coverage generally. We also sought comment specifically on whether adjustments should be made to the 8.5 percent APR trigger or 

$50,000 size threshold for first-lien transactions that are secured 

by a dwelling that is personal property, such as certain manufactured housing loans. We note that the Bureau generally has the 

authority to make adjustments to the definition of ‘‘high-cost mortgage.’’ Additionally, the Bureau has the authority to adjust the percentage points for the APR triggers if such adjustments are consistent with the statutory consumer protections for high-cost mortgages and are warranted by the need for credit. The Bureau also 

has the authority to adjust the definition of points and fees for the 

purposes of determining whether a loan meets the points and fees 

threshold. 

Before finalizing our proposal, we will consider the impact of the 

proposed triggers on various types of loans, including manufactured 

housing loans and small balance loans generally. We are currently 

reviewing all of the comments, we are aware of the concerns surrounding loans for manufactured housing and small balances, and 

will closely review all available data to determine whether any adjustments to the HOEPA triggers should be made. 

Q.2. RESPA/TILA was a subject of conversation at the hearing. As 

Senator Shelby pointed out, the draft rule designed to simplify 

these disclosures is 1,000 pages long. Are you concerned that complying with a complex rule such as this will prove challenging for 

community banks? In addition, if the APR calculation is not helpful 

to consumers—and the CFPB has indicated it might not be—should 

it be eliminated as a requirement in disclosure? 

A.2. We are confident that the final TILA–RESPA integrated disclosure rule will ease compliance burdens for community banks by 

eliminating duplicative forms and resolving long-standing uncertainties that led the Department of Housing and Urban Development (HUD) to issue hundreds of responses to frequently asked 

questions. In fact, much of the proposal’s length results from the 

Bureau’s provision of extensive guidance on how to comply, including samples of completed forms for a variety of different types of 

mortgage loans. Industry repeatedly requested this guidance during our outreach and the Small Business Review Panel process because knowing exactly what they need to do can save time, energy, 

and costs. Once the rule is finalized, we plan to publish a compliance guide and to reach out to the banks and their service providers to help them come into compliance. 

The Annual Percentage Rate (APR) is intended to show consumers the total cost of credit spread out over the entire life of the 

loan and expressed as a percentage. Consistent with prior research 

by the Federal Reserve Board and HUD, however, the Bureau’s 

qualitative testing indicates that the APR may not be a helpful disVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00046 Fmt 6602 Sfmt 6602 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
43 

closure for many consumers because it is difficult for consumers to 

understand and use effectively when comparing loans. Nevertheless, the Bureau did not propose to eliminate the APR disclosure, 

which is critical to determining whether loans are subject to certain additional protections under Federal and State law. Further, 

because we know consumers face difficulties in using the APR disclosures to compare mortgages, in part because not all charges are 

currently required in these disclosures, the Bureau is proposing a 

more inclusive definition of the finance charge, which would make 

the APR a more accurate reflection the overall cost of credit. For 

example, the APR would now include title insurance, which is the 

largest charge for many consumers. The Bureau’s intent in including all charges in an APR is to enhance consumer understanding 

and shopping with improved disclosures. 

Q.3. I asked you about the complaints posted on the CFPB Web 

site, which also contain information on the financial institution 

that a customer is upset with. You said you verify that there is a 

relationship between the customer and the financial institution. Is 

this the only piece of information you confirm? Or do you go any 

deeper in terms of due diligence before posting these complaints 

online? 

A.3. The Bureau maintains significant controls to authenticate 

complaints. Each complaint is checked to ensure that it is submitted by the identified consumer or from his or her specifically authorized representative. Each submission is also reviewed to determine if it is a complaint, an inquiry, or feedback. (Submissions in 

the latter two categories are not forwarded to companies for handling as complaints.) Further, each complaint is checked to identify 

duplicate submissions by a consumer who has already filed with 

the Bureau a complaint on the same issue. Finally, complaints are 

only routed to companies when they contain all the required fields, 

including the complaint narrative, the consumer’s narrative statement of his or her fair resolution, and the consumer’s contact information. Companies view and respond to complaints using their secure web portals, which they also use to notify the Bureau if a complaint has been routed incorrectly, if they suspect manipulation, 

etc. Companies have 15 days to provide a response. 

Complaints are only posted to the Consumer Complaint Database 

after companies provide a response which confirms a relationship 

with the consumer or after they have had 15 days to review the 

complaint, whichever comes first. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR JOHANNS 

FROM RICHARD CORDRAY 

Q.1. Mister Cordray, I first want to offer thanks and an acknowledgement of a bit of work well done that many bankers in Nebraska very much appreciated. Acting in response to a question 

from one of my bankers, your Assistant Director David Silberman 

made the trek to Gothenburg, Nebraska—not a terribly convenient 

place to get to, mind you—and spent an entire day walking 

through the practices and procedures of a small community bank, 

speaking with account managers, loan officers, and customers to 

get a better feel for how a bank of that size operates. 

44 

I think that was an above-and-beyond show of humility and good 

faith, and the bankers in Nebraska wanted me to extend my 

thanks to you and Mr. Silberman. With yesterday’s announcement 

of your Community Bank Advisory Council, I hope that more and 

more of this occurs, so that when rules are written by the Bureau, 

the operational differences between the biggest banks and the community banks are fully appreciated and accounted for. As I hope 

the visit to Gothenburg made clear, a one-size-fits-all approach to 

banking rulemaking just does not work. 

A.1. The Bureau is always pleased to meet with community bankers, and we have held dozens of such meetings and roundtables 

with community bankers around the country to hear directly from 

them. 

Q.2. I have concerns about the governance and quality control procedures that the Bureau has in place. Let me give you an example: 

I spoke with a community banker from Alma, Nebraska, over the 

August recess. He relayed to me at least three occasions in the last 

6 months where his bank received complaints from the Bureau that 

should have been directed to other institutions. Two were intended 

for Texas banks and another to the First State Bank of St. Clair 

Shores, Michigan, some 979 miles from Alma. 

Even though these complains were erroneous, they still require 

time and resources to identify, investigate and respond to. Now, on 

their own, none of these are egregious, and none of them too timeconsuming for the banker on the other end, but when the mistakes 

begin to add up, now we’re wasting resources that will otherwise 

be used serving small Nebraska communities. 

As we all know, you are growing quite rapidly and paying your 

employees quite a bit more than the typical Government employee. 

With so many people getting paid great sums of money, where are 

the basic quality controls? What procedures are in place to make 

sure that a tiny institution like the First State Bank in Alma, Nebraska, doesn’t continue to get bogged down in paperwork from erroneous complaints? 

Is there a process in place to ensure that a complaint is legitimate, and then that the legitimate complaints are actually forwarded to the correct institutions? 

A.2. The Bureau maintains significant controls to authenticate 

complaints. Each complaint is checked to ensure that it is submitted by the identified consumer or from his or her specifically authorized representative. Each submission is also reviewed to determine if it is a complaint, an inquiry, or feedback. (Submissions in 

the latter two categories are not forwarded to companies for handling as complaints.) Further, each complaint is checked to identify 

duplicate submissions by a consumer who has already filed with 

the Bureau a complaint on the same issue. Finally, complaints are 

only routed to companies when they contain all the required fields, 

including the complaint narrative, the consumer’s narrative statement of his or her suggested resolution, and the consumer’s contact 

information. 

Companies view and respond to consumers using their secure 

Web portals, which they also use to notify the Bureau if a complaint has been routed incorrectly. As we work to continually imVerDate Nov 24 2008 09:58 Apr 26, 2013 Jkt 048080 PO 00000 Frm 00048 Fmt 6602 Sfmt 6602 L:\HEARINGS 2012\09-13 HOLDING THE CFPB ACCOUNTABLE -- REVIEW OF SEMI-ANN
45 

prove our complaint routing accuracy, such notifications from companies are key to routing complaints to the correct companies and 

increasing routing accuracy over time. 

We regret the inconvenience caused by three complaints being 

misdirected to First State Bank in Nebraska instead of companies 

with the same name in Texas and Michigan. Once notified by First 

State Bank in Nebraska that complaints had been misrouted, the 

CFPB rerouted the complaints to the correct First State Bank. We 

are committed to redoubling our efforts in this regard as we strive 

to make our complaint resolution process work for both consumers 

and companies. 

Q.3. In June of this year, Bureau officials testified before the 

House Financial Services Committee on the implementation of the 

‘‘ability to pay’’ rules for credit card lending that were mandated 

under the CARD Act. 

As you know, mandating that a credit card issuer only take into 

account the applicant’s individual income and not that of a spouse 

or the entire household when evaluating ability to pay can have 

many unintended negative consequences on folks like military 

spouses or stay-at-home moms and dads. 

While I understand that the original rules were written by the 

Fed, they were part of the package transferred to the Bureau. In 

that appearance, Associate Director Hillebrand testified that the 

Bureau hoped to announce next steps in reforming these harmful 

rules by the end of summer. I was hoping you could shed some 

light on the progress you’re making on this front? 

A.3. The Bureau recently issued a Notice of Proposed Rulemaking 

in which it seeks to make it easier for spouses and partners who 

do not work outside the home to qualify for credit cards and establish their own credit histories. The comment period for the proposal 

will end 60 days after the notice is published in the Federal Register. 

The proposal would generally eliminate the independent abilityto-pay requirement for consumers and applicants age 21 or older 

and instead permit credit card issuers to consider income and assets to which the consumer or applicant has a reasonable expectation of access. For spouses and partners under the age of 21 (including military spouses), the proposal seeks comment on whether 

to make adjustments to the existing rule in light of the statutory 

requirement that underage consumers without a cosigner, guarantor, or joint applicant demonstrate an independent ability to pay. 

Q.4. The Bureau’s RESPA/TILA rule creates substantial uncertainty regarding who prepares and delivers the final disclosure information to the consumer. The proposed rule, by permitting the 

lender to deliver the final disclosure, removes the independent, 

third-party closing agent from the settlement process. The independent agent deals with many different lenders, giving them a 

glimpse of the best practices employed by a broad cross-section of 

the industry. 

What was the intent behind removing this informed and independent check at the closing table? Is it your opinion that this will 

ultimately benefit the consumer? 

46 

A.4. Settlement agents provide crucial services, and we have no desire to exclude them from the closing process. Real estate closings 

are very complicated, and involve much more than just completing 

a disclosure and watching the buyer sign documents. There is a 

reason why an entire profession, which is over a century old, exists 

to perform closings. Our proposal only addresses who provides the 

disclosures. It will not regulate the other important functions performed by settlement agents. 

The Dodd-Frank Act requires us to combine disclosures that are 

currently provided by lenders with disclosures that are currently 

provided by settlement agents. Much of the information on the 

combined disclosure relates to the terms of the loan and is therefore in the possession of the lender. In addition, the Dodd-Frank 

Act amends TILA to make the lender responsible for much of the 

information. For that reason, the proposal contains one alternative 

which makes the lender responsible for providing the combined disclosure. The proposal includes another alternative, which would 

allow settlement agents to provide the combined disclosure. The 

proposal solicited comment on other methods of dividing responsibility between creditors and settlement agents, provided that such 

other methods ensure that consumers are provided with prompt, 

accurate, and reliable disclosures. 

47 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

SEMI-ANNUAL REPORT OF THE CONSUMER FINANCIAL PROTECTION 

BUREAU 

48 


Message from Richard 

Cordray 

DIRECTOR OF THE CFP B 

JUS! oot )mljlP, tbr Con.uom rmll\ruJ Pmt«llOO Burtru bta.m m~ "'0011'1 f,not 

ftd~,,1 wuC)'wlell' &lCW...!Qfl prt>tcttmg fonsumu'l in die linlf\cilllll3rkt'Pu.cc. AI; 

rIu! rtpoll ~o .. . we hm: ilrad)' mid. gRit strid~ :I/Id helped m~nf thoo,aoo.k of 

The m.lB;flS for COO$lIIllCI nn1l1tC Ire tOOled !II me liulnrui lind mdr (\fells .. ~ Jll 

mCOIInrcr!ll our dIiIy ~Vt3. Thtst p1Udum and ~1I100 hart broo,.gl1t bll».d benefits to 

,\mtllNIl! :IS they m<lllJgt the Ill!" tIld mtll11 of men tins. 8ur. IS 'Ol: hJI"C sc:m, If 

rb~ produclHIld ifl'"ICt$ ire ~d, Ihef tlIn 00 tal dUllIgt to ron3l.n~!S lind to me 

hroader ccooomy. 

The (Qn~r Burnu is cmbfu!I1IIS mnb:ll!drd Ib1d .... lIOmb!.: o"'I:Slg!1 t to the 

m.rkctplo!n, We ile \ro l~)ng (J) root (lu t unfair, dtCqlhlC. 01 i1bH~I~c pnClkrs. 

{'.oo$umc", cl=,,~ Il> h< t<",trd fudr. ",d III h.>« >On'I«>n< ,(>Jld"", th';'$IJc • .,m !hc ~ :1ft not Congr'!! dm-md us to 6~ gt:I\'C problem> ul the molTg:agt mirkc:~ lIld ~'l: 

iIIr \\'cll ()11 001 "".)' to fulfiDUlg thaI god_ 

10 "hien thC:lt obj,CUl"t:Ii, .. 'r ire dtdiC':lll'd fO Ittolrung til agrocy !lUI Ii ~ldmcc-bl.'cd 

!lId w.1lI-dn"cn. Fitld ' n mlg!', UlqWries, buIIemu, nJrnlllmgs -~'r !I~ In "ill of dtt 

loo,.C" >IPflmach In S',arantec Ihal n IIII'C me 00' Cllmn! infomution ~~ 1ft make 

policy dtciSlOn$. 

Our Ccn!!une r Re:;ponsc rcam Ii handling (ompLllnl! on i.'\Ut' mlgmg flOOl nlOngagu 

~ (rrdir anlj 10 bUlk pllXhKts III StUdtnllr..lulS. Our "Kni;rt' Bc&!rr rOIl Ol\'t~ pfllteClS 

Ill'll ~ mili the ooslSiind nsks of financial d~ioos dwn mJ motr aWl!:<It.1t for 

I:(IO!ll1l,trs \rc u!ul(hl'd I)IIrCooSUlllCrComplamt D:1t1\}J;;c to bnllgmQrt l~rtn,'Y 

ind dT",mcy to ~,r mu\;ttplm. 

\'(It CTultd I hnmrul Nd Shopp'"S Shw 1I1d ~ fllllIlcuJ Ill! eo.,l(I~nron SIlOrPcr 10 

hdp lrudmrs ond Ihtl! families benCl,,"dttSl1l1J me m..lc<Ir 101111 plOCtst. We Ifl' 

SEM~ANNUAL REPORT Of THE CfPB, JULV 2012 
49 


$ceking to educate old.! Am"nClln,lbout the" financtal cphon. and help 

strncemembnl make the bat (onOlle,oI dec'"",n~ fa, Ihemstl"u and the,r bm,Joe .. 

The (,m yrnafthe Consume, Bureau ha. been busy ~nd full ; II .. n.ets the hard wort 

dcM by poc.ple or the htgh .. t r~hbe, and dedir>ted to public 001"'0<. W. loot forvNd to 

con(,numg to fulfill C""g<es .... "'..cn or '.n ~roey !hoI hdp' 011 Anv.-t..:""" by ,mp'ovo"8 

the,r financ .. l hl'''. 

Soncgoly. 

Richard Ccrdroy 

J SEMI·ANNUAl REPORT OF THE UPS. JULV 2012 
50 


Table of Contents 

Message from Richard Cordray ...................................................................... , 

Executive Summary .......................................................................................... 4 

Consumer ChatJenges in Obtaining Financial Products and Services ....... 8 

Delivering for American Consumers and leveling the Playing Field .. 31 

Building a Great Institution: Update ............................................................. 50 

AppendixA: More about the CFPB ................ ................... ........................... 64 

Appendix B: Statutory Reporting Requirements ....................................... 66 

Appendix C: Significant Rules, Orders, and Initiatives., ............................ 68 

Appendix D: Actions Ta ken Rega rding Rules, Orders, And Supervisory 

Actions With Respect To Covered Persons Which Are Not Credit 

Unions Or Depository Institutions ........................................................ 71 

Appendix E: Reports ..................................... ........ ....... ........ .......... 72 

Appendix F: Congressional Testimony ...................................................... 73 

Appendix G: Speeches .. . .... . ........ 75 

Append ix H: Financial And Budget Reports .............................................. 78 

Appendix I: CFPS Organizationa l Chart .. . ...... ........... 80 

Append ix J: Defined Terms .. ... ........................ ........... .................................. 81 

SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
51 


Executive Summary 

111e COllSumer Fjll~nci~l Prolection Bure:lu (CFPB or Bure:lu) is thc Il:ltion's first fcdeul 

agency focused solely Oil consumer financial protection.1 111e Dodd-Fmnk Wall Street 

Reform and Consumer Pro tection An (Dodd.FOInk Act) cre>lted the CFPB to protect 

con5umc:r~ o f fin:mcial products and services :lOd to encourage the fllir and competitive 

Ope ~tiOll of cOllSumer financial markets. The Bureau's mi s~io n is to make consumer 

fmanci .. ] markets work for American consumers, honest businesses, >lnd the economy 9$ ~ 

whole. 

In fu lfillment of its statutory responsibility ~nd its commitment to accounw.bility, the 

eFPS is le~ sed to prcseM its second St'mi-Annu.u Report to the: Pre!ident ~nd Congress. 

This report pcovides :m UpWle on the Bureau's activities :wd accomp~shmell t'!- since its 

inaugur:d report in J:mu'lry 2012 llnd additioml information required by dle Dodd-Ff~nk 

Act.: 

The Dodd-Fmnk Act require£ the CFPB to: 

Ensure that consumers have timely :lnd underst:lnd:lble inform:ltion to m~k!': 

responsib!!': decisions about fmannal truosactions; 

Protect consumers from unfrur. deceptive, o r :lbusive :lcrs and practices, an d 

from discrimination; 

ldelltify MId address outd:ued, Ullllecrss,u:y, o r unduly burdensome regul9tions; 

1 Previously, seven different federal agencies were responsible for rulemaking, supervision, 

and enforcement relating to consumer lillancial protection. TIle agenCies which previously 

administered ~tatutes transferred to the Bureau are the BO;;lrd of Governors of the Feder<ll 

Reserve System (Fede",1 Reserve, Federal Reserve Board, or Federal Reserve Board SYSlem~ 

Department of Housing and Urban Development (HUD), Federal Deposit Insul1lnce 

Corporation (FDIC), Federal Trade Commission (FTC), National Credit Union Administration 

(NCUA), Office 01 the Comptroller orthe CUlfency (OCCl, and OHice of Thrih Supervision 

(OTS). 

2 Repo!ts cover six-month increments beginning J anuary ' " <l od July ,<1. Appendix B 

provides a gUide to the Bureau's response to the reporting requirements of Section' Ol6(c) 

of the Dodd·Frank ACI. 

4 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
52 


Promote ir competition b~l consistent enforcemen t of the CQllsumer protection 

laws in the Bureau's jurisdictiou; and 

Ellsu(emadrets forcomumC'f finanClltl products 9nd seevicts operate 

tntnspuently II.nd efficiently to fiJcilit:tle access :lnd innoYHioll.' 

Since opening its doors on July 21,2011, the CFPB has dedic~ted its efforts to listening 

and responding to COll5lUlltrS and industry while layi.ng the fowldation of a gre~t 

institution . 

CONSUMER CHALLENGE S IN OBTAINING FIN ANCIAL 

PRO DU CTS AND SER VICES 

Consumers' input l their experiences with financial products and services is critiCl.1 10 

understllnding the ch~ ll etlge5 that coll;.umec~ [:lCe in obt:uning financi:u products rod 

services in the current economic climate. It is also ~ drivi.ng force behi.nd the CFPB's 

development of resources rod progmrn s to help build Americllll cOlISurners' fin>Ulool 

capability and to level the ph}~n g field. 

In die pil$l year, the CFPB has hellrd from cOllSumers ~bou l their positive and nev-tive 

experiences \\~th fin:Ulcial product'5 and services, ulcluding through the ''1" ell Your Story" 

~tl.He of the CFPB's website, roundt:tbb, lown hall;., and field hearings. In ~ddition, the 

Bureau has launched a first-rate in fnlstructU[(.' to receive, process, and facilitate responses 

[ 0 consumer complaints. TIle Bureau is ~so gathering ckta and evidence about consumers' 

beh~v;ors and choices when thql shop for fin9.nci:U products and the ~ys that m~rket 

structures wd sales prnctices may shape such conduct. 

DELIVERING FOR AMERICAN CO NSU M ERS AND LEVELI NG THE 

PLAYING FIELD 

The CFPB h:l.s [~ken ignificln[ s in th e past yen towHd making conswner financial 

mHkets work bener for conSWTlers 91ld respomible comp~n es . TILe Bureau h~ s bunched 

office s to provide vital reso urces for conmmers. For example. the CFPB's Consurnec 

Response team aCtiVes compbints :lnd inquiries direcdy from consume ~. The CFPB's 

Di\·ision of Consumer Education Illld Engagement develops :l.lld implements initiatives to 

educate and empo\ver consumers to make beuu -infoffiled !illwcigl decisions; its 

initiatives include pwgfllms directed toward particular populations, such as 

suvicemembe ~, older America.llS, studeuts, ,lnel consumers who tradition~lly h~ve been 

underser\'ed by the financia l m:l.rkets. 

Thl' Bureau h:J.s also: 

J SeeDodd-Frank Act, Pub.l. No. 111-203,Sec. 1021(b). 

