Consumer Financial Protection Bureau (CFPB)
Supervisory Highlights, Issue 33 – Spring 2024
The CFPB issued the Spring 2024 edition of its Supervisory Highlights. This edition focuses on mortgage servicing. Some of the CFPB’s key findings of the Supervisory Highlights include:
Illegally charging and obscuring fees: Mortgage servicers charged homeowners prohibited and unauthorized fees. These included prohibited fees for property inspections and late fees that exceeded amounts allowed by their mortgage loan agreements. Mortgage servicers also failed to explain the reasons for fees by not describing them adequately on statements.
Keeping homeowners on the hook for fees during COVID-19: During COVID-19, many servicers used a streamlined process to determine repayment options for struggling homeowners. Some servicers failed to waive late fees and penalties, as required.
Missing deadlines to pay property tax and home insurance: Mortgage servicers that accepted or required money from borrowers to pay taxes and insurance failed to make those payments in a timely manner, which caused some borrowers to incur penalties. Servicers only took responsibility for those penalties for missed on-time payments if homeowners submitted complaints.
Deceiving homeowners and failing to properly evaluate them for repayment options: Some servicers sent notices to homeowners in financial distress that stated they had been approved for a repayment option. In fact, no final decisions had been made, and some of the homeowners were ultimately rejected. Examiners also found servicers sent some homeowners false notices saying that they had missed payments and should apply for repayment options. Servicers also improperly denied requests for help and failed to evaluate struggling borrowers for repayment options as
required under the CFPB’s mortgage servicing rules.
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Federal Trade Commission (FTC)
FTC Announces Rule Banning Noncompetes
The FTC issued the Non-Compete Clause Rule final rule. The final rule which provides that it is an unfair method of competition for person to enter into non-compete clauses with workers on or after the effective date of the final rule.
Existing non-competes, entered into before the effective date of the final rule take different approaches for senior executives than for other workers. For senior executives, existing non-competes can remain in force, while existing non-competes with other workers are not enforceable after the effective date.
The final rule will be effective 120 days after it is published in the Federal Register.
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U.S. Department of Labor (DOL)
U.S. Department of Labor Finalizes Rule to Increase Compensation Thresholds for Overtime Eligibility
The DOL published the final rule which increases the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements. Effective July 1, 2024, the salary threshold will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025. The July 1 increase updates the present annual salary threshold of $35,568 based on the methodology used by the prior administration in the 2019 overtime rule update.
This change will apply to credit unions in Arizona, Idaho, Oregon, and Wyoming which follow the federal standard. The state requirement in Colorado is already $54,999.98 for 2024 and in Washington it is $67,724.80 for 2024.
DOL Amends Definition of an Investment Advice Fiduciary
The DOL issued a final rule amendment defining when a person renders “investment advice for a fee or other compensation, direct or indirect” with respect to any moneys or other property of an employee benefit plan. The updated definition of an investment advice fiduciary, which takes effect on Sept. 23, 2024, applies when trusted financial services providers give compensated investment advice to retirement plan participants, individual retirement account owners and plan officials responsible for administering plans and managing their assets.
The current definition of investment advice fiduciary, adopted in 1975, was written when individual retirement accounts were less common and before 401(k) plans existed. Most people relied on traditional pensions for retirement security. Today, individual plan participants and IRA owners — not professional money managers — are expected to make important, complex financial decisions, and they seek help from expert advisers, which made updating this rule necessary.
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