For some time the mortgage industry, without success, has asked the US Department of Housing and Urban Development to provide a clear answer to the question of whether Deferred Action for Childhood Arrival (DACA) recipients are eligible for FHA loans.  HUD finally provided a clear answer in responding to an inquiry from Representative Pete Aguilar (D-CA): “DACA recipients remain ineligible for FHA loans.” HUD policy, currently reflected in HUD Handbook 4000.1, provides that “[n]on-U.S.…

In this podcast, we discuss the opportunities and challenges created by the use of AI models in consumer financial services, including the benefits of explainable AI and its implications for the consumer financial services industry, especially for applications where understanding the model’s reasons for returning a score or decision are necessary. Click here to listen to the podcast.    …

To mark the first six months of Kathy Kraninger’s tenure as CFPB Director, the CFPB issued a press release providing highlights of the Bureau’s activities during that period. The activities highlighted are those in the areas of consumer financial education, supervision, enforcement, and rulemaking.  The takeaway from the press release is that the Bureau continues to be very active under Director Kraninger’s leadership.  While the CFPB has reduced the number of investigations it is handling,…

Democratic Senators Elizabeth Warren and Doug Jones have sent a letter to the CFPB, Federal Reserve, OCC, and FDIC expressing concern that fintech and traditional lenders using algorithms in their underwriting processes may be engaging in unlawful discrimination.  (Such algorithms are often referred to as “artificial intelligence.”) In their letter, the Senators reference research results showing that “the algorithms used by FinTech lenders are as discriminatory as loan officers.”  They state that “the federal government…

Having announced in April 2018 that it would be holding a symposia series, the CFPB has now set a date for the first symposium of the series.  The first symposium, to be held on June 25, 2019, will focus on the Dodd-Frank Act’s prohibition of abusive acts or practices, specifically the meaning of abusiveness.  It will be webcast on the Bureau’s website. The Dodd-Frank Act does not authorize state attorneys general to bring claims…

The Federal Trade Commission (“FTC”) recently rescinded several Model Forms and Disclosures associated with the Fair Credit Reporting Act (“FCRA”), determining they are no longer necessary, given that the CFPB has issued its own model forms and disclosures.  The FTC forms that have been rescinded and the corresponding CFPB forms that now apply are as follows: Rescinded FTC Form: Appendix A – Model Prescreen Opt-Out Notices | Corresponding CFPB Form: Appendix D to Part 1022…

Utah Governor Gary Herbert signed H.B. 378, Regulatory Sandbox, into law on March 25, 2019.  This bill created the nation’s third regulatory sandbox program for fintechs, after Arizona, which enacted sandbox legislation in March 2018, and Wyoming, which enacted sandbox legislation in February of this year. Regulatory sandboxes are laboratories for the development of innovative technologies in an environment that is free from onerous government restrictions.  The sponsor of Utah’s legislation, Rep.…