5 SEMI-ANNUAL REPORT OF TH E CFPB, JULY 2012 
53 


EUg:1ged ill extensive outreach to consumers md industry throughout the 

country; 

Initiated and developed partnerships wilh fednw agencies, slllle finallci:l.J 

regulatory entities, Ilnd SI:lIl: attome)>s genem.l, :Uld begun to estilblish advisory 

groups comprised of consumer orgllnizations, community org:U\izations, 

govealllenl officials, MId industry representlltives: 

lmpleml"nred stnutory protections for consumers who lise con ume r fi nancial 

product:: ~nd services, nd begun the process of streamlining Ieguhltion s that the 

CFPB inherited from other agencies; 

L'luncilecl progcaffis tor supervising b.rge thlnks and other companies thal 

provide consumer financial products and se rvices to ensure thar they comply 

with federal consumer financiill protl"ctlon laws; 

lnvl"stig;tted pOlential \'iol~tiolls of I~ws under dIe Bureau's JurisdictIOn; ~nd 

Used extensive outreach in its ef torts to ensure fair, equimble, illld 

nondiscrim Jl~tory access to credit for illdividu~ls and communities. 

BUILDING A GREAT INSTITUTION 

All of this has t:l.ken place while the Bureau has been ell~ged in start-up activities. As of 

June 30, 2012, the CFPB team IIOW cousisu; of 889 staff workillg to carry out the Bureau's 

mission . It has worked to build a humlUl and physical infrastructure that promo\eS - and 

",<ill continue 10 promote - t(:lJlsp:l.rency, accouJll.llbility, faimes5, and service 10 the public. 

That includes: 

6 

Demonstcating a strong commitment TO openness and utilizing the Bureau's 

website to share Lnfomlation 011 the oper~tions of the Bureau: 

Rec.ruiting highly qualified pmonnel; 

Providing training :Uld engagement oppormnicies for CFPB st:J.tT to impro\""e 

skills:U\d knowledge and maintain exc.eJlencc: and 

lliunchiug the Bure u's Office of Minority ~nd Women Inclusion to promote 

divenity in til!.' erPB's workforce Ilnd ~mong its contr:l.ctof'5. 

SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012, 
54 


The CFPB is proud of the occompbslunents!hat itlw .duevedlll ,ts 6",ty"" _ But this 

maW only the ~ of the Bw •• u'. wo<k on behalf of comume<s and prOVIde .. of 

linonci.iI pwduc:ts and •• """"'" Ove< the next SiX mcnths, the CFPB'. efforts to make 

consume< fuuncul m.mts wod: ~r will C<rJllnu.. to expand We on";", you to ",,,t t.ho!, 

CFPE'. """bstte, 1c,;-o".,<lr,no,.., F , forupdltes on theCFPB', wod: over the 

~month;. 

7 SEMI·ANNUAl REPORT OF THE CFPB, JULY 2012 
55 


Consumer Challenges in 

Obtaining Financial 

Products and Services 

TIle challenges that consumers face in obtaining fiu9l1cial products and services ue a 

driving force behind the CFPS's efforts to mll.ke consumer fm:lIlciil m9.rker~ work better. 

Listening and responding to consumers He il1legmlto our mission, and the Bureau 

provides m~!ly me:U1S through which consumers (1m make dleir voices hend. 

Consumer Concerns 

Financial ffiUketS all' rooted in the <hily lives Ilnd the financial md credit needs of 

indi\ldual ArnerielillS. There is no doubt thlll consumer finlUlcial products md services, 

when understood and appropriately used, clIn bring broad benefits to consumers. Savings 

Ilccounts >He a firs't step to help people pursue their drelUllS and checking accounts 

f\lcilitate everyd9Y tmnsgcriolls. Mortgages help people buy hOllies and f'llY for them over 

time. Credit cuds give people com'enlent ~cce; s to money when needed. Student 10.1.1\5 

Iillow people who hck me:JJ1S but h~ve tlltem and ~mbition to pursue their deepest 

Rspir'Jtions. 

Over the p'asi year, consumelS h9ve sh ared with the CFPB their experiences - positive 

Il.nd negoltive - with fliHulCial products and services. Consumers hJlve the opportunity to 

provide the CFPB with such feedb:ick through 9 vwety of forum s. including, among 

others, dle "Tell Your Story" feHure of the CFPB's website, roundtables. to'W11 hillIs, IIJ1d 

fi eld hearings. This feedback is key to understJlnding the ch~!lenges COnSllmel,S [>Ice in 

obulning the fill~llci9l products ~Ild services they need. 

8 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
56 


The stories consumers have shared with the Bureau through the ''Tell Your Sto ry" feature 

of the CFPB's website cover a wide rmge of financial products and setvices, providing 

snapshots of consumers' day-to-day experiences in the marketplace_ Consumers' stories 

are reviewed by CFPB staff md further the Bureau's undersfjinding of current issues in 

the financial marketplace. 

Those consumers who have shared their experiences with the CFPB expressed some of 

their challenges and concerns widl respect to obtaining a v~riety of financial products and 

services. They include: 

Inability to qualify for a mortgage loan modification, or if they qualify they are 

unable to obtain a viable modification that sufficiently lowers their payments; 

Inability to refinllnce their 10llns even though they report having high credit 

scores; 

Inability to refinance, consolidate, or pay their privllte student loans; 

Lack of clarity about credit scoring and the scores dlat credito rs use versus the 

scores consumers are given by credit bureaus, making it difficult for consumers 

to underSlllnd this key me~S\l[e of their creditworthiness; md 

Confusion about overdraft protection, including teons, fees, and the relationship 

between checking ~ccounts and related savings accounts, lines of credit, Ilnd 

credit cuds. 

In addition to "Tell Your Story," consumers have opportunities to voice concerns and 

share their experiences in person. Consumers have participated in large Bureau-sponsored 

public events, including town halls and field hearings focused on p".Irticular consumer 

finance issues, in Bioningh:Ull, Alllb:Ulla; New York City; and Durham, North Carolina. 

Combined, these events have drawn hundreds of participants, many of whom have 

shared their experiences - positive and negative - with mortgages, student loans, credit 

cards, payday loans, checking accounts, prepaid cards, and other consumer financial 

products and services. 

In each of these cities and others, the CFPB's Office of Community Affairs has also 

hosted roundtable conversations with local leaders representing consumer, civil rights, 

community, housing, faith, student, and other org.lnizations. The roundtables provided 

opportunities for stakeholders in the field to share their ground-level perspective on these 

issues with Director Richard Cordray and other key Bureau staff. 

The CFPB also has hosted dozens of roundtables and meetings at its offices in 

Washington, DC. The Office of Community Affairs and subject-matter teams have 

included hundreds of policy experts and Ildvoutes and community leaders in Directorlevel, roundtable, Ilnd other discussions on mortgage issues, credit cards, payday loans, 

student loans, checking Ilccounts and overdraft fees, prepaid cards, credit reporting and 

scoring, debt collection, remittances, the CFPB's Consumer Response system, the CFPB's 

9 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
57 


<!<fill""'" or: "luga p<mopuI .... on .-bont ",.,ta;-, ... <I !he C!'fB'''Pl'oodI ., 

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Rcsf"""" ...", h ... , d<rc<:I!, from "",,,,,,,en ~'o<tIt thedullen~ .. lhey r..,. .. the 

m"t<tp_ bUIlg> IM[ """""'''' ,. the .tIl:n.oo of f .. iIlc:o.llll,O.II.OO',.oo "'~'" on 

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the CI'PB "'port, to h,"de "", ... rna o:>mpia"" on .<11", ptoduru '0:1 ''''''''' "n"'" 

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5EMI.ANNUAL REPOf!l Of THE CfPB. JULY 2012 
58 


Consumer Complaint Database [beta/ 

---- -_ .. __ .. ---_ ......... _ .......... __- _---"' _ .. _ ... .... 

-_._ --_.-.... ,-_ ...... - .... _- .. _--

•••• •••• ---- -- .- --- - www.D.JI.~ .. I.~.li •••••• ca.yoy/c ... "pj •• h •• d~ 3t.as.-

nee 

information :Woutron~ comp!:nnts is now·avzUbl. to th. pubhr, follt1l1lln8 th .. 

CFPB'.launch of ~ public ConsumerCompl3l!lt Database onJune 19,2012' The 

dat.l~ IS popul.:!i;M by credit em! COmpldllltl; recoved by the CFPB on and after J\l.'\e 1, 

Xl12 and contains c= indmdual cornpWnt ~ data collected by the CFPB, 

IIlcludmg the type of complamt, the d.ote oi OUbl1llSiilOIl, the consumer's ZIp code, and the 

cosnpany that the ccmpwm concems. The da~ :dso mdude\; informabon about t.~ 

3C1lOns taken on 11 compl:llnt - whether w. company's rO!SpO~ was tlmdy, how the 

company respond.d, and. whether the coosurner d10puted the rompany'sresponse. The 

ctIta~~. not mclll<k ronfidenllal mfurmmon about consumers' "lenblW;. Web-

~d and user-fnmd!y features nfw dmbase IIlclu& the ambty 1.0: ~r data b<lsedon 

specific starch cnteri~ ~te dab m ntlousway;, "uch;ll; by complalm type, Ism:r, 

1o<'3.1JOn, date, of any combiru.tion of vajbbl. vanabl.,,;; and downlo~ dab. O~ lIme, 

the CFPB t1Uy add complamts,about other conswn~r finana.21 ptoducts,and setVlC\"S 

under ItS iouthority to the Conswner Complamt Damas-: 

In keepmgWlth the CFPS's s~tutoryrel1'0f1sbility ;Iud llSCOIl'UTlllment tOioCCOunU\l!htj', 

tius report prOVIdeS an OVa'Vll'W of how CO!'ISUI11a Rel1'oose handles complaints and 

presents an anaJyois of comp!=ts fec~ved over the penod from July 21, 201! through 

June 30, 2012 

'In De<M"lber 2011 . tl>e CFf'8 5,~e~ tI>e pvbli, to ,O<""' ~nton 5 propoud pOl~~ 01 m"'j~9 

Som. cred,t <"ard w",pl~ nl dot~ p~b li dy a'5 I~blt. Alter <onSidefing tho.e comment •• th~ 

CFPB ;~5 ~~d ~1 pol"y lor d"cl<»'~9 .ome 01 the det/l tlv<lugh ~. (.OI'>.um~r Com~ nt 

D",ab5;,}_.suOi.do.1Jre of Ce't/l,n Credit Ca,d Compl5PnI D5ta. 77 F .. d. R'9 37.~a(JUMe 

22. 201l~ 

11 SEMI-ANNUAL REPORT OFTHE CFPB. JULY 201 2 
59 


HOW THE CFPB HANDLES COMPLAINTS 

Cousumer Response screens all complaints submitted by consum ers based on several 

criteria. These caleos include whether the complaint f:ills within the CFPB's prim~ry 

enforcement authority, whether tlle comphtint is complete, II.nd whether it is ~ duplicate of 

9. prior submission by the S:lllle comumeL Screened compl:Ullts are sent Vi3 a secure wrb 

port9i to the appropriate company.' TIle company reviews the infonnatioll, 

communicllteS with the consumer as needed, gild deteffi1ines wh9t (lction to t:lke in 

response. TIle compJll)' reports oock to the consumer md the eFPB via the secure 

" compll!ly porul." The Bureau then invites the con sumer to review the response. 

Consumer Response prioritizes for review and investigation complaints ill which the 

consumer disputes the response or where (:ompaniH f~iJ 10 pmvid ... ~ timely response.s 

Comumers who hllve filed compl:tiuts 'llith the Bure~u c~n log onto the secure 

"consumer pomd'" 9v=-tilable on the CFPB's website or call a toll-free number to receive 

>rarus updates, provide additiollal infoonatiou, !lJld review responses pwvided to the 

conswner by the compm}'. 

,. i' ~ • Com~" nt r... ", C""'pa") Con".""" i>e.; 

~ .... ond 

liIt<..,...d .~d ~"" ... ~"P"= ~~.,~ W "'· ... "iiOl<>' 

l1lroughout tim proce~s, Consumer Respouse is supported by CFPB co!leagues who 

provide subject-mailer expertise and help monitor complain ts. For eX:Ilnple, Consumer 

Response coordinates widl the CFPB's Office ofSer1."; cemember Affairs on compLwl ts 

filed by servicemembers or their spouses lind dependents. 

1 If a particular complaint does not involve a product or market th<'ll is within the Bureau's 

jurisdiction or that is currerotly being handled by the Burellu, Consumer Response refers it to 

the appropriate regulator. 

" The CFPB initially requested that compauies respond to complaints within 10 calendar days, 

but iller-eased the requested response lime to 15 calendar days when Consurner Response 

began handling mortgage complaints on December 1,2011. If a complaint cannot be closed 

within 15 calendar days, a company may indicate thaI its work on thecomplairlt is 'In 

progrc~s ' and provide a final response withon 60 calendar days. 

12 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
60 


COMPLAINTS RECEIVED BYTHE CFPB 

Bet\veen July 21, 2011md June 30, 2012, the eFPB received approxim1tely 55,300 

consumer complaints.9 

FIGURE 1: CONSUMER COMPLAINTS BY PRODUCT 

2% 

Other 2% 

Consumer loan I i 

4% ---Student loan 

15% 

Bank account 

and service 

Approximately 44 percent of !til complaints were submitted through the CFPB's website 

md 11 percent via telephone calls. Refem.ls accounted for 38 percent of Illl comphints 

received. TIle rest were submitted by m:lil, elmii, ~nd f~x . 

The tllbles and figures presented below show comphints by type, actions taken, cOlnpA0Y 

responses, and consumers' reviews of company responses,iO 

91his analysis excludes multiple complainls submitted by a given conSumer on the same 

issue and whistleblower tips. All data are current as of July 1, 2012. 

10 Percentages may not sum to 100 per"CcllI dlJe to rounding. 

13 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
61 


Consumers' Credit Ca rd Compla ints 

Table t shows the most common types of credit card compillints th9.1 the (FPB ha~ 

received liS reported by consumers. Sixty-seven percent of the llpproxim:l.tely 18,800 

credit ClIrd comphints fell illto these 10 elltegoues. 

TABLE 1: MOST COMMON CREDIT CARD COMPLAINTS REPORTED 

BY CONSUMERS 

Billmgdisputes 

Annual Percentage Rate (APR) or interest rate 

Identity ulcft/ Fraud / Embezzlement 

Other 

Closing/Cancelling accounl 

Credit reporting 

Collection practices 

Late fee 

Credit card protection/ Debt protection 

Collection debt dispute 

CREDIT CARD COMPLAINTS IN TOP 10 TYPES 

As die lible iUmtflltes, billing disputes lire the most common type of credit end 

complaint. Some consumers aIe confused and frnstfllted by the process >lnd limits to 

challenging i1l9ccllfllcies on their monthly credit card hilling statements. For example, 

so me consumers only rcalize after their cl:tim has been denied thJlt they needed to notify 

their credit ,:Hd compJlnies within 60 days of any billing euol"O. In olher cases, consumers 

9.re not JlW9.re dIal companies Typically do not stop ~ merch:.mt charge once the cardholder 

has 9.uthorized it or do notoverricie a merrnanl's " no-return policy." Other common 

type s of credit cud comphints relgte to :lnnu!li percentage mles or interest rAtrs :llld 

ideutit)' theft, fr9.ud, or embezzlement 

The CFPB genenilly h~ s !~lied on the COO~UIller'S ,harll,lenutlon of his or h rr complaint 

to identify its ollture for analytical purpose~. However, the CFPB's exptrience to date 

suggests th~t consumers m~y often have differing interpretations of what these categories 

mean. For example~ one consumer might choose to categorize a problem :1.5 :I. billing 

dispute, while 1I11o ther might identify the same iS5ue:l.s a concem with a provider's setting 

14 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 

14% 

10% 

9% 

6% 

6% 

6% 

5% 

4% 

4% 

3% 

67% 
62 


or changing of an in terest nile . To improve our reporting on the daw. we receive, the 

Bureau is ewluating the use of these aLlegocies by consumers 10 date and developing 1I 

simplified categoriZlltion scheme to promote more consistentc:Itegorization of 

compl:nnts. 

Consumers' Mortgage Complaints 

F"ib'Ure 2 shows the lJ.pes of mortgage compl:nnts liS reported by consumers for the 

approxim~teJy 23,800 mortSllge comphints received by the CFPB. 

FIGURE 2: TYPES OF MORTGAGE COMPLAINTS REPORTED BY 

CONSUMERS 

.% 7% 

Other Applying lor the loan 

54% 

Problems when 

urwblc to pay 

Applying for the loan 

(Application, originator, mortgllge broker) 

Receiving a credit offer 

(Credit decision/ Underwriting) 

Signing the agreement 

(Senlement process and costs) 

Nlaking payments 

(loan seLVicing, payments, escrow accounts) 

Problems when you are unable to pay 

(loan modification, collection, foreclosure) 

Other 

TOTAL MORTGAGE COMPLAINTS 

'" Receiving a credit oller 

4% 

Signing tr,e "greement 

2S% 

flAaking payments 

'5 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 

8% 

2% 

4% 

25% 

54% 

7% 

100% 
63 


1111'. most common type of mo[\~ge compillin! is abourproblems consumers h:l\'e when 

they He uuabl!." to mllke pllyment$, such ~s issues related to 10:1n tllOdificatiolls, collection, 

or foreclosu re. Consumers who ha ve filed the~e complaints generally app!!:u: to be driven 

by a desire to seek ag(eement with their companies 011 foredosuft, alteOlfttives. TIll' 

complaints indicllte th:lt consumer confusion per;ists around the process and 

reqnirements for obtJLining loan modifications ftnd refinancing. esp("(:ially reguding 

document submission tlmefral1les" payment tri~1 periods, allocation of payments, 

treatment of income in eligibility calculations, and credit bure3u reporting during the 

e ..... :liu:ltion period. 111(' shelf life of documents pro\ided a~ parr of the loan modific:ltion 

process is of p:!nicuhr concern to consumers. -nlough consumers mu;;! provide 

documents within ~hort time periods nd income docul1letlUt1on generally rem;uns v:tlid 

for up to 60 days~ lengthy evaluftt10ll periods can result in con~ume[5 h9\~n g to resubmit 

documentlltion -sometimes moce than once.TIlis seems 10 contribute to consumer 

fatig.ue and frustnltion with these processes. 

Other common t}'jJoe' of mortgJlge eomplaints ~ddrt'ss issues reht ~d to m.tking pa~lnen[S, 

such ~s igsu~s related to lo:rn servicing. pa~ments, or escrow ~ccoun . Por eX'ffilple, 

consumers express confusion ~bou twhether m:lking timely tr1:l1 period paymen~ will 

guar:lfllee placement.into 9 pemlmenl modifi c~tion. Issues rehled to applying for the 

101111, such ~s the application, the originator. o[ the mortgage broker, au 2lso among the 

most. common t}'jJoes of mort ~ge compla.inL~. 

SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
64 


Consumers' Bank Account and Service Complaints 

Figure 3 shows the types o foo.nk lI.ccount m d service complaints, such lI. S co mplaint~ 

!lbout checking !lnd savings 2ccountS, as reported by consumers for the !lpproXinl2tely 

8,100 comphints received by the CFPB. 

FIGURE 3: TYPES OF BANK ACCOUNT AND SERVICE COMPLAINTS 

REPORTED BY CONSUMERS 

,,% , % Problems caused by low funds Using a debitor ATM card 

I I 

.% Sending or 

receiving payments 

,,% 

Depmits and withdrawals 

Account openmg, closing, or management 

4 ' % Account rnanagemenl 

(Confusing marketing, denial, disclosure, fees, closure, interest, statements. 

joint accounts) 

Deposits and withdrawals 

(Availability of deposits, withdrawal problems and penalties, unauthorized 

transactions, check cashing, pilyroll deposit problems, lost or missing 

funds, transaction holds) 

Using a debit or ATM card 

(Disputed transaction, unauthonzed card use, ATM or debit card fees, 

ATM problems) 

Making or rt1:eiving payments, sending money to others 

(problems with payments by check, card, phone or online, unauthorized or 

frnudu lent transactions, money/ wire transfers) 

Problems caused by my funds being low 

(Overdraft fees, late fees, bounced checks, credit reporting) 

Other 

TOTAL BANK ACCOUNT AND SERVICE COMPLAINTS 

17 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 

41% 

25% 

5% 

9% 

15% 

5% 

100% 
65 


As the mble iUustmtes, the mOST common type o f bank account lind service complaint 

(dates to opening.. closing, o r 1lI1!.fiaging the acc:;oun1. TIlese complain ts ~ddress issues 

such :1S confi.,~ing mlHketing, deni:tl, fees, t:l.tement~, !l.Ild joint ac:;counlS. O ther (:Ommon 

types of complaints rellite to dep(Hit lind withdr~wal issues, such :lS trilmaction holds and 

unauthorized tmnsactions, !Llld problems caused by the consumer's funds being low, such 

ol.S bounced checks, overdmft alld late fee s, ,I.IId credit reporting. Mall}' con sumers rem!lin 

frustclted with overdr~ n fees lind the wide discretion co mp~ni es ~ve to assess these lind 

o ther fee s so long liS the fee. are outlin ed in account agreements. Similarly, some 

con sumers express frustration with tile oroer in which compmies process account 

wilhdr:lw:lls beC:luse tlleprocessing ofhrger tmnsactiolls befor e smaller Diles can le:ld to 

mo re overdraft-fee chnges. 

18 SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
66 


Consumers' Student Loan Complaints 

Figure 4 shows the types of student IO:l.n complaints:l.s reported by consumers for the 

approximately 2,000 student lOan comphints rece;t"ed by the CfPB. 

