The Consumer Financial Protection Bureau [1] (CFPB) has granted a no-action letter (NAL) to Bank of America, N.A. regarding the bank’s funding arrangements with housing counseling agencies (HCAs) certified by the U.S. Department of Housing and Urban Development (HUD). NALs provide increased regulatory certainty through a statement that the Bureau will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances.
The CFPB issued a revised NAL Policy in September 2019, which improved on the Bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question. According to the CFPB, regulatory uncertainty can “hinder the development” of innovative products and services that benefit consumers.
NALs provide increased regulatory certainty through a statement that the CFPB will not bring a supervisory or enforcement action against a company for providing a product or service under certain circumstances.
“The new NAL Policy improves on the Bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question.” the CFPB says.
Basing its application on the template the Bureau approved in response to HUD’s request, Bank of America applied for a NAL to facilitate funding arrangements with HCAs.
The CFPB’s first NAL under the new policy is in response to a request by the Department of Housing and Urban Development (HUD) on behalf of more than 1,600 housing counseling agencies (HCA) that partake in HUD’s housing counseling program.
HUD discussed concerns in 2018 to the CFPB about the HCAs and lenders not entering into agreements that would fund counseling services due to uncertainty of the Real Estate Settlement Procedures Act (RESPA).
Bank of America’s NAL application can be found here. [2]