FIGURE 4: TYPES OF STUDENT LOAN COMPLAINTS REPORTED BY 

CONSUMERS 

28% 

Problems when 

unable to pay 

3% 

Other 

4% 

Getting a loan 

I I 

65% 

Repaying the Joan 

Getting a loan 

(Confusing teaus, rates, denial, confusing advertising o r marketing, sales 

tactics or pressure, financial aid services. recruitIng) 

Repaying your loan 

(pe.es, biUing, deferment, forbearance, fraud, credit reporting) 

Problems when you are unable to pay 

(Default, debt collection, bankruptcy) 

Other 

TOTAL STUDENT LOAN COMPLAINTS 

4% 

65% 

28% 

3% 

100% 

The most common type of srudent IO:l.n complaintre19tes to repsying the loall, such ilS 

fees, billing, deferment, forbta!ance, fraud, and credit reporting. Consumers struggle \\ith 

the limited paymentdefellllcnl options pennitted in uleirloan :tgreements, especi:l.lly 

when they have not fOIUld employment by !he time they need to begin repaying their 

1091lS and because deferments often are limited to six months. Another common type of 

complaint addresses problems consumers h~\l e when they are unable to pily. such 115 

issues related to default, debt collection, and bankruptcy. 

19 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
67 


Consumers' Consumer Loan Complaints 

Figure 5 shows the types of consumer loan complaints, such as complaints 9.bout 

installment 109.ns, vehicle loms md e~ses, and personal lines of credit, 9.S reported by 

consumers for the appcoxim9.tcly 1,400 consumer 10ll.n complaints received by the CFPB. 

FIGURE 5: TYPES OF CONSUMER LOAN COMPLAINTS REPORTED 

BY CONSUMERS 

6% 8% 

Other Shopping forthe loan 

I I 

17% 2' % Problems when 

unable to pay 

Taking out the loan 

48% 

Managing the loan 

Shopping for 9. 109.11, !ease~ or line of credit 

(S9.ies tlIctics or pressure, credit deni9.i, confusing advertising or 

marketing) 

Taking out the loan or lease / Account [enns and changes 

(Term changes (mid-deal changes, changes after closing, rates, fees, etc.), 

required add-on products, trade-Ill payoff, fraud) 

Managing the loan, lease, or line of credit 

(Billing, late fees, damage or loss, insurance (GAP, credit, etc.), credit 

reporting, privacy) 

Problems when you are unable to pay 

(Debt collection, repossessIon, set-off from bank account, deficiency, 

bankmptcy, default) 

Other 

TOTAL CONSUMER LOAN COMPLAINTS 

8% 

17% 

48% 

21% 

6% 

100% 

The table illustmtes that the most common type of consumer loan complaint is about 

managing the loan, lell.se, or line of credit. Another common type of complaint addresses 

problems consumers have when they are unable to pay, such \IS issues rehted to debt 

collection, b:mkruptcy, and default. 

20 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
68 


HOW COMPANIES RESPOND TO CONSUMER 

COMPLAINTS 

Appmximately 44,600 (or 81 percent) of all complain ts received between July 21, 2011 

md June 30, 2012 were sent by Consumer Response to companies for review and 

response,lI Table 2 shows how companies responded to these complaints during dlis 

time period. 

Company responses include descriptions of steps taken or that will be t9.ken, 

communiclltions received from the consumer, any follow-up 9.ctions or planned follow-up 

llCtiOns, and ntegorization o f the response. Based on industry comments received :l.bout 

disclosure of credit cud comphint dahl, beginning June 1, 2012, response category 

options included "dosed widl monetuy relief," "closed with non-monetary relief," 

"closed with explanation," "closed," "in progress," md other administmtive options.12 

MonetJi.ry relief is defined:IS objective, measun.ble, 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 oblective, 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 relief to the consumer as a direct result of the steps taken 

or thin '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. 

11 The remaining complaints have been referred to other regulatory agencies (8 percent), 

found to be incomplete (4 percent), or are pending with the consumer or the CFPB (1 percent 

and 6 percent, respectively). 

12 The (FPB initially asked companies to categorize their response as "full resolution 

provided: "partial resolution provided: "no resolution provided: or another administr<ltive 

option. From December 1, 201 1 through May 31, 2012, theCFPB piloted categories of 

"closed with relief" and "closed without relief" in addition to other administrative options. 

21 SEMI-ANNUAL REPORT OF THE (FPS, JULY 2012 
69 


TABLE 2: HOW COMPANIES HAVE RESPON DED TO CONSU MER 

COMPLAINTS" 

Bank 

account 

Crl.'dit =d Student 

All ,~d Mortgage service 10= 

N:::44,600 N::: 15,600 NZ20,200 N :::6,40(} N :::I,400 

Company 

reported closed 26% 47% 9% 32% 6% with mo neta ry 

relief 

Company 

reponed closed 3% 2% 5% 2'% 3% with nonmonetary relief 

Company 

(t ported closed 55% 42% 66% 48% 60% 

with explanation 

Company 

reported closed 1% 0.2% 1% 1% 0.5% (without relief or 

e:....vlanation) 

Company 

provided 3% 2% 4% 3% 1% administrative 

response 

Company 13% 7% 16% 14% 29% revlt'wmg 

TOTAL 100% 100% 100% 100% 100% COMPLAINTS 

COffipRnie s have !esponded to over 40,300 of the 44,600 complaints sen t 10 them (90 

perce ~ md report ha\ing dosed 85 percent of the complaints sent to them. Tilble 2 

shows how companies have responded. 

Beginning December 1, 2011 , companies had the option to repolt ~n unt of 

monetny relief, where applicable. Since then compmies hllve provided relief amounts in 

13 While companies' responses under previous categorizations were maintained, for 

operational and reporting purposes, responses categorized as "full resolution provided," 

' partial resolution provided,' and "dosed with relief are considered a subset of ' closed with 

monetary relief: and responses categorized as ' no resolution provided" and "dosed without 

relief' are categorized as "closed with explanation! 'Closed with non-monetary relief" and 

' closed" renect only those responses provided by companies aft er June 1,2012. 

22 SEMI-ANNUAL REPORT O F TH E CFPS, JULY 2012 

Consumer 

1= 

N::::800 

19% 

5% 

57% 

1% 

1% 

16% 

100% 
70 


response to more than 4,800 complaints. The mediRn amount of relief reported by 

compmies WRS $144; however, compmy reports of relief ilffiounts md mediRns vary by 

product. For the RpproximRtely 2,500 credit cRrd complRints where compmies provided a 

relief amount, the medim ilffiount of relief reported was approximately $130. For the 

Rpproximately 800 mortgage complaints where companies provided R relief amount, the 

medim Rmount of relief reported was approximRtely $411. For the more thm 1,400 bmk 

account and service complaints where compmies provided a relief amount, the median 

ilffiount of relief reported was approximately $105. For the approximately 70 student loan 

complaints where compmies provided a relief amount, the median ilffiount of relief 

reported WRS approxim9.lely $1,597. For the Rpproximately 80 consumer loan complaints 

where compmies provided a relief amount, the medim amount of relief reported was 

approximately $136. 

Consumers' Reviews of Companies' Responses 

Once the compmy responds, the CFPB provides the compmfs response to the 

consumer for review. \Xlhere the compRny responds "closed with monetRry relief," 

"closed with non-monetuy relief," "closed with explanation," or "closed," consumers are 

given the option to dispute the response. H Complaints with disputed company responses 

Rre ilffiong those prioritized for investig9.lion. Table 3 shows how consumers responded 

to the approximately 36,600 complaints where they were given the option to dispute. 

Consumers are asked to notify the CFPB within 30 days if they want to dispute a 

company's response. Approximately 44 percent of such consumers did not dispute the 

responses provided. Neuly 17 percent of consumers hRve disputed the responses 

provided. The rest were pending with consumers at the end of this period. 

14 Consumers were initi ally given the option to dispute responses from companies that 

indicated a resolution had been prOVided. With the shift to closure categories, consumers are 

given the option to dispute company responses regardless of closure category. 

23 SEMI·ANNUAL REPORT OF THE CFPB, JULY 2012 
71 


TABLE 3: CONSUMER REVIEW OF COMPANY RESPONSES 

~k 

Account 

Credit ""d SlUdenl Consumer 

All '" Mortgage Service ~ 

Pending consumer 

review of company's 40% 40% 39% 42% 39% 

resfJonse 

Consumer did not 

dispute company's 44% 46% 42% 43°(li 48% 

resEonse 

Consumer disputed 17% 15% 19% 15% 14% company's response 

TOTAL 100% 100% 100% ]00% 100% COMPLAINTS 

Consumer Response Investigations 

After requesting that w mpllmes respond to all complaints filed and giving consumers the 

opportunity to review nd dispute company responses, Consumer Response pcim~.rily 

focuses ils review and investiglltion effom on dlOse complaints where th e consumer 

disputed the response or where companies failed to provide m y response within IS 

calendar <bys. Consumer Response !lIsa periodically investigates groups of comphinls to 

survey product- and ss ue-~pecific trends. Consumer Response seeb to deteonine why a 

company fll.i.led to provide a timely response (if IIpplicable) lind whether the consumer's 

dispme of the compmy'; response (if ~pplic~ble) justifies additional review of the 

compm y's minimum required actions under the consumer finll.ncilll protection hw~ 

within the CF PB's ll.uthority. [n the course of m investigation, Consumer Response may 

ask comp-.Hues :l.I1d consume~ for addition9.! inform~tion, and once th ~ i!lv stig~tio(1 is 

completed, Consumer Response sends the consumer ~ swnm9.f)'. In some C9.se~, 

Consumer Response has refened compb.iuts to colleggues in the CFPB's Division of 

Supervision, Enforcement, and F9.ir Lending & Equd Opportunity fo[ further action. 

Listening <lnd responding to COllsum« compbin ts is lin integu i p-.lrt of the CFPB's work 

HI underst:l.nding issues in the fill9.noru marketpbce and helping th~ mnket work bener 

for consumers. 

24 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 

Loo" 

49% 

35% 

16% 

100% 
72 


Shopping Challenges 

The ch~llenges mgt consumers [:.Ice in the m~rketphlce highlight the impomnce of:.l tenet 

which is centr~1 to the CFPB's mission - promoting m~rkets in which consumers can 

shop effectively for fmancial products iUld services. \'Vhen the costs, risks, and other key 

features of financial products are transparent and underst9.nd9.ble, consumers lice bener 

able to compare products ',Iod choose the bt'St one for them. 1111s discllssion presents 

p reliminary observations about opportunitil's and challenges that comumers face when 

shopping for checking ~ccounts. S 

CHECKING ACCOUNTS 

Background 

Over 92 percent of Ame[ican households hold some type of tr.lmacuon account for their 

core cash manll.gemen t needs.l 6 Most of those accoun ts are insured checking accounts :.It II 

bank, thrift, or credit union . According to one survey, households lICe switching their 

checking account providers at ~ rate or once every 11 ye~rs, Il.nd switching is on the riseY 

Con sumers shopping for b-mks in 2011, on average, looked at no more th:l11 two 

institutions.ls While histocic9.Uy consumers may h3ve bcell most likely to shop for a new 

bank when moving to 9 new city o[ neighbomood, incre9.singly consumers mgy be 

shopping in respellSe tO!l.n unple~sanl experience, such as chmges in fe/'"s or oth/'"r tenns 

.md conditions.l ' 

I> Fora discussion of shopping challenges in markets for mortgages, credit cards, and 

student loans, please see Consumer Financial Protection Bureau, ·Semi-Annual Report of the 

Consumer FinanCial Protection Bur eau, July 21 - December 31, 2011 : January 30, 2012. 

1~ Jesse Bricker, Brian Bucks, Arthur Kenniekell, T raei Mach, and Kevin Moore, ·Surveying the 

Aftermath ohhe Storm: Changes in Family Finances from 2007 to 2009,· March 2011, at27, 

htrp:llwwwJt.tdlJral' .. ~etvf!.~J(J~/p!JI,~I1i'dv2011J:iO' 117120 1117p<lp pdf (last ~Iewed July 9, 

2012). 

17 J.D. Power and AS$ociates, 'Shopping and Switching Rates Increase amollg Retail Bank 

Customers as Competition in the Industry Intensifies;' Milrch 1,2011, 

htlp:llbu.sin(,:W.,",fltt'r 4dpowo:rcom/n'·woJpl':"'ir""·.HC". 'ip~7ID 201 10tO (last ~iewed July 9, 

201t). 

a ld. 

1~ J.D. Power and Associates, "Bank Customer Switching Rate~ Rille Again, ~ueled by Issues 

",ilh Fees and POOf Service," Fp.b. 27, 2012, 

loUp:/lblhioo~,<"oo1"r IdIlOW,·,.((lI!IIr ... wSlj"ll'·~';1 d. JS'~.;,~r''''''''!IO-?() 12(117 (last Viewed July 9, 

(012). 

25 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
73 


Bmks may charge ~ wide unge of fees TO holders of checkUlg accoutJlS.2!I Some fees, 

including monthly mlllntenance, are levied 011 a peliodic bll.sis. Othen-, such ~s fee s for 

using the A Thh of other institutions or fee.s for in·person !r:U15actions with telJer5, a.!e 

incllued on a per·tl'.Ulsaction basis. Depository institutions frequently glso impose 

"penalty" fees for overdmfts, returned deposited checks, 1I.rld otller tmnsactions that Illgy 

unpose additional risks or costs upon the institution . 

Shopping Channels 

While consumers h~ve historically shopped - and continue to shop - (or checking 

accounts at branch offices, a large portion of tlle population now relies upon the Internet. 

Use of the two primary shopping ch:Ulne1s m~y not be nlllruglly exclusive. A recent survey 

estimll.tes thll.t '76 ptrcent of consumers \'iew the bank brmch as the primary place to 

open new accounts wd 65 percent look there first when they bllJ banking products."';!l 

However, the survey also found that "70 percent of consumers first go online when 

researching b:tllking products :Uld services, up fmm 42 perctlJ! five ye~n ago." 

The growth of online shopping promises increased lI. ccess to informll.tion 9nd 

developmrntof tools witll which consumers un make online comparisons. Consumers 

Catl oht!l.in >It !e~st some infoGn>ltion lI.bout checking aCcoU1lt producn at most finnnciru 

institution s'wehsites. TIley can iilso COffipgre checking products .... [ong-9 limited number 

of dimemions at 9. number of third.party sites.Z' Still, a number of iSSlles present 

chll.llenges for consmner shoppers. 

Transpare ncy 

DISCLOSURE OF TERMS AT BRANCH OFFICES 

Regulatioll DO, which jmplemen ~ the Truth in S:J.vings Act, requires:l. depository 

imtilUtion to di c!o~e to ~ consumer, among otller things, the teans ,I.nd fee s (and 

conditions under which the fees will be imposed) ssocj~ted with lllaintaining ~ checking 

gCCOW1T before i, opens the aCCOlU] t for or provides sen;ces 10 the cOllSumer.2l TIle 

;/0 Banks' revenue flOm chocking accounts comes through a combination of net interest 

margrn (interest earned hom lending or investing the consumers' deposits, minus (lny interest 

paid to consumers' account), inter-r.hange earned on consumers' debit card transactions, and 

fees cha rged to the consumers themselves. 

11 Sherie! Meleis et aI., "Reconstructing the Retail Banking Business: Novantas Review, july 

2011, at 13, h\!r:llwww.w~v .. nlils.~ .. rn.drtld .... I.hp·l!rj.-J 1/ (last viewed July 9, 2012). 

~ Exarnples include Bankrate.com-and Findabetterbank.com . 

.ll See 12 C.F.R. § 1030.4. 

26 SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
74 


pmposr of the reguhlion is 10 enable con;umers 10 nhlke informed decision> about, 

IlCcounts lit depository instilutions.z4 

However, in 2008. the Govenunent Accounllibility Office (GAO) found that consumers 

ro:l}' oOlbe able to oblliin the required info(JI\~tion from bank bmnches 91 illl times ~ 

GAO employees conductt'd "secret shopper" visits to a noo,generilizable yet sizable 

s:lmple: 185 brunches of 154 banks, thrifts, and credit unions during 2007 and 2008. 

Visitors found they were " unable to oblll.in, upon request, a comprehensive list of ~U 

checking and s~vings 9CCOWI!, fees at 40 of the bmnches (22 perceTlI).'-'26 Similarl}'. the 

"secret shoppers" were "unllbJe to obt:l.ill the account teom lUld conditions, including 

infonn:ltion on when deposited funds becWle avaihtble rod how overdrafts were handled, 

for checking ~nd savings accounts at 61 of thr bmnchrs (33 perccnt)." 21 Thrse findings 

ilppeH to be consiSlent\\o1th those published by the Unites St:l.les Public Interest Research 

Group (PIRG) in 2011.7<1 

DISCLOSURE OF TERMS ONLINE 

Currently, tlle reguhttion implementing the Truth in SH'ings- Act, Regulation DO, illso 

provides th:ll if a consumer uses rlectronic means to open lI.!l account, such as through II 

wrbsite, thr Sllffie disclosures required for opening an llccount in ~ bllnk bmnch mu>t be 

provided to the consumer before the :J.ccount is opened or II service is provided. However, 

beclluse the regu!:l.tion :llso provides th:lt disclosures may be mailed to customers who 

requesrwritten 9ccounlinfo[]n~tion when the customer is not "present," ~ccount teom 

m:J.Y not be immedi9trly 'Ivllihble for customers shopping online.2'l ln :i,ddition, Reguhtion 

E, which implements the Electronic Fund Transfer Act, requires disclosures offees for 

electronic fund transfe[s or the righ t to m9kc such trAnsfers:l.T the time the consumer 

contracts for the electronic fund transfer service or before the fim transfer is made 

involving vIe consumer's Ilccount..lO Examples of fees for electronic fund tru.usfer semces 

24 See id. § 1030.1(b~ 

2' Government Accountability Office, "Bilnk Fees: Federal Bilnking Regulators Could Better 

f nsure That Consumers Have Requrred DisdosureDocuments Prior to Openrng Checking or 

Savings Accounts/ January 2008,ll nr;lI\'lwW'HilO.<}Q<lI'!'~'~1~/2}jlln 11I1tt'-'.pdl (last viewed 

July 9, 20 12). 

:ib Id. at 6. 

,~ U.S. Public Intelest Research Groups, "Big Banks, Bigger Fees 2011: A National Survey of 

Bank Fees aud Fee Disclosure Policies: April 2011, 

IrUp.llwww Ib! "':f,ClrW5,1 .. ~lpt, ~/f,I~/'''I''-'lls/u~I'I ''-IOIGf1ANj(SRl!'' )Ii (r IN! V (.r<J! (last 

viewed July 9, 2012). 

:s See 12 C.F.R. § 1030.4. 

)J See id. § 1005.7. 

27 SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
75 


indude fees for ATM widJdr~wals or purchases made using ~ debit ca.cd.51 However, 

thl.'se disclosures also may be provided too late to IlSSist shoppen . 

In 20081 die GAO found th:at infonnQuon on fees, teons, :and conditions WQS not readily 

avaihble on the websites of the institutions visited by its "secret shopper" e.mployees. The 

GAO w~s "uMble to obtain ~ comprehensive list of fees from .103 of the 202 [website~] 

(51 percent). In addition, (it w~s] unable to obtain the terms ~nd conditions from 134 of 

the 202 (66 percent)." 32 

ACC ESS IBILITY AND PR OM INEN CE 

FaciJitas, Inc., ~ milIket research firm that publishes the website FindABetterBank.com 

alld monitors checking account pricing daily at 139 institutions ~cross the nation 

(including the 65 Ltrgest) Ius conducted lIddiuonru research on disclosure of remls:md 

pricing by depositories. The company tracks and score~ dle difficulty of flflding 

infonnation related to 24 common fees at each of the illStitutions the finn monito~, 

noting wh,t tenm are promim.:ntly posted online, wh9t is only contained in legal 

disclosures, whllt is not posted md requires assistance from 9. customer service 

representative, md whllt is ostensibly no r avail!lble outside of a bmllch. As of FebruH}' 

2012, the avemge accessibility score earned by bmks md credit unions observed by 

Facilit:ls was 2.9 on a scrue oro to 6, where a score of3.0 indicates "persistent n9vigstion" 

is required to find fee infoml:l.tion online and ~ 2.0 suggests fee ;nform!ltion is difficult to 

find or is not a\'ailable on the bank's website.JJ 

Other srudies indic:lte that institutions th~t post information online often do so witilin 

complex legAl disclosures. In ~ 2011 stud}' of the websites of die ten largest depository 

iJlStitutiom. the Pew Charitable Trusts was genef!llly ~ble to find fee infoulIKtion online 

for the imtitutions' checking produclS. However, for many of the institutions, dle study 

found that the fee schedules \l'ere contained within lengthy documents containing lIlI the 

teons and conditions fo r checking lind slIvings products, with 9 median length of III 

p~gel; ).! 

31 See id. §§ 1005.7, 1005.16. 

12 Government Accountability Office, "Bank Fees: Feder.ll Banking RegulatorsCould Better 

Ensul e That Consumers Have Requil ed Disclosure Documents Prior 10 Opening Cheddng or 

Savings Accounts,~ at 38, January 200B, hup:llwww,~ a(J.""l'I/ulodY28U1ll1IJtlO.JAU (last 

viewed July 9, 2012). 

11 Data from FacHita~, Inc., leceived February 28, 2012. Scores below 2.0 indicate Ihat the 

consumer had to navigate through an automated phone ~"Ystell1 to get information, which al 

limes was difficult. 

l~ The Pew' He"lth Group. "Hidden Risks: The Case for SafeandTranspalent Checking 

Accounts: April 2011, at 6, 

I.Dll://www./ll.wt.U.ih.U.q/u ....... ilJctllll\:...i/wwwl.ewtJlJ~ • .!ou.tjll?cll(.>.t.sI5 .. 1 .. Ch~don'-l JIl t~" 

[1~n(lJlV _A!JalP<;l.w_Rf'I1<lJCI1Iddclil/(5k~ .rr!1 (last viewed July 9. 20 2~ In the 2012 follow·up 

to this study, Pew observed that the median length decreased La 69 pages; however the 

change was la/gel)' attribUted Lo a change In methodology (ather thar~ an industry trend. The. 

28 SEMI·ANNUAL REPORT OF THE CFPB, JULY 2012 
76 


NOMEN CLATURE AND COMPARABILITY 

Even when comume~ are llb1!:' to obtain complete pricing infounll tion on competing 

products,. comparing those products call be challenging due to a lack of swndardized 

descriptions fo r cerrain types of fet"s, especially with respect to overdraft transllctions. For 

eX9.mple, different depo,itory institutions may use different teons for the fee ch9.rged to 

tunsfer money from 9. ll vin~ account or 3 ljne of credit to 3 cbecking accollnt to cover 

an overdnft lLlld for the fee charged if an overdraft is not rep~d withi!! a specified period 

o f time. 

Product Complexity 

Subtle Il.lld sometimes sign ificant w.ri ~ti ons in product pricing strucrure5 :leTaSS 

institution s ClIll m~ke comp~mons between products or providecs cumbersome. For 

ex:unple, some aocounts may charge mon thly fees jfllle minimum daily babnce 

requiremen ts ,ue not met for JUS! one (b y or even for p:tr1 of one chy during a shttement 

period, while other accoull ~ h~ve ~ fee trigger based upon th e (1''tTfI!/mon thly bal:lllce of 

the cl:Oun t. 

Some institution pr.lctices, frequently undisclosed, may make it particulnrly difficult to 

anticipate overdrJft usage and costs. For example, some institutions may post check, 

automated clearing house (ACH), and debit trnnsactions in order from tlle largest to the 

smrulest amount, while others might employ ~ chronological or low-ta _high posting order. 

These posting-order rules impact the size and number of items thatgcnernte overdraft or 

non-sufficietlt funds (NSF) fee s. BeC'.,lUse many payme.nts do not settle 0 11 the diy 011 

wh ich they were conducted or :luthorized, wnsumers ~re hard pressed to predict the 

precise order in which items \~ill be processed on a given dgy.llnport:lntly, many 

disclosures merely slAte that the in stitution reserves the right to deteonine the order in 

which to process items. 

FurtheOllore, manyinstitutiolls'po!icies set ris -b~sed limits based on ~n individual 

CUSLOmer's credit stan ding. Ilistory with the institution, p~st overdraft usage, and other 

factors. Those ~ccount underwritin.g policies Vilry f!Om iustimtion to instirution but 

cannot be used ~S:.J. basis for compiring providers if undisclosed . 

Consumer Expectations 

Finally, as when shopping for other consumer fll1:mci~J products, consumers ellroJling ill 

uew checking acconnts m~y o ften unde.restimate the likelihood of Ilel}lti\'e outcomes, 

Pew Health Group, ·Still Risky: An Update on the Safety and T ran.~parency of Checking 

ACI;oUfltS: June 2012, at 7, 

f,tt".:flwlVw f"'~'Ilru~h.(.I.~/..,pl';;IJ"dr fl.,slw....-"'P~ .... If\,J<;J.;O' qlRr.\)otl;.lSal.,_ r::n,~irlfl'UII Jh,·_ 

tlo£tl (Jill, .A9~'" _~dl~ _(h",d'illg_SlilU(I~.(od' (last viewed July 9, 2012). 

29 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
77 


such as overdrawing uleir t1ccounts or incurring overdraft-related fees.}~ TIIUS, consumers 

may pay less attention to these te(JTlS - even when they ill wdl-disdosed - thun to "front 

end" charges Ihey 'Will iucur 'With more ceruinty, such as monthly maintenance fees, 

regudJess of the fact thai "back end" tnl.llsaction fee s may represent the majority of costs 

they are likely to incur. 

1\ M~clu.d S. Ban et:l.1, "Behav'onlly Infonned Finandil Services Reg.lbtion," OClober 2008, 

1,[tp:l/wwwJltWdlH"rI{<w<'!Vme<;/udf .b(·I'ilVi,lIijl \/S.IJJt (WI viewed Julr 9, 2012); ROOER 

BUEHLER ET AL~ INSIDE THE PLANNING PAllJ\.CY: THE CAUSES ANO CONSEQUENCES Ofl 

Ot'!'IMlS11C TIME PREDICI'IONS (2002). Bar-Gill (2004) madt s;mil:u obSetVH;ons \\,ith ftSpeCI 10 

the cre-dit card markets. Ottn Bar-Gill, "Seduction by Plastic,"' 2004, 

hUIl:lllawJ)fJfOlf!.ss.uJln/.:gl/w-'w(rJl1Il'!II.t:gi?al1l(le IOl.J~. lfIl<"lI.t" .. lca QUI viewed July 9, 

2012) 

30 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
78 


Delivering for American 

Consumers and Leveling 

the Playing Field 

TIle CFPB is aurhO[izM (0 exercise its lI.u thoDties under federal consumer fin:U1cial 

protection laws to adrnininer, implemellt, and pmrnOle compliance \I,~th those laws. To 

this end, the Bu(esu hu madt elTorts in dIe P:lSt yeu to improve the resources :l.vaibble 

to consumers and to build the infnst.rocture ll ~cess~ry for m~king consumer fmanoal 

macke!; work better. 

Resources for Consumers 

TIv.' eFPB has launched a variety of offices to provide lI!isistwce wd info rmation \0 

consumers. 1111' Bu[ea,u ;.trives to provide indil;dualized help to consumers based on 

their specific issues with finmcial producTS and servict's, lind it "",orks to improve fmanci9) 

literacy 9 • .nd capability - amongst the public as it whole and comumers who traditionally 

faced part.icul:u: challenges in the fin ,Ulciai mukets. 

CONSUMER RESPONSE 

The Bureau'sConsumer Response team receives complaints IllId inquiries direcul' from 

consumers. TIle (FPB ~ccc ts complain ts through its website lnd by telephone, mail, 

email, ~x, and referral. Consumers Ele complaints on the Bure~u's website using 

complaint fonm tailored to specific producls, and can also log on to ~ secure consumer 

pOffill to check the St:ltw; of a complaint and review a company's response. Wh ile on the 

website consumers can chat \\~th ~ live agent to receive help completing a complaint form. 

COllSumen; call also calilhe BurellU's toU-free number to llsk questions, file a complain t, 

check the St:lrus of a complilint, and more. The CFPB's US.·blIsed cont:lct centers handle 

calls '.\lith little-to·no wrut times; they provide services to consumers in more th!lJl 180 

lolJIgu~ge s lInd to heuring- md speech-impaired consumers Vill II. toU·free telephone 

31 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
79 


number. Cutting-edge technology, including secure company Rnd consumer portills, 

mRkes the process efficient Rnd user-friendly for consumers rnd companies. For 

compmies, the CFPB provides secure channels for communicRting directly with 

dedicRted suff about technical issues. 

As Consumer Response processes complaints Rnd responds to inquiries, it continues to 

seek new WRYS to improve existing processes to make them as efficient, effective, lUld 

eRsy-to-use as possible. BRsed on feedbRck from consumers lUld companies, RS weliRs its 

0'W1l observations, the Consumer Response teRm identifies new opportunities to improve 

its processes and implement chmges with each product launch. By applying the lessons 

learned through previous complaint function rollouts, the Consumer Response terun has 

improved its intake process, enhlUlced communication with companies, and ensured the 

system's eRse-of-use lUld effectiveness for consumers. The CFPB Rims to provide services 

that are trusted by consumers and companies alike. 

CONSUMER EDUCATION AND ENGAGEMENT 

The CFPB's Division of Consumer Education md Engagement is responsible for 

developing and implementing initiatives to educate and empower consumers to make 

better-infonned finmcial decisions. Improving fill9.nciallitemcy and capability 

encompRsses mlUlY short Rnd longer-tenn efforts, including education Rnd engagement 

with infonnation and tools designed to provide del.[ and memingful assist:l.nce to 

consumers at the moment they need it. 

Reaching out to consumers is essential to the work of this Division . Over the past year, 

the Division's Offices have engaged with different groups across the country through 

more thRn 320 listening sessions, town hillis and roundtables, visits to military instalhtions, 

and other stakeholder events. These lUld other oppornmities to hear directly from 

Consumers about their financial needs, aspirations, and experiences help inform all of the 

Bureau's work. Through this outre>lch work, the CFPB has connected to more than 4,200 

stakeholder organizRtions that were involved in these events. 

As a 21st-century agency, the Consumer Engagement office has focused on bringing 

financiRI decision-making tools and infonnation to consumers through lUl accessible 

online fonnRt. Over the P,lSt year, a steadily increasing number of consumers took 

advantage of these offerings. The Bureau's website received more than 5 million unique 

views in the past year. The CFPB estimRtes thRt more than 3,7S0,COJ of those were to 

1I!e>lS of the site providing consumer tools, infonnation, and assistance. 

32 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
80 


, 

" 

-

_. - ' • - - - = 

- -

Know Before 

You Owe: 

Mortgages ) 

Tl>: 0""""" "'l'f"'''' oo<~ 1l\e CPl'S'. ~8"."t.amptJgn; r-B~ }' .. 0.., 

",hldl hr b<gJo '" mU< "'.a><~ <nO """ offinirlool prcdlru.,,<1 """'" "",or '" 

undatW><l Although ""","men crpoet to l>< hdd =?"<t"t.I< to. 111 ... ?>rdl.,,, ... d 

d<btl, ttI,,~,., ......... '" be.:to., mot • .,r"",,<11 d>oot:eo boteoJ O<Ilcng-!r:IOI <:OIl> 

It1d r.m d tI\Qo< .. _m 1M =v= J:Ma.!!tjM y". CM "'""""'t"" ~ 

r<>pom1bi...,..". '1IW1 d<=tOD-""""g tlu""", r"" .00 .tfo;:nv. "pm .. ".oa" d!bc 

tcydCll'cll! 0[""'_11 ..... mb offilllllcoi ,.oducb..,d""""",, 10W\I, IheBo!CaJ 

I"'bI~h<d p'O"''JP< ru"". tool" ""~ """ItO<!> fur """,£"p, <hld<oU"",., .nO cml~ 

ow>< tltt! "" de!;'!flod I<> mote ""p"'Wlt tofor",,""" "'~ .. ., find 

TI>e Off"", ofC""wm .. I!"~"'t _ Off"", ror SOJ<I<tiU ."""tfJ .... o:«d !bc 

_d ph"" of '" r.-B¢'r Y .. o..:c s.,.",Il-..pr""", bp .. ""rt:. b<!s "",,"'" 

of. r .. ..,o~ Old «<I>p<ldO!! toOl fo< pobilC cornrn"" Th~ orilll<l«:l "O"'!:l'od to 

~dp .",d""t>,..,o r.",.. ... ",ok< be<!"H,fe<med d"",oo.,. ,bcAI. , ..... , 10.,.. The bet> 

0<t<l0fl d("","poe> l"llo;l, .. llIIlhIe dou P'O""'," by 1:>''''''''''' '' , .. ~tnl ~""'" 

.. dudm, mfo!maoon "" more tIti.n 7,!OO _. ltd '",_WIl<, otdudiDgVOCll"""" 

oct>ooI • .,., """'''''''''11, ".~ """ p"",(I: <OIl'!; .. 

E~~ANNUAl REPOFIT OF THE CFf'B. JYlY 111 12 
81 


Paying for College .... 

University of the United Stales 

------.~ ... $7,986 

---

----

$105 "'-- .. 7 - --.. .- .-.... --- -

---

--

_- 0 .-

----- -..- ..... '_='_"'-__ '_" 'n._ ..... ...... 

__ •• _ - ;,.-- .... ~__ -,'-'<0 _.... " .... .... _.- __ , ... .. --- - ","_= __ ,---=_ =_~-'o --- -- The Il;>0l111(> ,ndud<4. 'NWo"'Y """di~ ClII.IlJI.!<>r" "'" <:0" "'~""t< ~'"_ 

baidit> fQ' ,,,,,,,,,,,,,,,mber., """'."~ .... "'''' fllfTll1", The<lllwlotor onduda mill .. " 

lUI""" .. ,""""" ond p.,,,.9/11 GI BIII><",:I1" The a.""" "".m<ll~J <"Ii",',.",< f~bo¢ f,om ...., ('Ji:>I,e'" .. !<lIm ill. _opm .. , of the fitt~ =<10!1 c,( lhell:>ol 

In oddiOon, on Feb .. .". the CFPB'. Con"""", ito""",,_.oo T<dln""" & 

'on<>O.oon ",""" ,dea><>! . """ """go fuf _ ."",F , .. ,,,. r ,"'hrl ",,.,mJ .. od ...., 

,,"'" ,nfo",lllt>o., t«h."","-,re TIl .. n ... ~'II" h .. 'n<f~ ", .. W0t? of "".on ., lind 

,dum""", 01>00. Ill. em', r~_m, ""I""''' r", ,nf",,,,,,",,,,.,,d gm!&.", ro. 

"'per=ed .j"""" '"'''' .. onedrl d: tIl< h<>m"f"S~ 

; ask cfpb 

---

---- -- " 

-- --- ---

----

...... ----- ---- --

iii 

--

__ .. __ 0.. 

---

------

SEMI-ANNUAL REPOIIT Of THE CfPB. JULY 2012 
82 


In M,uch, the Bure~u rdea,edAsk CFPB, ~n inremctlve.online too! thllt helps cOllSumers 

find delU. unbiased \Ul$We!:S to their rma.ncw question . A.i: CFPB cumntly contains 

more tlUI1l 420 easy-to-relld, pl:Iin-hngwge entries written by the Bureau's subject-matter 

experts. Consumers can view ellloes org:mized by "most helpfid;' mo t viewed," or 

'"recently upd9.ted. ' The m~iocity of the entries are focused on credit card and mortgage 

questiollS.ln theconung months, the Bureau \\oill e... pand the da.1:Ib~se to answer 

questions about a mnge of financial products ~d services, including student lo~n s, 

vehicle o~ns, and checking :md savings accounts. With this exp~nsion, the Ask CFPB 

content\\~ ll mirror tlle Conmmer Response system, which is alrelldy answering consumer 

questions a.nd taking compl:l.inrs on these products md services. 

The Bureft u also helped bring mention to Financial Capability Month in April with ~ 

series of events t1lCoughout the country. Through e",ents on C~ pitol Hill; in Chicago, 

illinoIs.; New York City; and Amarillo, Texa s, Director Cordt:l.y and Bureau leadership 

en&lged fiflllncia! educ~tors and leaden in the field, rural and commulli~' groups, 

consumers,.uld blinkers about how to improve consumers' flIl:!.nciallitet:l.cy. hI addition, 

the Assist:lllt Director for the Office of Fin.ulcial Educlltion restified before Congress 

II.bout fi!l~ncial cll-pability. 

As Vice-Ch:i.ir of the Financial Liter,u;y nd Education Commission (FLEC), Director 

Cordray hdped bang attention to the issue by emph~ izin g how importan t it is for 

consumers to have the ability to underst:lnd !lnd control their finances lUld t11:1t this ability 

cre~tes ~ path to economic independence !lnd mobility. 

The Bureiu is committed to fd c~tion that builds fUHUlcial capability o.nd tllH engages 

consumers!l.t tlle right moment 'With in formatitlll, tools, llnd skills to help them !l.chieve 

their OWll fi!l:ll1cial go~k In keepi.ngwith tIM commitment; the Office of Fin~nci:tl 

EduCll.tion helped educate people during ta:-: time about opportunities to s~ ve 3 portion of 

their !:Ix refund by providing useful materials to Volunteer Income Tax Assistillce 

(\lIT A) site, nationwide. TIle results of mgt inili~tive will help focu s and mfoan furure 

efforts to help consumers reach tlleir savingf. goals. 

Service members 

The CFPB's O ffice of Servicemember Affairs continues to reach out to servicemembers 

where they are, by visiting 27 milit::uy in w.ll~tion; and N ationru Gu:mi units !Uld 

puticipating in 18 town h,ills ~l1d 14 roundtJI.bles ince October 2011. At these outreach 

e\'ent5, Servicemember Affairs e~ ership wd slllfTlistened to servicemembers discuss the 

finmcial challenges they face, observed financiru educnion wlining. md provided 

ducation~1 materials. In o.ddition to the militll.ty units/ insMlh tions visited, the O ffice 

pllrticip:lted in fifteen outrtach events spom ored by exteOlal org'Uli:tatlons st eking 

additional ed c~tion:u infoonation about the Offict ~Ild the CFPB. TI.e Office u5ed 

Militllry Saves Week in February a5 ·an opporrunity to distribute a video message to all 

mi!iury units ,.bout the importance of s~vin g for goals. Also in February, AssistlUlt 

Director Hon~, Petraeus met with Pell l:lgoll orfi ci~ s, who asked the O ffi ct to ss t in the 

e~ tioll of fin9.nci~l phmning materi~l s for aU servicemembers leaving Th e militllry. ~1l 

35 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
83 


often difficilit ciltle of T.rltmition when such Itlllterials lire particularly useful. TIle Office 

5wff h~5 de[ivf'(ed consumer fin~ c.iaJ educlltion infoUlI:l.tioll to over 14,000 people S!flce 

Ol:toher:!OII . 

Building all its prior work with [hI' U.S. ~rtrnent of the Tre~mry (Treasury) and 

other$ to ~ddrt~s the {J'lftieuhr ch=illenges that servieemembet> often face in the moftgdge 

mukets, the Office con tinued it] efforts to address the unique challenges presented by 

Permanent Changt' ofS[ation (PCS) orders. III April and May, the Office worked with 

Treasury to secure chltnges to the Home Affordable Modification Progrltm (HAMP) that 

wil! provide mort' opportunities formortg~ge ~HistlJnce to military homeowners. Under 

the announced changes to rIMlP, 9.5 of June 1, milituy homeowners and other families 

who are pemunendy displaced by!l. move due to PCS orders m~y still qultl;fy n owner· 

OCCUp!tIlts for ~ HAMP mortgage tlIodificlttion.ln June, the Burell.u. ltlong with the 

prudential regulators - the Pedeml Deposit Insur.mce Co rpoution (FDle), tht' Bond of 

Governors of the Federal Reserve System (Federal Reserve, Federal Reserve Boa rd, or 

Fedeml Reserve SYHem), the Ollice of the Com[?trolier of the CU[ft'llcy (Ocq. IIlld the 

Natioll:l.l Credit Union Administmtion (NCUA) - issued joint guidance to ~ddre5~ 

mortg~e sen;cer pmctices that may post' rislcr to homeowllt:'rs who are serving in tht' 

military. TIle guidance is to c:nsure compliance with applicable consumer law~ and 

regulations u they permin to milil:lry homeowners who h~ve received PCS orders. 

Older Americans 

The J)ivi5iou of Consumer Education md Engagement's Office. for Olde.r Americans has 

con tinued its oUt(e9.ch efforts ground the country with iTS core constituency, key public 

offi cials, finmc.i>ll institutions, industry, advocatt' ~, gild other stakeholders - including 8 t 

events with more thaIl 2,700 putic.ipants since October 2011 . The Office's outre9.ch work 

is helping to mis e. IIWMeness of growing consumer financial challenges f9.ced by olcb 

Americans aIld 10 bring v~rious interests together to develop solutions Oil the 10c>!l, stg te, 

lind national level. To assist with this work, the Office issued a RequeST fo r InfonnMion 

(RFI) about elder financial exploimtion .Ill d other issues iJll{J'lt1ing seniors in J une. 2012. 

The Office 31 so worked wi th the CFPB's Rese9.rCh. Mukf'n 9.nd Regullttions Division to 

issue ~ report and consumer guide ~bout reverse mortgages, a IOal] product sold to 

homeownerli ~ged 62 and older. 

Students 

LllSt fal~ the Bureau hunched its KII()II 810" YO/lOll!: 5fNtillfi LMIIJProject to help 

rudellt ~ make informed decisions ~bout the level of debt 9ssocigled with choosing a 

college. The Bureau also contin ues TO offer the Studenr Debt Rep9yment As;islllnT. fOol 

for gf'.tclUll.teS to help them better understand the existlllg.progmms to man9ge their 

studellt debt repayment OptiOIl S. 

J6 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
84 


How !o PlY 10, tollege 

-"""-.« ...... ~. 

-......... _- --- --- ---- -

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p,,,,obodbJ ~ ..... """ 01 Ed.o"""","U h.., .o.1m" onol fom ~ .. "'G" do" 

.. 10,,,,,,,,,,, ... &<>0" ",d ","", """,,, '""~ '" '" "' .. ..,..,. oIl"ojto" ",*".,,,,, In 

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lit. _Id toO,"" ,_ ",...-de Ill. 60>1 ..... ".n . 11It .... _ ,h ... ... br 

p,,,,.bodbJ ~ .• s..""" 01 Ed.o"", .. - "'p"""de -." ",I.""""", to '''''f'- 01 

""to,!, ",d _"" ",*,,,,,,,,,,, t..o>e6" 

In "'"ell, lit.!",..., ..... '" ""'fI ~_ I"", "" publ< on ""OM! .. "" Th. 

ern', $"""", l.o>tn o..to..l!.,..,. _, ...... 1It e",,",,,,, R_,., ,I" U g 

o.p-nmr .11i"'''' .... , .. d""""' ...... I~" oW""''''. 1m .... " ",d ""'''' ' " 

" ,," l>om-won-'> ".,~bonh "" F"'" ......,.,,,'" loam ",rl to.o.;,.,. <h"",,I"" 

"" ... <l<nt ... d'll"""sploee Th, s.._, (.0", o.n..._ .. ~ ,--." .. ''!'O'' to 

c"'C''''' Iat, Ill",.,,, In P'<p'".''' r., lit" «pO'" <II. 1m .... poo.<h,..j • tl .. " "'rl 

~" 1« Info""",,,,, .. J"" Io.oioo< """"""" on II .. -." 01 r"-' ,!U<Im! 

..,., ~bonh ", • .-NbJ "'.""", .. ,, o!"'oI>« oW"'."'.""" 'Il"'~" , "'''''''l', "00_ ~51 O'V"''''''''. "',;""'" ... ,,_,;~ .. 

Financial Empowelmel11 

Th.!.,..., .... <11", .. 00" of ""'_aI Empa<-e~ "1_:.'1112 to _ .. , lit. 

0_ 01 """' •• ,,," IO'" h><lo.ondy "--. -........:rbJ II" ....... >l0"Wk« The 

Ofti. .. ~ .-twol .... to ~ "',; ..... ... 1""1 r-P' .... ,' '"~"""'""", 

'"~ I.mn<od ..... '" p __ s.."tU "~''''''. or" or~", h .. _ ....... «.Il>", 25 

..... d>ol6<ti'""l" n ... ...-C' h..,od .. f."" lit. orb'"", fOOl'" d<odop In'; 

" 
85 


provid.. umo""tlw appro:acMs tlul w:iIl h~1p ~d to lowu..ncome md =<>ml~y 

vuIn~",bZe ccruum.n' ""","&.t/' Meds fo, t=ction =unu.nd cw:!il, as ",<!II '"' 

the>, ~-r...m> n",ds for"",~"vingr. ond ",,,,1m building ln~ddtt>on,on Ju,,", 

25, Du¢(tOI Cordny'OO Office~p held . c""f~~c,," 1» IfItlO<iuot tho. 

OffICe'. "'od< to more than 400 p~rtIc!p>nu reprt<""tIn€ COItUIIUI'Ilty org=:zation., banks 

md orcd!t urJOO<, academ"" ond 'e>e.rd!e ... rep, .. "" ... tlveo f,om local wd .... te 

govemmom, coolitlons, >nd othol>. 

Outreach 

In .dcUlIOn to the Burelu', wodl eng:>gI~ .nd educating p.rt>c:ula, popoJ.,t:ons, the 

Bure"" ha$ ho$t/'d e"""ts all o"er the ~ou:,.tf}' to wOm> md ,eo:ive icput .bout its wod( 

on ,..u .. related to conswner finanoal products and oem=. More than I,m COfl.Um= 

haw mode tlu::o, voic .. heard by porticipatin.g If] town hall. aM !ield heamJgo convened 

by the CFPB. The Bureau ho.ted t\>'o fleld heanngs - en payday loans In s,1lIll!l£ham, 

A1.h=. aM en ptq>.w. c:ore!. If] Durham, North Carolina - to ac",vely .oliot pubhc 

"'put on k.y po~cy iruMtlW'. In N= Y orl: City, Ihe CFPB """"",-,.d. !rlwn hoi! 

me.eting to !..om ftO!'ll tho. pubbo'. el<f>e"""c,," with con",,,,,, r"""""a1 products and 

.. f'>i= ~luIe In Siow: F"",, South D.>110 ... !he Bureau \It:wiled ,I> Finano.U Ad 

Compori$cn Shoppe, at a gothering ofh:gh school oenio~ "",w,kmg on the coUege 

oelectwn p<OO:S._ 

In COfll'lrtcTlcn ""lit field 1!IteI1l$, D.re.:!m Corduy and Depul)' Dire<:to< lU) [}q.te Iu"" 

hdd rolloo ... ble< WIth oommuruty bonks, credit UntOn>, and olhe, membeB of the 

38 SEM·ANNUAl REPORT Of THE CfPB, JULY 2{)12 
86 


fin~nci~l services industry as p:ltt of Oil( continuing commitment to engage ,,~th firtiUlci:l.l 

service providers. Si.nce j~lluary 2012, Buruu represcnt:itivt' 5 have lllel with hundreds of 

industry represellbtives and seniorCFPB leader5hip h~s dcliver;ed scvew speeche5 at 

widrlY-ilttended industry conferences. The Bure:lIllI.lso ha ~ convelledits first three smruJ 

business pllllels.in jillluary, pri~ md May 2012. These panels, wh;ch \lfe re<Juired 

whene'i'er 9. rule that theCFPB is writing m~y hH'e ~ signific:tllt economic impact 0 11 

slllall businesses, provided vital im'ight from financial service pro\-~ders \IS the Bureau 

strives to issue thoughtful, research-based rules. 

The Bureau has also actively solicited the perspective of cOllsumer alld civil righrs groups. 

In coniunction with field events, Director CordLJIY alld Deputy Director Date h9ve held 

roundubles with community-oosed organiz~ti ns across dI e coun try. Since j:U1uary 2012, 

the CFPB's Office of Con un unity Affairs has eng.l.ged over 3,500 community group 

represenl9.tives through mon' than 100 meetings, roundl9.bles, and public appen;lJlCeS in 

Washington, DC and th roughout the country. Since J anuary 2012, senior CFPB 

leadership delivered ~peedles at four n&tional nonprofit conferences. As with industry 

utre~ch, the Bureau has ensured tllat consumer groups' pecspectives infonn its internlll 

dr.liberations on policy initilltives. 

Partnerships 

The Bureau has furthered many existing partnerships and formalized se~e!ill new ones. 

The CFPB re ceived over i Oa completed applications to serve on its Consumer Advisory 

Board.TIlis Bond, manruted by Section 1014 of dIe Dodd-Fnmk Act, Virill comprise II. 

varied group of consumers, conUTIunit}' organiz~tions, govemmentJll ffici~ls , llnd 

IIldustry representatives who will provide Director Cordray with advice IUld consult::ltloll 

on consumer financial issues. The CFPB will be eS!Jlblishing communit), bank and credit 

IInion advisory groups to help ensllre that the agency's rules do not unduly h~on entities 

rhlll we do not supervise. 

To dne, the Bureau has sigll ed numerous memOralldli. of understanding (MOUs) with 

intergovernmental partners, including fedenl a~ncies, shlte financial regulatory entities, 

md slate attorneys general. The CFPB has conducted meetings with over 200 

intergovernmental st:lkeholden slIch as. m~yors, state legisbtors; and intemationlll ollicials 

to help ensure tlut consumer financial protection remain s coordinated :unong these 

entitJes. 

39 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
87 


Regulations and Guidan ce 

The Bure2u IS focusing Intl'.nsiveJ), on implementing consumer protections requiu-d by 

the Dodd-Frank Act in anticipation of stll.tutory deadlines in 2012 lnd 2013. [II addition, 

the Burt:lU has issued allUmber ofbullftln5 to pro\-\dc guicLmce 011 reguhltory m~ttc[ s 

-and is analyzing public comments on potential project's to stre amline [~gulations Ih:lT it 

has inherited from other federul agencies. 

IMPLEMENTING STATUTORY PROTECTIONS 

As contempb.ted by the Dodd-Frmk Act, the CFPB is in th e process of issuing a 

comprehensive set of reguhtions to iddress deep flaws in the mortgage market thGt were 

revealed by the financi:l.1 cnsis. After mend}s of preparation :Iud outreach, including 

conducting se\-emJ sm.uJ business review panels, dIe Bureau e.xpect'; over summer :!0 12 to 

Issue proposed rult's to address the following topics: 

Streamlining :lJ1d intcgr~ting feder~1 mortg:l.ge disclosures to ensure th~t 

consumers who hllve applied for:l. mortgagt 10:1n unde(Slllnd the term s of the 

tfilllsaction and to facilitate complimce by lendel'i :lJld Olilef finoUlcial services 

providers. 

Addressing widespread pwblem5 UI the mortg~ge se(vicing.iudunty by 

implementing Dodd-Fronk ACT regulrements reg.uding periodic sWements, 

force-pla ced in sumnce, prompt crediting of pap"llents, respouses to (e<Jues~ for 

p(l.y-off :l.ffiouuts, :lJld error resolutions. In !l.ddition, the Bureau phns to propose 

basic requirements to ensure that servicers ffiaiut!lill fells-ollable information 

management systems :I.lId fe3Ch Olll e3dy to wod;: with borrowers who are having 

trouble PIIying their iOoUlS. 

Refining existing rules regarding thf' compeusHion and gualificatiofl of mortg~ge 

10lln originHors, induding bmkers arid loaii officers, s weD as si ;f}~ng the 

5trucmre of upfront points md fees on certaill loan s. 

lmplementing Dodd-Fr'Jnk Act lUIlelldmen ls 10 existingrules governing higbcost mortgage loans to apply the ctguirements to a bmflder group of mortgages 

and to increase consumer protections. 

Emunng that consumers receive 3 copy of the appraisals conducted in 

conuection with their mongage 10lln :l.pplications. 

The Bureau is ~1so working 011 ~11 interagency basis to implement cemull olil er DoddFrJuk Act [e<Jui[e ell1~ regrJ rding 9ppnusak 

40 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012, 
88 


IIf,e, the l'ublK"commont ""nod, md, the Ilun':lu ",11 wnO; to fon.li,l' ,hc"" propos;ols as 

,,·ell as ,wo .dd,tion.1 monga;,,,- n;latC<l I'ropos.ls ,h.t "'etC is, ..... xI by the I'ttlc"ti R~"S<n'e 

I\o:l,d on 2011 to impltm<'nt ;tdd,oon.I))Qdd·FranK :let "'luo"'tn~.,,,s regarding escm,,· 

xc"unlS and Icntkrs' ob),ption, to as,ocs., iIor-rw'ers' .hilit)" to "'pa), mor~ loans. 

;nduding eCrIlI,n I'rotectioM from I .. hilitr for "'1""lif"'<l mortgJg..... H In M'r 2012. the 

Ilu""3u '''''1'''''<'<1 th,· comment ""nod on the .bil'I},.to-n1")' rule to setk publIC fttdb:>cl 

on ccrt;,n informatiM thot the Bumu h., =,,-.:d ,n (Oflncn;"" "ith thot ",Icm~king. 

as wdl", to "'lueS! add;t""",1 d., .. 

n. 1I",,",u e.'ptets to fo.,.I"cmost of the m~~' nolesby January 21, 2013, in 

accordance with .onain ."tutory d .... dhn"". Due to .dditional ron.um ... testong and other 

f.ctors, fin.l nolos ~,d n8 'he inte/,'flltioo of ftdml mongagt-di,do,ures.n; e.'ptetro 

to be im.ed latcr \0 2013. 

The Hun .. u i,.>I", working to ,mplement othcr DoJd·!'rank Acr I'roI,'<tiM" In 2IH2. the 

II"""" ISS"ed ne,,' rules 1IO''<"f1U"g fo"'ign moo(")' to"ders (,,,,,,itunccs). whICh 

1'''''"1Ou,l), h.n hem brgc~' ,'Xc\ud<"r from f<'<Iera! eon,umer fin.nelll prot<"tlOn low" 

Those rule" including nc,,' .!i,closures and error ,osolutioo PtQCoou" ... , ",U t:l.ke eff<'CI In 

I'ebn ... y 2013. The Bu .... u ."1"-,,1:< to issu<'. suWlem<",!.1 noll' on f<'lll;ttan<~'S in 

summ, ... 21)12 [0 .ddtlCIS cenain is,ues on which it had <ought addition.1 p"blic oornrn<'1II. 

tn ad, .. nce o(the Feb"",!,)' 2013 impltm''1IQtion date. Additional 'u!<>makings.tlC 

COl11crnpbtC<l (oncem1Og "1'Orung of dau ~rdlng mong;>!.O(: knding.le dirt8 to snull 

bUSInesses .nd "'0''''-'''' ""d minorir)"-<l'4'ned busule,,,,,. and <on,,,,,,er=, to their 

0""11 !rJnsaction dtlll. 

In additioo, the llu,,'"1" Ius begun to ;"U<" noles thot ",!:ate to Itssup"""iw!')' authority. 

" SEMI.ANNUAL REPORT OF THE CFPB, JULY 2012 
89 


1L has proposed ~ rule that defines '9~rger pmcipallts" ill the debt collection and 

consumer {('porting llIHkets, which will brillg within the scope of the CFPB's supervisory 

authority debt collectors and consumer reportinK :Igellcies th:1.I meet certain aJlIIual receipt 

thresholds. This would be. the CFPB's illitilll rule defining larger particip:lOts ill nonbank 

mll(kets and will be followed by a series of subse'luent rulem9kings to define brge( 

p9fticipants ill other m:trkets. 

The Bure~u has lliso proposed a rule to emblisll procedures by which the CFPB may 

make any nonbJnk entity that the CFrB h9s rell.,on~ble C1tuse to det~on;lle is posing a 

risk to cOll5umers subjet:t to its supervisory !WdIOCty. TIle proposed rule would eSUiblish 

II. process for the CFPB to give notice to the nonb9nk entities of such detemlination s and 

would provide them with a regsonable opportunity to respond. The pmposed rule would 

not impose new substantive consumer protectioll requirements 011 any nonbank entity. 

INTERPRETING AND STREAMLINING INHERITED 

REGULATIONS 

Tht' Bureau is working with COlIsumt'f ~nd industty SUlkeholders on interpreting and 

stre~linillg tegulatiom to implement existing fedeml consumer financi,l protection l:\w$. 

These regulatiollS were Issued previously by other fedef:11 finmcigl services regula tors and 

transferred to the Bureau in July 201 1. 

In 2012, the Bureau issued interpretive guidance on a v~riety of topics, including 

lnterprel9.tion of regulutions concerning mortgu.ge loan origin:J.to[ compensgtion. licensing 

requirements for loan originators under the Secure md Pair Enforcement for Mortgage 

Licensing Act of 2008 (SAFE Act), and analysis of rusp:U::lte imp~ct under fair lending ~w. 

In addition, the BUfC:lu h:ls been explorillg possible initi ~tives to IlpWte, modify, or 

eliminate inherited regulatory requirements that m~y be outdated., unduly burdensome, or 

unnecessary. At the request of various sUlkeholders, the CFPB extended the comment 

period covering po tential streamlining initigtives from M!l.rch to June 2012. The Bure~u is 

currently (eviewing the comments received to pl:ln follow-up action. 

Filially. the CFPB has begun issuing upcbted housekeeping rules dl:lt e.~ l:Iblish procedures 

for the public to obtain illform~tioll from the Bure~u llllder the Freedom ofillfonmtion 

Act, the Privacy Act of 1974, alld in lr:gill proa!edings, and t11~t provide for the 

confidential tre9.tment of infonn~tion th9t the Bureau generates ~nd obwin$ in cOllllection 

with the exercise of its 9uthorities. The CFrB also pcomuigated supplemental ethics 

reguhtions for Bure~u employees eSUlbJishing restrictions on outside employment and 

business activitie;; prohibitions on the ownership of ceruin financial interests; restrictions 

on seeking, obt:tining or renegotiating crt'dit aJld indebt dness; prohibitions on 

rt.commencL.tioTlS coucenling debt md equi ty interests; disqualificstion requiremeuts 

blUed on credir or indebredne5s; prohibitions on purchasing certain lIssets; and 

restrictions 011 P'~rtiC;pa ti.ll g in puucnlar matters involving outside entities. 

42 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
90 


Su pervision 

The CFPS's supervision p!o m seeks to ensure thu llltge banks ilIld o ther companies 

thll.t provide fmmci~l pwducts Il.nd snvices 10 eonsumers comply with federal consumer 

fillllnoru laws. The eFPS's supnvision program has two p~((S. The large b!l.llk 

supervision program focuse s on compli:lllce with cons\lIner protection laws lind 

regulations by insured b,mks, thr.ifts, omd credit union s with ,nsets over $1 0 billion, their 

afGiialcs, and ,ervice providers. llle nonb:ir1 k sUpt'rvision progmm focuses 0 11 

compliance with the sa me laws md regulations by thollswas of other "nonbank" 

companies, including mortgage lenders !lnd brokers, credit bureaus, payday leuders, omd 

their service providef'>. 

SUPERVISORY ACTIVITIES 

TIll.' CFPB has h unched its nonb,mk supervision progmm, the fi[ stfede l progmm to 

supenise nonb!l.nk providers of consumer finllncial pmduclS lind services. The e FPS 

commenced xrun n~tion s of mortgage lenden, brokers ,I.nd servicers s well !I.S shortteIJJI, m~ll doll~r le11(ief'l, commonly referred to liS lY.lydllY lenders. TIlesI' nonbil.nk 

enti r.ies hgve coopef"Jted in the eXllminlltiollS, which include infoonation requests lllld 0 11-

Si te re\·iews. CFPB examiners continue to acti"e\y examine h rge blUlks in ellch of its four 

regions thmughout thecollIltry. 

The CFPS will soon issue ~ policy that gtves supervised entities IlIl opportunity to request 

review of a fin:1l , less th:lJl s~ ti factory, mting IlIld the underl}ing supenriso ry 

detenninnions. TIle review would be cOllducted by CFPB officiols fmm headqu9Tters and 

from a eFPB rt'gion thaI WliS not involved ill lIssigning the [<lting. This policy will SUppOrT 

the gOlll of main taining a supervisory pmgrnm tlI91 is fa ir, claw-dnven rnd consinem. 

The Director of tile CFPB is 9 member of the Fedt'ul Fin~ncilll Institution s runilla~ n 

Council (FFIEC), a fo rmal interagency body empowered to presc.ribe unifoan principles, 

smnwrds, :1I1d report foom for the fedeml examination ofinsll~ed depository in stitlltions. 

Additiollally, employees of die CFPB actively parucip,ne in nine FFIEC task foa::es, 

committees, and working groups. The CFPB currently pmvides leadership for tile 

FFIEC's Consumer Complianct" Task Force . 

EXAMINATION MANUAL, PROCEDURES, AND 

OTHER SUPERVISORY GUIDANCE 

The ( FPB o riginlllly issued its SlIpm.-iri,)1/O//d EXllln;1UlI;onMorllloJon October 13, 20 11 . In 

January 2012, the eFPB issued two addltioll$ to th e ManllaJ. The Mortgagf OriJ,i!lO!ioll 

E:'mminat;oll Profl'mtrl'J<iescribe the types of inform<ltion the Bureau's exruniners will seek 

in order to review key mortg>lge ongifl!l.IOr !l.ctJvities, from initial advertisements and 

marketing practices to clo sing puctices. The ShtJrt T~ml, SnlolI-DolirJr Lmmllg Exomilllliioll 

43 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
91 


Proc~d1lres address the types of inform:lbon necus:HY to review key p:1.yooy lending 

Ilctivities, from initiy} ~dvertisemellts IUId m~rketing to collection prlll;tices. 

The SAFE Act mandates ~ nationwide. licensing and registration system for residential 

mOrtgage 10all originators. On Ma(ch 7, 2012, the CFPB issued inte,mgency SAFE Act 

examination procedures for ir\Slued epo~ itory institution;:.111ese procedures describe 

the types of infooll9tion that the Bureau's ex~m.jners \\~n gather to ev:uua te compliance 

by depositor), institutions with th ~ SAFE Act's regisrmtion system requirements. 

TIle CFPB wiU soon issue the second version of its Supmision (/1111 ExllnlillOholl Mat/lloi 

Version 2.0 will replace outruted regubtory citl1.tion s with the ne\l.' CPJlB citations, 

reflecting the fact !hilt authority for feder:!.l consumer fin~nciall~ws was 1.u.!Jsferred to the. 

CFPB by the Dodd·Frmk Act. 

In addition, the e FPB issued bulletins in the past six months th:1.1 provide supervl$ed 

enti ties widl guidance on a variety of issues. These i.nclude : 

Confidentiality protection ~ thllt ue provided 10 Imtities during the e.'umin:1.tion 

process; 

The eFPB's expectl1.tion that supef\,ised entities will oversee their busines> 

rehtio!Hhips "u'-ith service pro\-iders UI ~ TT1:lIlner thu ensures compli~llce with 

fede.ral consum er fin~ncial laws; ~J\d 

O :lrification that under the SA FE Act a Wlte may grant lI. lransitiollll.llo>Ul 

rigin~tor license to :lIl individual who holds a valid 10m o riginator licen se from 

~n the r state, Il~ dl sc s~ed further below. 

INFRASTRUCTURE AND TECHNOLOGY 

The ePPB hJls fuUy implemented it ~ Supervisory ExaminHion System (SES) 1.0, which 

records, track.!', md pcovides currenlillfonn~tiol1 and dab about its supecvision and 

examination ~ctivicies. BeC>1use ulis system W:U; onginaUy designed for th e Office of TIl rift 

Supemsion, it is not fully capable of addressing all aspects ofule eFPB's consumer 

financial protection m,lJld<l.te. A S :l result, the eFPB is ~J1niJ1g ll11d moving forward with 

deveJopmeut ofSES 2.0, II. more technologically rophistic2ted progt:.lm that will h~ve 

enhanced cap'Jbil;ties that focus all die unique needs ll11d lunctions of the eFP B's 

consnmer compliance supervisory progm!lL 

44 SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
92 


THE SECURE AND FAIR ENFORCEMENT FOR 

MORTGAGE LICENSING ACT OF 2008 

Re19ted to ourSupervi~ion mission is the CFPB's responsibility to administer the SAFE 

Act..l6 En~cted 011 July 30,2008, the SAFE Act mandates <l. Illitionwide licensing and 

registmtion system for residential mortglISe loan originators (1ILO!}.ll TIle SAFE Act 

authorities tC~l\SreIIed to the CFPB pu(Su~nt to the Dodd-Fr:mk ACl,lS 

To ~ccompli,h the goal of natiol1illliceming aud registMjon, the SAFE Act prohibits 

individu!lis from eng:lging ill the buoiness ofMLOs witholltfirst obtaining ~nd 

maint:lining II.nnually a particullu type of registration. Individuals who ue MLOs 

employed by depository, md cer1ll.in subsidi~ry, institutions regulatf'd by the fedeca l 

banking agcncies)g or the Fann Credit Administr~tion (FeA) must federally register as a 

registered lo~n originator ~nd obtJin a unique identifier. All odler individuals who ne 

MLOs must be I;cellsed by a stare, register liS ~ sillre-licemed 10m originator, and obtain 9. 

unique identifier. The SAFE Act requires that fedeml registration ru'!d stale licensing and 

registration be accomplished through the Nationwide Mortgage LicensingSy~tem ~lId 

Registry (NMLSR), lIU online registration sr-'tem. 

The feder~l agencies pceviou,ly charged with SAFE Act responsibilities h~d issued 

reguhtions to implement the Act."" III light of the transfer to the eFPB of the SAFE Act 

rulem:iling authority o f the fedeml banking agencies, the FCA, Ihe Office o(111rifl 

Supenlsioll (OTS), Il..ud the U.S. Deparlmentof Houging and Urban Development 

16 The SAFE Act requires an annual summary of the CFPS's activities IJIlder the Act. 12 U.S.c. 

§ 5115(<1). This section of the CFPB's Semi-Annual Report con slit utes the annual SAFE Act 

RepOit for 2012. 

l' More spedficallYI1he SAFE Act as enacted required Ihe OCC, the FDIC, the OTS, and the 

NCUA, with the Farm Credit Administration (FCA), and through the FFIEC, to develop and 

maintain a federal system for registering MLOs employed by cerlalr) of their regulated 

institutions. In addition, the SAFE Act as enacted charged HUD with oversight of the states' 

compliance with systems for licenSing and registeri ng olher MLOs in accordance with 

minimum standards established in the SAFE Act. 

:ill With this transfer of authorities, the crPB assurned: (1) responsibil ity for developing and 

maintaining tile federal registration system (Including rulemaking authority); (2) supervisory 

and enforcemem authOlity (or SAFE Act compliance for entities under the CFPB's jurisdiction; 

(3) oversight and related authority relating to stall'$' compliance with SAFE Act standards lor 

MI.O ircensing systems; and (4) related rulemaking authority. 

)<I Defined il1 the SAFE Aetas the Fed(!ral Reserve Board, the OCC, the NCUA,a nd the FDIC, 

collectively. 

40 ln 2010, the Federa l banking agencies,l lle ors (sulm~quenlly eliminated by the Dodd· 

Frank Act) and the FCA published a combined final rule e.~tablishing similar requiremenL~ for 

feder",1 registration. 7S Fed. Reg. 44,656 (July 28, 2010). In 2011, HUD published a final rule 

sellfng minimum standards for state licensing and registration. 76 Fed. Reg. 38,464 (June 30, 

2011). 

4S SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
93 


(HUD), the CFPB published iUl interim finill mIl.' esmblishing a new Regulstion G (SAFE 

Mortgage Licen~ing Act-Fedcr;J] Registration of Residential Mortgage LOll.I) Originator<» 

and a llew Regul:ltion H (SAFE Mortg:lge LicemingAct-Slllte Compliallce iUld Bureau 

RegiSlnltion System).4l TIlis intrcim final n~e b~ame effective 011 December 30, 2011, 

Jl.nd does nor impose 1ll1y Ilew 5ubstil.ntive obli&lltions on persons subject to the existing 

SAfE Act regulations. 

Since the tmnsfer 1.0 the (FPB of the SAFE ACT Authocitie~, the Bure,m h~ s fielded 

questiollS regarding the validity of ullmitional licenses for MlOs subject to UHI.' licensillg 

requirements.11lt' CFPB issued a bulletin on April 19, 2012, tha! clarified the questions 

o f whether: (1) 9. !m.nsition:111;cense would anow a MLO who is licensed in one state to 

:lct:lS ~ MLO in :molher st:l.1e: iUld (2) il. Ir:lnsitionallicense would allow ~ fedec:l.lly 

registered IOlln originutor to ~ct as It swe-licensed MLO. As stilted in thaI bulletin, the 

SAFE Actllnd Regulation H genenuly require Thata sm.le prohibit:I1l ind.1vidual subject 10 

st~le MLO.licensing requirements from engaging in the business of l MLO in the stale 

unleH the individual first: (I) registers in II. loan originator through and obtillns :l unique 

identifier from Ule NMLSR; and (2) meets certain minimum slMIdards. The Bulletin 

cbrifies that the SAFE Act and Regubllion Hallow 11. state, if it chooses, to provide l 

lr~mition:1.1 MLO license 10 WI individulll who holds a \':uid Mill !iceme from another 

state. 11lis guidance. theretore, has the potential to incre2se employment mobility for 

state·licensed l\·ILOs who move from one state 10 :mother. Because these MLOs He 

al re:ldy licensed, issuance of such a trmsitiomJ license is consistent with the protection 

provided to ule public by the SAFE Act. However, states cannot permit ~ registered, but 

unlicellSed, 101lJl ocigiJlutor who is no longer employed by a fedeflllly reguhted Instirution 

to act as a MLO while pursuing ~ state licenu·. Recognizing thM this may cre~te 

irnpediment~ to job chmges by MLO s, the Bureau will wod:: with the 5t:Jtes, indust!)" and 

the N1fLSR to minimize these impedimeJ]\s going fO["\\fud, consistent \Vitl] ule SAFE 

Acr. 

4] 76 Fed. Reg. 78,483 (Dec. 19, 201 1l. 

46 SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
94 


Enforcement 

The eFPS '{lIns to enforce the consumer protection hws within the Bureau's jurisdiction 

consistently lUld to support consumer-proteCUoll efforts ngtionwide by investigating 

potcnti~! viob.liolls bou] independently ~lld in conjunction \\.ith other sIgle and fedeu.l 

law enforcemen t agencies. 

CONDUCTING INVESTIGATIONS 

Since ul e eFPB's hunch, the Office of Enforcemelll has been conducting reseuch ~nd 

jllvestj&'tion~ of poltlltiltl violations offeden.l comumer fUl:lllci~II!l.ws identified by 

( FPS staff, transferred to the Bure-au by the prudenti:!.l regulators lllld HUD, or referred 

to the Bu(e~u by consumrrs lind others. Enforcement h:ls endeavored to locus its 

inv~stiglltive resources on the violations of law that ~use the greatest hmn to consumer,S. 

The investigations currently ulldeC\"ay span the full bre!l.cldl o f the Bureau's enforcement 

Jurisdiction. Further demil about ongoing inve~tigations will not genemlly be made. public 

by the Bu[e~u until ~ public enforcement ~ction i; filed. 

JOINT TASK FORCE ON FOREClOSURE SCAMS 

[n December 2011, th e CFPB, the Office of the. Special Impectot Genet:!.l fot the 

Twub!ed Asset ReliefPtogram (SIGTARP). ~I\d the u.s. Depntmentof the Tre~su()' 

:I.llllounced the creiltion of a joint wk force to combat scams tlHgeted at homeowners 

seeking to apply for the Home Afford:J.b\e ?I"fodlfication Progr:un, a fOIeclosureprevention progmm :I.dministered by Treasury. TIlis joint usk force aims to protect 

t.axpayen by il1Vestig:lting ~nd 5huttingdowll these scams :Iud b}' providing oouC1Ition 

ogr~ s to vulnenbie homeowners. 

RESIDENTIAL MORTGAGE-BACKED SECURITIES 

WORKING GROUP 

1n J9.lluary 2012, the CFPB jOllied tlle ResideulIal Mortg9.ge. BackedSecurities /RMBS) 

Working Group, a group estabLIshed by tlie Anomer GeJlff:l.lllS a pHI o ftlie Financial 

Fr~ud Enforcement Task Force (FFETF) The RJ..1BS Working Group consists o f ~ 

hrond co~lilion of stll.te md federw o fficiws, including tlle U.S. Department of Justice, tlle 

U.s. Attorneys' Oftices, the U.S. Securities and Exc.h:l11ge Commission, the New York 

Sl:Ite Attorney General's Office, HUD, HUD's Office of Inspector Genl'rnl, tlle Fedeml 

Bure:tu nnves ti g~tion, the Feder.u Homing rUl,Ulce Agency's Office of Inspector 

Genernl, md other 5t!!.te Attorneys Genem l. The wo rking group ~nd its members !Ire 

focused on illvenigilting potenti~J fahe or mi,le~ding st9.tements, deception, or Oilier 

misconduct by market pil.rticipanB in the crution, p'.I.ckaging, klnd sille of mortgage47 SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
95 


backed sr curities. The working group also collaborates o n fu ture and curren t 

il\ve~tig:Jtions. pools resources, IUld ~tre!l.lll lille s proce5Ses to enHue th~t if ftaud or 

misconduct has occurred justice is :Ichic:vcd fot the victims. Within the working group. 

the CFPE is focusing its efforts on obt:Iining [dirf for consumrrs :Iud promoting he~lthy 

consumrr [lll!Ulce markets, 

WHISTLEBLOWER HOTLINE 

In Decembrr 201 1, the CPPE allnounced seveml ways in which illdi\'iduals call alert the 

Bureau auout potenti:ll vioi:llions of [edeml consumer [mmci:aJ laws. Current or former 

employees, Con \rllctors wd vendors, !U1d competitor companir5 tnlly submit information 

o r tips. People who submit tips may request con fidentiolity or even remain :monymous TO 

the extent pmnined by law. 

Fair Lending 

The CPrB's Fait Lending and Equal Opportunity O ffi ce lrads the Bureau's efforts to 

ensure fair, equiubJe, md nondiscDl1linlltory :lccess to credit fOf individuals and 

communities. TIle Bmem's inauguml Semi-Annual Rrport des.cobed the tooh Fai'r 

Lending uses to work IOWllrd this goal. This discussion will focus on o ne o f those tools: 

outreach 10 consumers, industry, and federal:md state :Ige1Jcies.

Q 

OUTREACH AND COLLABORATION 

The Fair Lending OfficI' engaged in numerous outreach event; fcom J:l!luory to J une 2 

in JOC:ltions throughout the CQuntry, rt:lchi.r1g consumers, consumer 9dvoc:ltes, a . .nd 

illdU>try represellmtives who!U"e interested in promocillg f~ir lending compliance, 

April 2012 was F:tir Lending 9nd Fllir Housing Month,lllld the Bureau hosted severru 

octivities to focus attention o n these issurs. On April IS, 2012. DirecTor Cordray 

mnounced ~ta n utre~ch event held at the National Community Reinvestment Coalition 

:rnnu~J conferen ce tha t the Bureau is "giving fair notice on fair lending" by issuing CPPB 

Bulletin 2012-04 which provides guicLlnce 01\ compJi~\l ce wi th the Equal Credit 

42 Sepafd tely, and pUfSuilnt to the Dodd·Frank Act's re'll.lirement in Section 1 013( )(2~d) that 

Ihe BUleilu report to Congre~s annually on its efforts to fulflll t~ fair lending mission, the 

Office of Fair lending wW sUbtlHl a single report In fall 20ll in 5<.tisfaction of this fequircrnet1t, 

and the Bureau's I eporting requll'ements under 15 US.c. § 16911 of the Equal Cledit 

Opportunity Act and 12 US.C. § 2807 of the Horne Mortgage Disclosure Act. 

48 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012, 
96 


Oppommity Act lI.nd Regubtion B.ll The Fair Lending Office "Iso issued p~lIlphle t 

!limed at educ~ting consume!;S about credit disccimin~tion wd th~ir rights.-I-I 

Fair Lending ruso has engaged in ~ v9fiety of efforts to coordinate with other fedeml 

supervisor;y:lIld nfor<:eme nt agencies, and has begun outreach to stlte IIgencies. Thos~ 

efforts include Joining the u.s. DepartmefJlofjustice, HUD, and the Federru Reserve n a 

co-chair of the Federru Financial Froud EnforcementTask Force's Non·Discrimination 

Working Group. TIle Task Force brings ogeth r represenl3tives from bw enforcement 

IIgencies, reguhtor;y authorities, inspectors geneflll, stue anomeys generru, lind local law 

enforcement in order to coordinate and incre~se ~fTecti\'e enforcement in the lending 

discrimination :lIld mortgage fr9ud area~. TIle Fair Lending Office also participates in the 

Fedemllnteragenc},Task Force o n Fair Lending which brings together various federal 

regulatory llgencies45 to discuss lind coordinate fair lending activities . 

• ) See 15 USc. § 1691(aXn 12 C.F.R. § 1002.4. The Bulletin Is po~ted on the Bureau's 

website at 

Imp:llhh:.~.GI)/l:.u",rrr,r.ilflO:f' .",111/1/2011104 .llp1) .1'1J1I'~11l1 Jl'mhnQAj~oll"ltliitJfJ""dt. 

H The pamphlet is available on the Bureau's website at 

http://h! .. \,Con51.Jlrll',h1!~,,cl',qov/lnnl ~oo\ rtpb Clf'cill 1),«::111"""""," lif(.rlulr .... f'\ti!. 

'SThe following agencies participate in the Federal Interagency Task Force on Fair lending: 

HUD, the U.s. Department of Justice, the OCC, the Federal Reselve, the FDIC, the Federal 

Housing Finance Agency, the NCUA, and the FTC. 

49 SEMI·ANNUAl REPORT OF THE CFPB, JULY 2012 
97 


Building a Great 

Institution: Update 

The CFPS strives to promote tr:lmparency, oI.CCOUIlL1bility, and [,urness. Built on these 

~lues, the CFPB is better able to mgke consumer financiil m~rkets work for consumers, 

honest businesses, ,md the ecollomy. 

Open Government 

A key mission of the CFPB is to make consumer finmciru products IlIld services mO(e 

tnlllsparem in the consumer mnketplace. The eFPB believes it should demonstr-~te dIal 

s:;une level of commitmenl lo tr,l!lSparellCY in its own activities. To accomplish dli~, the 

Bureau utilizes its webs.ite as the priffillry vehicle to share infonnation on the operntions 

and decisiom that tlle CFPB undert:lkes c\'ery day. 

Recetlt examples over the [>1st few menUl; thaI illustmte the Bureau's commitment to 

openlle5s include: 

50 

Freedom of Infoonation Act (FOIA) 

The FOJA is ~ fundament,,! tI'lln sparency law tiLal give, consumers the slarulory 

right 10 request information owned by tbe CFPB. A FOIA and Privacy Act 

-Requeu Gllidebook was cre!l.ted to provide specifi c infoon!l.tion about submitting 

requests, fees, ~ppeaIs, and more. The CFPB hltS :1.];0 created!U1 lndrx of M9jO[ 

lniormation SY5tems; 11lis list highlights specific "'s}'sterm" dlat may contain 

infoffil!l.tion sought under the FOIA and PrivilCY Act, :HId thus makes it (,Asier for 

requestors to utlderstand what infonnation CFPB mrunm.im. 

Leadership Calendsn 

TIle CFPB is committed to letting consumers know th e daily schedules of its 

senior leadership. nle monthly calend:m of Director RichlUd Cordru.y, Deputy 

Director Raj DAte, and the past Special Ad\-lsor to the Secret:lry of the T re9.suq' 

SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
98 


51 

ElizlJ.br:th Warren hgve been posted to the Surell.u's website. The Bureau 

provides Ihe caiencL.u'J in multiple fonnals on II monthly b~si 5 HI order to 

enhame their usefulness. 

Budget Uprunes 

The CFPS publis.hes quarterly budget upd:nes on its website >1\ 

i..orll"t,ml·rhnllmr.f')' bud:n! to keep Congre<Js ~nd the public infonned 9.bout 

how the Bureau's funds He being spen!. In :lddition, the Bure5.U h5.5 9lso 

published on its website a fisc~l Ye:a (FY) 2013 budget in brief ;Iud budget 

justification, in addition to the BurCllu's funding re<Juests. 

Procurement 

The CFPS posted the FV20l1 Service Contructlnventory to its website . Website 

upd~tes include 9. summ.uy report of the CFPB's ten hrgesl se(vice contmct 

oblig!ltions 911d specilll lUleres! fUIlCtiOns, >lS well as:l. workshet!t th91 includes the 

inventory of awarded scn.;ce conlract WUlS9CtiOllS ill excess of $25,000. 

Gener91 Reports 

The CFPB posts 1I vlIriety of reports to illustrllte the progress in specific are:l. S of 

th e Bureau's opeutlolls. Recent reports include the BurellU's compliance with th~ 

Pbill Writing Act, a comprehensive upcbte on Consume( Response from July 

through December Xl]l, and 9 sunun>lf}' of activities related to dIe 

:l.dminislr~tion of the Fllir Debt Collection Pmctices Act. 

Gujd~Jlce Upines 

From time to time, the CFPB wiU post letters and other m~teriah thai p[Ovide 

guidunce to industry and members of the public. TIle Bureau hllS providt-d 

additional guidance on its website about mortg~ge origination eXllmill9.tion 

procedures; short-leOTI, smrul-dolbr lending ex~min:l.tion procedures; 2nd ,U\ 

inter~gency SAFE Act eXilmin~tion procedll[e for fedemUr regulated depository 

in stitutions. Bulletins on trnnsition~l licensing of mortgJge lo~n origill~tors under 

the SAFE Act; lending discDmuwion, service providers, and pa}'lTlent of 

cOm pClISgtion to IOlln originators were also posted to the website. 

SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
99 


Budget 

The- Bure u is committed to fulfilling it~ SIli\utory re~pofl sibiljtil'$ ~Ild delivering vlllue to 

Americm comumer5. Thi~ mell.ns being ~tco\Jllt:lble and lJ~ing our [e~ources wisely md 

carefull)'. 

HOW THE CFPB IS FUNDED 

TIu: (PPB i, fWJded principally by tl'.Ulsfers from the Fecleml Re$crvc System, up to 

limits set forth in the Dodd·Fmnk Act. TIle Direcror of the CFPB requests transfers from 

the Fe-clem! Reserve System in ~mounU thllt :l.rc rellsonably necessary to cany out the 

Bureau's mission. fumual funding from the Federal Reserve. System is capped at a fixed 

percenuge of the IOUil 2009 operating expenses of the federul Rt'serve System, equol to: 

10 peu:ent of these FedI'm] Reserve System expenses (or. approximately $498 

million) in FY2011; 

11 percent of these expenses (or approximately $547.8 million) ill FY2012; and 

12 percetlT of dlese expeTl5es (or approximately $597.6 million) ill FY20l:3 ~nd 

egch year thereafter, mbjeci to ~UUlUal inflation adjustments,-!!i 

During FY2012, to date, the CFPB has requested tran sfers from the Federal Reserve 

totlliing $257.7 million 10 fund Bureau ope ~tiom md activities ilS described in this 

report.47 

These funds ue hdd in an account fOt Ihe B\.lre~u at the Fedeml Reserve BmkofNe<w' 

York Bureau funds that'are [Jot funding CI.lrrent needs of the CFPB lUI' invesll"d in 

Treasury set.:urities. E~mil ~ from those investments IHe ~1s0 deposited into the Bure:w's 

account.'" 

If the authorized tnmsfers from the Fedeml Reserve lUI' not sufficient in FY2010-2014, 

Ihe CFPB C9 n sk Co gre~s for up to $200 million, subject to the 9ppropciatiom 

process. <9 The CFPB did not request >lI1. ~ppro l?ciati on in FY2011 md doe! not plan on 

doing 00 in FY2012 or FY2013. 

~ See Dodd-Frank Acl, Pub. L. No. , 11-203, Sec. 1017(aX2). 

(I The Bureau posts all of its funding request letrers 01) !tswebslte.at 

Con~llln"l! 11'''''' .... qO~/lHld91.'1 . 

~ seeOodd-Fr..nk Act, Pub. L. No. , 1 J.203, Sec, 1017(b). 

41 See id. § 1017(1'). 

52 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
100 


Pursu,ult to me Dodd·Frank Act, the CFPB is Also >luthonzed t:O collect and retrun for 

specified purposes ci\-il pmruties collected agaiust il.ny pwon in ~ny judici11 or 

administrnti\·e ~ctiOI) UIIdcr feder~l consumer tlnancw hws.wTIle CFPB gencrillyis 

authorized to use thes~ funds forpaym~nt of resti tution to victims, but may ruso use Ule 

funds for purposes of consumer educ9.tion and flllanciru liteucy p(Ogr~ms under certain 

circumstances. 11le CFPB mruntains a sepuate ~CCOUI11 for these funds ,n th e F ederru 

Reserve B9nk of New York. The CFPB did 1101col1ett all)' civil penlilties dueing the fir~t 

three quarters in FY2012. 

KEY CFPB EXPENDITURES IN FISCAL YEAR 2012 

Through June 3D, 2012. the CFPB has spent$247 millions1 in FY2012, and h>ls incurred 

$208.3 million 11\ obligations, including S101.1 million in salary wId benefits. $91.0 million 

in contractaJld support services, and $16.1 million in ([ ~vel and other expense,.51 

ApproxillU.tely h~lf of the Bureau's spending w~s [ehled to employee compel\sation IlIld 

benefits and tBlvd for employees on boud. Ovcr 70 percent of Ule W10unts obligAted ill 

contracts and 5Uppo~t services were for the acquisition of generol administr>l.tive alld 

support services from other govellHllent IIgencies lnd for the development and 

maintenance o f the Consumer Response 9.lId additionru infoanatioll technology systems. 

~ See id. § 1017(cl). 

!!l hls amount includes commItments for new procurement5 expected to be awarded (lnd 

obligated in subsequerll FY7.012 quarters. 

l>2 Budget and spending information is made available at C'JU~l.mn.1f Illall' ~"lu ... lhu\jq"L 

53 SEMI·ANNUAL REPORT OF TH E CFPS, JULY 2012 
101 


FIGURE 6: FY2012 YEAR-TO-DATE SPENDING BY EXPENSE 

CATEGORY 

Grand Total ~ClI""' onoI21 

$247,030,675 

$9,013,592 $125, 144 Eq u'pment T, ... portalionofThi<lg. iii 

I Irl---- !~ Di"den<k $1,743,755 

Suppl'e.&Maw,ia" ~ 

$29,903,208 

8 --- ~ ~ ~ .. 2':'''£'=''"'- ~ T,a",,( 

$1,638,990 Pnoung & Repro<iucWn • 

$1, 125, 593 ~M!S. CommunOc;otio(l" 

lJIil~ I~ , & M;.c 

' ln clud", open commItment< for procu"ment< fo, tl,'"ch. "" ndo, h1< nol Y'" be<n deto,moned..,d fund. have nol1"" 

b.." oblIgated 

53 ' Other ContractlJal Services' includes the cost of operating the Bureau's Consumer 

Response call centers in Iowa and New Mexico. 

54 SEMI-AN NUAL REPORT OF THE CFPS, JULY 2012 
102 


TABLE 4: 2012 YEAR-TO-DATE SPENDING BY DIVISION/PROGRAM 

AREA 

Di"ision j Progr'd.1ll Area 

Director 

FY2012 Spending to Date 

2,237,OJl 

Chief Operating Officer 54,536,6% 

Consumer Education & Engngemenr 

Research, Markcts & Regulations 

SupeLVision~ Enforcement~ Fair Lending 

General Counsel 

12)65,155 

21,547,487 

62,839,444 

5,606,288 

Extemal Affairs 2,453,989 

Centralized SClVices 85,444,585 

Grand Total (as of6 /30/ 12) S 247,030,675 

The Bure~u's ~igllifi<':iI.flt FY2012 obligations through June 2012 include: 

55 

$19.7 million fO Tr~lsucy for various administnnive support services, including 

information technology md humm resource support, tempofllry office spac!", 

md detailees; 

$1 1.S million to TrclISUcy's Office of the Comptroller of the Currency fo r office 

Spgce-; 

$7.6 million to Treasur:y'5 Bureau of the Public Debt for cros~-servicing of 

various humall resource and fmallclal mJ.n~gement services, such as core fmanciru 

~ccounting. I.l'msactlon proces,ing Ilnd tmvel; 

$4.0 million to ~ contractor for the development and operations of !.he Consumer 

Response System; 

$3.7 million to ~ contractor for human I'esouoce support service5; 

$3.7 millioll to an infoml~tion technology commctorforprojecrmanagement 

support semcl's; 

$3.J million to ~ cOlltnlctor for hosting, cloud infmstrocUIre, md system 

administration servicesj and 

S2.9 million for collection :md .analysis of credit card wu to ,mist the Burellu. 

SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
103 


KEY CFPB EXPENDITURES IN FISCAL YEAR 2011 

During FY2011, the majority of eFrB spending WilS rehted to essential, one-time costs 

related to standing up the BUreil.U, such as infonmuion technology and mission-specific 

md hum9.n clI.piml support. The CFPB incurred $123.3 million in obligil.!.ions, including 

$68.7 million in contr\\ct and support services, $48.4 million in salary and benefits, and 

$6.2 million in other expenses. 

Implementation Activities 

The Bure:lU's significant >t:Ht-up expenditures in FY2011 included: 

$18.6 million to Treasury for various administrative support services, including 

infol.1TIil.tion technology and hum:l.n resource support, office space, and detailees; 

S6.7 million to T reasuty's Office of the Comptroller of the Currency for office 

space and support services for comphint processing; 

$6 million to T re!l.sury's Bureau of the Public Debt for cross-servicing of vuious 

hum!l.n resource and financill.! m!l.n!l.gement services, such!l.s core financia l 

!l.ccounting, trans!l.ction processing !l.nd travel; 

$4A million to a contractor for human capital policies and assist&Ilce in 

developing sahry and benefits pachges consistent with statutory requirements; 

$4_3 million to an infonnation technology contractor for project m!l.nagement 

support services; and 

$4.3 million to a contractor for the development of Consumer Response. 

THE CFPB'S BUDGET PROCESS 

The Bureau's Chief Operating Officer (COO) is responsible for coordinating activities 

related to the development of the CFPB's annual budget. The Office of the Chief 

Financill.! Officer within the COO h!l.s responsibility for developing the budget, and works 

in close p!l.rtnership with the Office of the Human Capital, the Office of Procurement, 

the Tedmology and Innovation team, and other program offices to develop budget and 

staffing estimates in consideration of statutory requirements, performance goals, and 

priorities of the Bure!l.u. The CFPB Director ultim!l.tely approves the CFPB budget. A 

discussion of the Bure!l.u's goals and priorities, !l.n updated set of perfol.1n!l.nce me!l.sures, 

spending and staffing (ITE) estimates for FY2013 and projections for FY2014 will be 

included in die next CFPB Budget Justification, which is expected to be published in 

February 2013, in conjunction with the FY2014 President's Budget. 

56 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
104 


Diversity and Excellence 

RECRUITING AND HIRING 

Over the Pll.st yenr, the CFPB h~s endeavored 10 recruit and hile highly qulllified 

ulru\'idu!ils. Thest' effolts inwc focused on filling \'II.CllIlcies III ih hewquuters in 

Wilshington, Dc:, and in Its exi/.mine[ workforce diHributed across the country. TIle 

Bureau's examiners are organized by regions and anchored by key strategic satellite office; 

ill threeof the n:lrion's fin~l1cigJ hubs - Olicago, Illinois; New York City; and San 

Fr"ncisco, C,uifoml1t. A~ of June 3D, 2012, we hll.ve 889 st.lff on·oo1Cd :lnd working to 

cmy OUI the (FPE's mission. l11cse include appro):imately 230 highly qll~ Ji{ied regubtors, 

reSClI.rcilcrs, hwyc[5, ,1!Id market pmctitiooers who lm.n ,ferred from the consumer 

protection divisions of the pmdentiHl regubllors !I.Ild other federal agencies. 

To continue !hi; momennun, the CFPB is implementing 9 stmtegic pl:l1l to dl';'.'eiop a 

sustainflble pipeline of diverse cmdidlltes for OcrUp9tiOllS ~cross the Bure~u. 'nlis stmlegy 

includes: 

57 

Lt"vt"r:l.ging existing staff to be dIe epPB's most \'ocal iUJd efft"cli'l'e recruiters; 

Using soaal medi~ aud web 2.0 technology 10 connect people and get the word 

outabouttmploymem opporwnit.ies al the Bureau; 

Conducting outre:ich events thai fCllTUte our seniClr le:idership and ~tt[~Cl people 

to !lJl :igf.'11c.y that we hope they will \,-,jew as a '-'best place \0 serve;" and 

Crwting development programs for incoming s\jff such 9.5 the Presid !lti~l 

MII..nagement Fellow progmm ~nd our Honors Anlllysrs. 

SEMI,ANNUAL REPORT OF THE CFPS, JULY 2012. 
105 


FIGURE 7: QUARTERLY GROWTH O F CFPB POSITIONS FILLED 

THROUGH JUNE 30, 201 2 

~" 

01 ~" 

02 ~" 03 

m, 

04 ~" 01 

FISCAL YEARS 2011 - 2012 

~" 

02 

BB. 

~" 

03 

EDUCATION, TRAINING AND ENGAGEMENT 

Since its c£eition, the eFPS hil.s focused on sLrong engil.gement with existing md 

potenr.iJL! Bure!l.u sllIff. It hlls llccomplished this through eciuciltion, ruining. md 

engllgement pmgrmlS. As the Bureau mll.tures, the CFPS continues to build :lnd offer: 

Robust programs mit:run to keep its employees current on the latest skills they 

need 10 conduct their work md be successful; 

Vehicles for full participation in a vibr:mt culture that adheres to the Bureau's 

values of Serve, Lead, md lnnovlle, and that fosters the successful achievement 

of its mission; lind 

Programs:md methods to ensure that the eFPS attracts the best, brightest, :Uld 

mosl diverse group possible to carry our its mission. 

The eFPS is developing Illeaming environmenllllilored to meet the specific needs of the 

BUfUU'S divisions 9.nd the individuals within them. 

58 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
106 


In addition, the Bure9.u's Office of HUlllm Colpital (OHC) is working to identify, cultiv~te, 

Il.lId sustain ~ diverse workforce ~lId inclusive work C'IlVilOllmelit \0 further the CFPB's 

success, The OHC is making efforts to develop 1I culture th~I' ellcour;lge~ coJl~bof'JtiOIl, 

Aexibility, 9nd faimess, lIIld d19t le\-er:tges diversity throughout the org:wiz~tioll so dm ~lJ 

indiv\durus!He equipped to Serve, Lead, !\lId Innovate, 

DIVERSITY 

Divecsity has been Il comerstone of the Bureau'~ found>l.lion, its l'tf9.tegiC workforce 

planning programs, md its contncting since its establishmentY In J9nullry 2012, the 

Buruu formilly established an Office of Minority ilnd Women IIIc1uslO!I (OM\VJ) to 

ensure thllt inclusion continues to infoDtt its work, and in Apr~ 2012 hired the first 

Director for this offic e. 

The OMWI focuse s 011 developing md refining standards for: 

Equal emplo),lllent opportunity, workforce diversity, ,llld inclusion Ilt :tllle.veis of 

the Bu«!au; 

Increllsed pil.rl.icipation of minonty..owned !lnd women-owned businesses in the 

CFP '~ progr\lll'lS \Ind contrllcts; lind 

Assesslflg the divez:sity policies lind priebeeS of compllllJes thut the CFPB 

supervises, 

S. This disclJssion presents an o~efView of the Bureau's effort to promote divelsity across its 

workforce and contractor $Upport commlJnity. A more complete analysiS will be presented in 

the Burea\r·~ required anllual Human Capital report, which will be published later in 2012.1(1 

July 20 11 , the Bureau published a report on its goals for recrUitment <'lnd retention, training 

and workforce development, and workforce fle:<lbilities, ThaI report is available on CFPS's 

website: Cr..rFoIHIl<-'lIIUill1t t' .,(.1'_ 

59 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
107 


.n,. 'F!'H!. .. n", ,,';,1. "1'"",,, .. ,i,·,.. (,...." ,!.~ l;n'Mi.II" " in"i"", 11 .(,.,,.,.,,. I1 N"Olwl· . 

• nd Enf"r"Ccmcnt ,\" (FJI1REA) .grnci ... " .nd other ".keho!Jcn to ."'$0 how!)c" to 

SfruC'U,"" .nJ st.ff the OMWI .nd to help idcnufy~' prKti= for ,,·orkforce ,upph« 

di,·.,.,il)·. 

II The ... agencies ,nclude 'he OCC, 'he OTS. the FDIC, the NCUA, 'he Commod,l)' FUMe. 

T f.ding Comm'"ion. th e Sec"n" e. ~nd Exch.nge Commi",on .• nd the Fed.,,1 ReM"'. 

BM,d. 5 •• 12 U.S.C. § 1833b; IS U.S.c. § 78<1. 

60 SEMI·ANNUAL REPORT OF THE CFPB. JULY 2012 
108 


DIVERSITY IN THE CFPB'S WORKFORCE 

As of June 30 2012, the CFPB's workforce is 49 percenrwomen IlIld 51 percent men. The 

eFPS workforce is comprised of33 percent minorities. 

FIGURE 8: BUREAU-WIDE GENDER AND MINORITY STATISTICS TO 

FIRREA COMPARISONS 

49% 

ti;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;£oJtl Female 

...... --.....:.t" 

,,% 

Minority 

FIRREA Female Comparison 

FIRREA Minority Comparison 

Figures 8 compares CFPB's workforce to the FlRREA community with respect \0 

divwity by gender, race, and natioll:U origin. 

OMWI'S ROLE AT THE CFPB 

The OMWI will help all parts afthe Bureau bring diverse perspectives to bear on its work 

IIlld promote inclusive hiring and contracting pffictices. 

Recruitment 

As the eFPB continues to grow, the OMWI will work with the fedeoll OMWI 

community, low wd natioll:l.i media, wd varied sakeholders to broaden awareness of 

job opportunities at the Bureau in order to promote the opportunities for women and 

minorities in its workforce and [0 diversify its appliCllot pool. In addition to promoting 

diverse 9.pplicant pools for immedi9.le openings, the OMWI '.lIill work with the OHC [0 

develop long-teffil plms th9.t focus on active p:uticip.ttion 9.t recruitment aud outre9.ch 

events for 9.11 levels of cmdidil.tes. The Ilim is to continually support the capacity to attract 

diverse applicants 9.l1d ensure th~t the CFPB h~ s the benefit of a diverse md qualified 

pool of Cllndicbtes for all job openings. 

61 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
109 


Regulatory Oversight 

Under the Dodd-Frank Act, the OMWI must ,'mess md monitor the diversity policies 

md pr:l.ctices of the entities that the CFPS supervises. The OMWI will continue to 

support the Bure!l.u's efforts to define procedures for conducting this oversight, working 

with other regulatory agencies rnd consulting with apptOpriate stakeholders. 

DIVERSIFYING PROCUREMENT PARTICIPANTS 

The CFPS continues to promote diversity among the companies that compete to receive 

its contracts. The Bureau's Procurement Office is measuring obligations for ceruin small 

business contmers lI.wlI.rded to minority-owned small disadvanlllged businesses Rnd 

women-owned small businesses ag!l.instgoals bil.sed on the percentage ortoW dollars 

spent or obligated on contract actions. 56 As shown in Figure 9 for FY2012 through June 

30,2012, to.57 percent ofCFPB contract dollars went to small disadvantaged businesses. 

Orrhat amount, 80 percent or roughly 54.! million was awarded to certified 8(a) finns. 

Additionally, 5.30 percent of contract dollars went to women-owned small businesses.

s7 

56 Obligations are measured for contract awards valued above $3,000. 

57 Final FY2012 results will be validated in an annual data certification due to OMB in January 

2013. 

62 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
110 


FIGURE 9: FY12 SOCIOECONOMIC OBLIGATIONS THROUGH JUN E 

30,201 2 

Small disadvantaged business 

Women owned small business 

Service disabled veteran owned small business 

HubZone small business 

O tller small business 

21 ,1% 

Small business 

78.9% 

Large business 

ObLigmed 

Dollars 

15.1 M 

$2.6 M 

$1.2M 

$0.9 M 

10.4 M 

The CFPB Procurement Office will work illong \\~tll the OMWI to research and develop 

stmtegies 10 incre9.se the levels lit which minority Ilnd women-owned enterprises - both 

hrgt :l.nd sffi!lll - pllrtlCipHe in the CFPB's cOllt!:l.cting opportunities. Tbe OMWI will 

also develop procedures to promote opportunities for ;( inclusion of women :Ind 

minorities within the population of contr-JelOr suff lInc\, as applicable, subcontractor staff 

in ~ccord:mce 'I,jth !he Dodd-Fmnk Act. 

63 SEMI-ANNUAL REPORT OF THE CFPS, JU LY 2012 
111 


APPENDIX A: 

More about the CFPB 

<D GENERAL INFORMATION: 

Email Address: mil: '1 "ltiSU mtlLu~IJ{' " 

Phone Numbec: 202· 435.7000 

Mulling Address: 

Consumer Fimlllci l Prot{"{;tion Bureau 

ATIN: Employee Name, Division, and/ or Office Number 

1700 G Street NW 

Washington, DC 20552 

\. CONSUMER RESPONSE! COMPLAIN TS: 

Houes of Operation: 8:un - 8 pm EST 

Toll Free #: 8SSAll-CFPB (23il) 

Espanal: 855-411-CFPB (2372) 

'm'/ TDD: 855-729·CFPB (2372) 

Fax #: 855·237-2392 

• Consumer Response /Comphunt Mailing Addrt'ss: 

Consumer Financial Protection Bureau 

PO Box 4503 

Iowa City, low\! 52244 

~ WHISTLE BLOWERS: 

Toll Free #: 855-695-7974 

64 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
112 


!WII PRESS & MEDIA REQUESTS: 

~ OFFICE OF LEGISLATIVE AFFAIRS: 

Legislative Affllirs: 202-435-7960 

.1 CFPB OMBUDSMAN'S OFFICE: 

65 

Emilil: CFPBOlllhll~I'Uhlll:ii .·tpb.y"" 

TaU Free #: 855-830-7880 

Fax Number: 202-435-7888 

SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
113 


APPENDIX B: 

Statutory Reporting 

Req u i rements 

This Appendix provides ~ guide to the Bureau's response to the reporting requirements of 

Section 1 016(c) of the Dodd~Fnlnk Act. The sections of the report identified below 

respond to Section i016(c),s requirements. 

Statutory 

Subsection Reporting Requirement 

A discussion of me significant problems faced by 

wnsumer.; in shopping fOf or obtaining consumer 

finmcw products or Stf\lCCS 

A justifK:ation of the Burt~u's I:A.Ldge l retprst for 

~ previowytllf 

A list of significant rob and orders adopted by the 

Buretu, as \l,rU ill Dlhrr significml initiatiws 

conducted h)' the BUrem, during the preceding 

yeu and the pilln of the Bureau for rules, orders, 

or other initiatives to br lUlderuken wring tht 

upcoming period 

An miilysis of oomplaints tbout tonswner 

finmcw products or ser.iccs thaI the BurelU has 

received lUld collected in its centnl ru.tabne on 

compWnts during the prtceding yeu 

A liST, \lith a brief statemem of the issues, of the 

public mpervisory md enforcement actions to 

which the Bur~au was 'party during the preceding 

ym 

Section 

Consumer Chalknges in Obtaining 

Financial Products and Services -

Shopping Challengrs 

Building a Great Institution: Up<ku -

Budget; 

Appendix H - Financial and Budge! 

Reports 

Apptndi.~ C - Signifitlnt Rules, Orders, 

and Initiatives 

Consumrr Cllillengrs in Obtaining 

Finantlll Products and Sef\1ceS -

Consumer Concerns 

NIAll 

Appwdix D - Action! Taktn Regarding 

Rules, Orders, and Superviso!)' Actions 

P.g. 

25-30 

52-56 

78·79 

68·70 

8·24 

N /A 

The actions tiken regnding rules, onitrs, Hid 

ruperviso!), actions with respect to covered 

persons which are not credit unions or depo~i y 

institullons 

with Respect to Covtred PtlSons Which 71 

Are. Not Crtdit Unions or Deposito!)' 

Institutions 

sa ~ Buretu /IiS been 1 pllrty to no such .(tions ruring the prec ding YClif 

66 SEMI-ANNUAL REPORT OFTHE ( FPS, JULY 2012 
114 


9 

An assessment of significant actions b)' State 

Itlomej'S general or Sute regulators r<'lating to 

Peden! consumer financial law 

An mllysis of the Bureau's efforts to fulfiU its fair 

lending mission 

An am.lysis of the Bureau's efforts to iIlCfN.Se 

workforce and contracting divmity consistent with 

the procedures established b)' OlllWl 

Ddivering for American Consumers 

lIld uveling the Playing Field ~ Fair 

Lending 

Building a Great Institution: Updm ~ 

Divcriity:tnd Excellence 

59 Tlte Bureau has not learned of any such actions that ha~e been flied since July 21, 2011. 

67 SEMI-ANNUAL REPORT OF THE ( FPS, JULY 2012 

NfA 

48-49 

59-0 
115 


APPENDIX C: 

Significant Rulest Orderst 

and Initiatives 

Section 1016(c)(J) requires "a ust of significant rules Ilnd o rders 9dopted by the Bureau, as 

wen as other signitiClIllt initiatives conducted by th e Bureau, during the preceding yell[ 

Rnd the plan o f the BUrf'au for rules, o rders o r other Initiatives to be undertaken dunng 

the upcoming period." 

In the past yeu , the Bureau adopted the fonowin g siglliiiallt ruJrs 9.nd orders and 

conducted the following significant initiati\'es: 

68 

T I,lrge t('d [l'vit'W of inherited regub.tions and resl:lletnent of inherited regulll.tiolls 

via interim [mal rules; 

h5 ~nce of rules to implement Dodd-frmk Act protections conceming 

COIlSUme,[ remittrulce \r.allsfers 10 foreign countries; 

Interim fmlll rules defining proudures for investig~ tion . rules of pacrice for 

~djudic;l.tion proceedinss, lind procedures for disclosure of r:ecords wd 

information; 

Proposed Rule regarding defming '1.arge r pHnclpgnts" 111 cerUln markets: 

lssued the Sbort-Tm», Smoll·Do/lnr Llilflin.!, ExominnfiDII ProttdHru; 

hsued the Mort~.!.~ OrilJlllltiOl/ EYamillatiOi/ PrlJu dllrr.., 

Issued the 'J~rt~J~ Smiting EXaml11illiOll Prom/"".., 

Notice :llld Opportunity to Respond alldAdvise process; 

Notice ~l1d ReqlJest for Inforrmtioll on checking ~CCOU l1t verdr~ft progr~m : 

Fonn:tl solicimtio n for nominations for CFPS 's Consumer Advisory Bond; 

Rele3se and testing of ~ droft periodic mortgAge sl.:I.tement; 

SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012, 
116 


69 

With the U.S. ~p3TtmentofDefense, the FTC, ;lnd the National Association of 

Atto rnep General. the development of Q database to combat consumer fimmciai 

fmuddirecled ~t milil::lry members, vetel1ll1S, ,md their f:IIDilie§; 

\'(lilh the FOIC, the Fedeml Re,elVe, the OCC, !I.lld the NCUA, issued join! 

guidmce 10 !ldclress mortg'<ige :lervicf( pr~ tic es llw may pose risk> to 

homeowneH who sre serving in dLe milit~ry: 

MOU with the FTC to protect consumers ilIld 9void dupliclLtioll of feder:tllaw 

enforccmenlllnd regulatory efforts; 

Beglln to 19.ke complaints o n credit ClirdS, bank produc ts Qnd rvices. pnv~te 

studl"llt 10al1~, and consumer loam, through the Consumer Response function; 

Luunrued A!k CFPB. iUl interactive online tool that helps co nsumers find clear, 

uubiHcd lIllSwers to their rulolucio.l '1uestioos; 

ReleilSed a beu version of the r .. ,01.1" I v,J L,'h 'ljHu,,, ";''''l' •• l as part of Kl/oJ!' 

B10re YON 011'1: Slud£/II1...tmns.,:m inlCt9ctive, online 1001 designed 10 help frun llies 

pl'oll\ for the cost, of pon-secondary education ; 

Released u bulletin on third'p'Jrty service providers to supt"nised entities: 

Released a compliance bulletin regarding the enforc~men t of Equal Credit 

Opportunity Ac", ,Ind recognizing the di p~ e imp.!ct doctrine.: 

Launched ,I public inquiry into how consumer.; 'llld fill.:Ulcial st'(Vices compallies 

are affected by ~rbitr"Jti n :Uld ~rbitnltion clause,: 

MOU with th~ prudentigl regubto rs to ensllre the coo rdin9tion ofimporulllt 

aspects of the supervision o f iusured depository ulStitution s with more than S 10 

billion in JLS5CtS and their affili:lIe~; 

lc:l~ d ~ report and cOllSumer guide about reveHC mort :lg ~; 

Interim FiuIIJ RI~e providing for confident/III tIeatmenrof informlltioll genc[lIted 

and obtained by die Bureau, 'ollJJ esublishing procedures for obtaining 

infoLl\IJLtion from the Bureau olS peonitted by law; 

Final Rule regm:ling confidentiill tre:o.tment of pn\~lt'~d infomwion; 

Supplemental ethics regulntions for CFPB employees; and 

Interim Final Rule ensuring nondiscrimination on the basis of dis9bility in 

pro l'~ms JLlld ac tivities undertaken by the Bureau. 

SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012 
117 


In the uex! six months, the Bureau pbns th e fonowing significant rules, orders, imd other 

;niti~tives: 

)0 

Final rules to implement Dodd-F flln k ACI requirements defining lenders' 

oblig::lliom to Ilssrss borrower!" ~bility to rrp::ly nlortgJlge 101lm, including crruin 

protections from liabil.ity for "qualified mortgll£es;" 

Fillal rules to implement Dodd-Frank Act escrow requirements: 

dditi n~l rules to p rovide further guidance to remiulInce tn.mfer providers; 

Proposed inlegtllted disclosures lind ~CCOlllpilnying rules for mortg:tge la :lf)s tll::lt 

satisfy the requirements o f both the Trutll in u ndingAct 1Illd the Real Emil.' 

Settlemeni Procedures Act; 

Proposed rules to implement Dodd-Fmnk Aa protection s for the mort~ge 

m9.fket, including provision s on o~.n o riginator compenslltion rod qualification, 

restrictions on high-cosl 101lJ1S, servicing pr~ctices, provision of appf:li ~l 

documenution 10 consumers, ~lld (011 an iotemgency basis) o dler ~ppmi al 

pr:lctices; 

PHlicip!Hion in illterl1{;ency processes to consider mortgage servicing st:lJlchrds: 

Propose rul e~ to ckfine the ~cope of the BU[('1l.u's llonbllllk supcrvi5ion progum; 

Fiu::il l'eglJiations oosed on cedilln interim fin~l rule ~ iS5ued since July 21, 2011 

including those that est!lblish procr.dures for uwestigJtiom md rules o f p ra ctice 

fo r ~djudic~ti n proceedings among others: 

Reports on priv ~te student lOiins il.nd recommencmtions on best pmctices 

concerning finllllci:l.l advisors who work with older AmeriCllllS, ~s cOlltemplllted 

ill the Dodd-Frank Act; 

Continued expansion of the Bureau's c9pacity to hanelle consumer complaints 

with respect to Illl products rod services within its autho ril} ~ 

A pilot progwn to eV:l.lu>lte certrun financial educ:l.tiol1 progrllln s in the iield; 

Reporn: on v~cious aspects of the Bure~ s work and op!'ution:;, including 

reports on Consumer Re sponse, Fin:Ulcial Educ~tion, F~ir Lending, and Humilrl 

Gpim.l !lmong odlers, as conTemplated Ul die Dodd-Frgnk Act: !llld 

First meeting o f the Con sumer Advisory Bo~rd. 

SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012, 
118 


APPENDIX D: 

Act ion s T a ken 

Regarding Rules, Orders, 

And Supervisory Actions 

With Respect To 

Covered Persons Which 

Are Not Credit Unions 

Or Depository 

Institutions 

Section 1O\6(c)(6) requires:l report on "the lIetions ~kcn rcgmiing roles, orders and 

supervisory actiollS with respect to covered persons which srI' not credit unions or 

depositor), i1l5titutiolls." In ::!012, the BUleJiu hilS Llken the following actions with respect 

to ~uch comp:ll1ies: 

Proposed Rule reguding defining "larger p1rticipJJlti" in cerwJII mackw; IlI1d 

Proposed Rule regarding procedures for super:ising nonbanks that pose risks to 

consumers, 

In addition to these itellls, o ther BurellU rule~ ~ppl y to both depo~jtory institutions and. 

non-depository institutions. 

71 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012 
119 


APPENDIX E: 

Reports 

The eFPB h!l.s publi ~hed the following reports: 

72 

July 21. 2011: Developing OUf Hum:ln ~piw: 

No\'ember 30, 201l; Consumer Response interim report on eFPB'$ creditcllrd 

comphint rul'J; 

December 9, 2011: FInancial Report of the CFPB - Fiscal Year 201 1; 

January 31, 2012: Semi·Annll:J.l Report a fthe (FPB; 

March 20, 2012: F.ur Debt Collection Pmctices Ac t: 

March 31 , 2012: Comumt'( Re5ponse Annual Report; 

April 13, 201.2: Plain Wri ting Compliance Report; md 

June 28. 2012: Revme!l'[ortgage Report. 

SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012, 
120 


APPENDIX F: 

Congressional Testimony 

Senior CFPB staffhiwe testiiied before Congress on dIe following 21 occ~sions; 

73 

February 9, 20 11: Ho!1y Pet[;lCUS before the HOllse Committee on VetcU.lls 

Affairs; 

March 16, 2011: Eli2:l.belh W~rren before the House Financial Services 

Subcommittee on Fin~nci:llln,tituti s ~nd Consumer Credit; 

April 12, 20U: Holly Petroem before the Soule Homehlld Security & 

Govemmentttl Aff:lin Subcommittee on Oversight ofGovemmenl M~nagemenr, 

the Fedual Workforce, :wd the Distritl ofColumbi:t: 

May 24, 2011: Eli1Jlbeth Wll.rren before the House Oversight and Government 

Refonn Subcommittee on TARP, Fin!lllcilll Services ~nd Bailouts of Public Ilnd 

Private PrognullS; 

July 7, 20Ll; Raj Date bl"fore tlle House Finllflc:i>li Services Subcomminees on 

Flmmcial Institution s 9.ud Consumc[ Credit !lid Oversight llnd lnvestiglltions; 

July 13, 2011: Kelly Cochrm before the j'louse FUHWciotl Se,,;ct's Subcommittee 

on Insurance. Housing and Community Opporrunity; 

July 14, 2011: EJiz9.1:ltth Warren lHofore the House Ove ~igh tllnd Government 

Rdoml Commillee; 

July 28, 2011: Drul Sokolov before the House Sm:u1 Bu~ille ss Subcommittee on 

lnvestig:ttiom, Oyecsight ~ud Rt-guhtion5; 

Scplember 6, 2011: RiChHd Cordmy Nominj),tion He:Jring before the Sen~ e 

Bmking Committee; 

November 2, 2011: RAJ DJI!.' before Ihe House Finrulcl:U Semces Subconuninee 

on FmllllciaJ Instirutions AAd Consumer Credit;. 

NO\'ember 3, 2011: Holly Petueus before the Senate B:mking Committee; 

SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012, 
121 


November 15, 2011 : Skip Humphrey befofe the Senate Banking Subcommittee 

on financial Institutions and Consumer Protection; 

Jan uary 24, 2012: Rich'lrd CardnlY befar.e the House Oversight ~nd Goveolment 

Ref 0011 Subcommittee on TARP, Financial St(\'ices ~nd Bailouts of Public snd 

Priv~te Programs: 

J anuary 31, l 012: RlCh9.fd Cordny before the SemIte Banking Committee; 

February 15,201 2: Richard Cord[~y before the Home Finmcial Service$' 

Subcommittee on Ove ~igh t lI.1ld investiglltlollS; 

Ma rch 29, 201 2: Richard Cordrll}' before the House Fin:mcial Services 

Comminee: 

April 26, 2012: C:l.mille Busette before the Senate Homehnd Security rmd 

Govemmental AtTai~ Subcommittee on Oversight of Governmen t Manggement, 

the Fedeml Workforce, :lJIeI the District of Colnmbi,j; 

June G. 2012: Richuel Coreluy befOfe- the Senate B:l.Ilking Committee; 

J une 6, 2012: G~il HiUebmnel before the House Finallcial Services Subcomml1!ee 

on Finmcial JnstimtiollS and CollSurner Credit; 

J une 20, 201 2: R:! j Date before the HOl1se Finmcial Service5 Subcommittee 011 

lnsumnce, Housing. ,mel Community Opportunity; ~nd 

J une 2G, 2012: Holly Pel.!:ICI.IS before the Senate Committee all Banking. 

Hou~ing aud UrlJ.Jll AtTai~ . 

Written tesUmoll}' submitted til COllllee.lioll with these appearallces C~ll be found on 

UJII-!UlItrf··ln~"'-<: ~u' . 

74 SEMI-ANNUAL REPORT OF THE CFPS, JULY 2012. 
122 


APPENDIX G: 

Speeches 

Director Riciuud Cordray Ilrld Deputy Director j D,1t~ spoke at the follo'W1ng public 

even ts: 

75 

Septemhe r 15, 201J: Remarks by Raj DJte lit National Constitution Center in 

Phihdelphi:l, PA; 

September 20, 2011 : Rem.u-ks by R.l.1 DJ\c ~tAmeriQ.!) Banker's Regub.tory 

Spllpo£i.um ill Washington, DC: 

OClObcr 10, 2011 : Remllrks by RlIj D~te III the r-.fortg~ge BIIIlker5 AS50t;i~tion's 

98 1i1 Annual Conference in 0lil:ago, IL; 

October 26,20lJ: Remuks h)' Raj D~te.i.ll }.tinne9pob5, MN; 

DeCe'lllber I, 201]: RelllHk5 by IUj D.l.tt':.lt Comumer Federation of Americ~ 's 

Fin:mcig] Service~ Conference in Wasllington, OC; 

December 7, ZOll: Rem!Uks by R:lj Dolle in Cleveland, OH; 

J an uary 5, 20ll: Remarks by Richard Cordmy ~t TIle BrooJci.ngs Institution in 

Wilshinglon, DC; 

January 17, 2012: Rem~[ks by Ridmd Cordr>l.yat FDIC Board ofDirecto(5 111 

Waslungton, D C: 

January 18, 2012: Remar.b by Rich~ rd Couir.ay H U.S. Conference of M~yo(S in 

Washington, DC; 

J anuary 19, 20ll: Remark!; by Riclmd Co[dr~y at Payday Lam Field He.uing in 

Birmingham, AL: 

_February 15, 2012: Renurks by RichlUd Cordmy ill" League of United L~till 

AmeDc:u) Citizens Conference in W'lShington, DC; 

February 22, 2012: Remarks- by Richnd Corck,lY al CFPS Roundtable 011 

Overduft Pr~ ctices in New York, NY; 

SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012, 
123 


76 

March 6, 2012: Remarks by Richard Cordray at National Associ9tion of 

Attorn ep; Gem·raJ in Wnhington, DC; 

Ma rch 14,2012: RemHks by Richgrd Cordr3y :lt Independent Commwlity 

Bgnkers of Arneric~ N~ iongl Convention in Nashville, TN; 

Ma rch 16, 2012: Remarks by R\ch"rd 0>rduy at Society of American Business 

Editors il11d \'(Iriters in Indianapolis, IN; 

March 19,2012: Remarks by RiChllfd Cordray gtCredit Unioll National 

Associlltion Govemmenll1.1 Aff,un; Confrrencr in W:lshington, DC; 

Ma rch 21, 2012: Remark..., by Rich9rd Cordray at Consumer Bgnkers Assoagtlon 

in Austin, TX; 

March 28, 2012: Rrm~rks by Richard Cororil.y .. 1 U.S. Ch(l1nher of Commroce in 

Washington, DC; 

April 10, 2012: Remarks by Richard Cordmy :lt Opentlion Hope in Washington, 

DC; 

AprilU, 2012: Remarks by Richnd COrdf'lY on launch of the Fin~nclal Aid 

Comparison Shopper In Sioux Fill~, SD~ 

Aprill8, 201.2: Remarks by Richnd Cordr:lY at Ihe N9 tionill Community 

Reinvestment COlllirion in Washington, DC; 

April IS, 2012: RemHks by Richard Cordray gtJump$tart in Washington, DC; 

April 20, 2012: Rem~d~s by Raj Dgle .. , Greenlining lnstirute Conference in Los 

Angeles, CA.; 

M ay 3, 2012: Remarks by Richud Cord(:.lYu 2012 Simon New York City 

Conference in New York, NY; 

May 7, 2012: Remuk, by R~j D:He !lt Mortgage Banlrers Associ1tion N~tioml 

Srcondary Mukt't Conrerence in New York, NY; 

May 10, 201 2: Remarks by Ricll9.rd CordrJY 11. White Homr Pin:Ulcial Summit in 

W .. shinglOn, DC.; 

May II, 2012: Remarks by Richm! Cordmy at Michigan SIl1.!e University College 

of L~w Commencement UI E:lSI UtIlSUlg, Ml; 

SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012, 
124 


May 23, 20 12: Remarks by Rlch,ud Cordray H CFPB Prepaid Cards Field 

Hearing in Durham, NC; 

Jun e 5, 2012: Rem'Hks by Ri h~rd rdr~ y H White House prt·ss briefing on 

student loaH tra/lSparencyiu W~ hin ll, DC; 

June H, 2012: Rem9rks by j Date at Amencan B!U1\rers Association 

Conference UI O rlando, PL; 

J un e U, 201.2: RemHks by Rich:ml Cordmy at World Elder Abuse Awareness 

D9}' Event in W>l.ShUlgtOll, DC; 

Jun e 15, 2012: Remilrks by R1ch:ml Cordray al Amecic:m Connirulioll Sooery 

Conference UI W>l.slungloll. DC; 

JUIl e 21, 2012: Remuks by R1 h~rd Co rdr~y u press confe-re:nce on Mili!:l.!.y 

Permanent Change OfSUtiOll (PCS) Guidance for Mortgage Servicers in 

Wa.shulgron, DC; ,I.tld 

Jun e 27, 2012 : Rfmark; by Rich9[d CordClY all Reverse MOllgages Study in 

\'(f9,shinglon, DC. 

Remarks can be found on " lll'+Hru;{hll.Drl 1'. 

77 SEMI·ANNUAL REPORT OF THE CFPS, JULY 2012, 
125 


APPENDIX H: 

Financial And Budget 

Reports 

The eFPS has published the following financial repom, which lue all QvaihbJe ~1 

LltI~ulUt'(fUJ"ur~ "'i bllll).:cr: 

August 3, 2011: efG upd~te for the thini gunterof fisOJJ yea! 201 1; 

December 9, 2011: Fin9.Jlcial Report of the CFPS - Fiscal YCif 2011_: 

December 30, 2011: eFG update for the fourth quarter of fiscal year 2011 : 

J anuary 20, 2012: eFG upchte for die first gUMle! of [Isclll yC9.! 2012; md 

May 11, 2012: eFa update for the second quarter of fiscal year 2012.~O 

TIle (FPS hH published the following Budget Documents, which are all 9v:l.ih b)e at 

.Q1l"lflH"rl·Ifl~f\r~\~llV t,ull~f' t: 

Fiscal Year 2013 Budget Justifi cation ; 

f iscal Year 2013 Budget in Brief; 

Fiscal Year 2012 CongressionaJ Budget Justifi cation; and 

Fiscal Year 2012 Budget in Bri ef. 

The eFPS h:.!> published the following fundin reque 5 to the Feder~l Reserve Bond, 

which are all avaibble at I.": 1W'"llt rI-'1I ~!ll't"~'f \ h'lr~' , : 

September 28, 2011: Funding Request to the Federal Reserve Board; 

OClOber 21, 2011: Funding Acknowledgement from the Federal Reserve B09rd; 

!.'l In addition, the CFO update for the third quarter of fiscal year 2012 will be made available 

at (mIllime" If"'fI~.;.\)W"I\IJ4"1. 

78 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 
126 


December 23, 201 1: Funding Request to the Federal Reserve Board; 

January 6, 2012: Funding Acknowledgement from the Federal Re;erve Board; 

March 30, 2012 Funding Request to the Fede~l Resc[Ve Boaed; and 

April 5, 2012: FWlding Ac knowledgement from the fedeml Resen'e Board,M 

61 AdditiOIl,,1 qu"rterly funding requests to the Federal Reselve Board and the correspofJding 

funding ackno\~ledgements from the Federal Reserve Board w!ll be made available at 

_<JI'l~J.rm"'IFII'l-""o,P..9rw!l"IJI'I,'I . 

)9 SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012 

III 1m IllI Ht iH l ' I 

, I I . _ . "! 

> . j ' it \, 

lit !l! h 'IJII I III l!U L,!llt j! lll; !'j:j I jf'r' Iii r"\ I ""W I 1 .. 03 ",j h f 1 ' I -, 

v 

"' 1 o. • 1; " +-' H ,iii f i i . -j U 

co Hi! h 'ill tljljil HHI I !II -jlij' .N il Hp i I J! ;Jj !jlr Ii, iP II 2 c l' oc co • .! I jhj 

ill il}' 'lrl fhl rn 

Jil!; III lilt htl 1jH 

L l 

t IJlll iii Ill, !Ii i ! 

0.... co lll!j n \"-, .h. ., .. 'J ' II "!' 'I 

LL L I'll!! f! iilj llu! II 

U U 'lu h'o 

Jl,t W! I!J! I. J1HJ' lh! I 0 

," . <I> .. ..11 .. 15 <0 
128 


APPENDIX J: 

Defined Terms 

DEFINED TERM 

ACH 

APR 

BUREAU 

CFPB 

coo 

DODD-FRAN K ACT 

FCA 

FDIC 

FEDERAL RESERVE 

FEDERAL RESERVE BOARD 

FEDERAL RESERVE SYSTEM 

FFETF 

FFIEC 

FIRREA 

FLEe 

FOIA 

FTC 

Automued de~ring house 

Annual Pe_rrentage Ra te 

The Consumer Financial Protection Bureau 

The Consumer Fim.llcial Protection Bureau 

Chief Opcl1lting Officer 

The Dodd·PllI nk Wllll Street Reform iIld Consumer 

Protection Act 

Pann Credit Administl1ltion 

The Fecicrill Deposit Insurance Corpo ration 

T he Board of Govemors of lhe Fedenl Reserve S}'$lem 

The Board of Governors of the Federal Reserve System 

The Board ofGovemors of the Pt-deul se v~ Sr-'Iem 

PinlUlcial Fraud Enforcement Task Force 

FedCfll.l financia.l Instinniom Exunuurion Council 

The Financial instinuiollS Rcfonn, Recovery, :wd 

Enfo rcement Act 

Fimmcial LitefilCY !lnd Education CommisSion 

Freedom of lnfo[JIlslion Act 

The Federal Trade Commission 

81 SEMI·ANNUAL REPORT OF THE (FPS, JULY 2012 
129 


FY 

GAO 

HAMP 

HUD 

MlO 

MOU 

NCUA 

NMlSR 

NSF 

OCC 

OHC 

OMWI 

CTS 

PCS 

PIRG 

RFI 

RMS 

SAFE ACT' 

SES 

SIGTARP 

TREASURY 

VITA 

82 

Fiscal y<'!lr 

Government ACCOlIllliolbility Office 

Home Affordable Modifi ca tion Prog (ILrIl 

The U.S. Dep~rtmenl of H owing and UrblUl Development 

Mo rtgage Loan Origin,noes 

MelUonlncil.Uu of undersr:mding 

The Na tional Cttdit Union Adtninistrntion 

Nlllionwide Mortgage Liceming System and Reginry 

Non -suffi cient funds 

The O ffice of the Comptroller a f the Currency 

aftiee o fHulU(IJl Capilll.l 

O ffice o f Minority and Women Inclusion 

Th e Office ofllu.ifl Supervision 

PermilJ1enl change of station 

United Sllltes PubJjc Interest e~ell rrh Group 

Requt"st for Infoml!ltion 

Residential monga.ge-bRcked securities 

The ~cure and Fair Enforcement for Mortgage Licensing 

A" 

SupelVisol)' Ex:unin atiOl:l SYSTem 

Special Inspeclor Gcnera1 for the Troubled Asstt Relief 

Program 

The D epartment of the TtCa5ury 

V01U01""I Income Ta.."( Assistance 

SEMI-ANNUAL REPORT OF THE CFPB, JULY 2012