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Reshaping Debt Collection

Debt collection is being reshaped in light of plans by the Consumer Financial Protection Bureau (CFPB) to put the finishing touches on collection regulations, stated Law360.com. The Bureau is proposing modifications to mortgage data reporting requirements this fall, slamming the brakes on those searching for a rulemaking moratorium in the eye of COVID-19.

Additionally, other rulemaking activities being hatched by the CFPB for the coming months were part of a blog post pronouncing publication of its most current regulatory agenda. However, the point at which its overdue payday lending rule could be completed was unaddressed.

"Even as we’ve continued to move forward with our other regulatory work, we’ve taken several steps in response to the COVID-19 emergency,” the CFPB said in its post by Susan Bernard, head of its regulations office.

The post continued that the agency’s been "prioritizing activities aimed at protecting the stability of the financial sector and enhancing its recovery once the public health crisis has passed and guarding consumer financial well-being during following the COVID-19 emergency."

Meantime, the CFPB’s been urged by, among others, consumer advocates, to temporarily freeze rulemaking efforts that don’t address the pandemic. They insist the agency should continue to strictly hone in on its response to the crisis rather than creating policy while the public’s attention’s glued to coronavirus.

In any event, while planning predating the pandemic’s reflected by the recent regulatory agenda, in its accompanying blog post, the CFPB said it plans to “move these and other pending regulations forward” later this year and into next spring.

Also outlined by the agency were other important rulemaking initiatives it expects to make progress on in upcoming months. Included are rules proposed last year that would clarify consumer communication standards for debt collectors. They also would restrict certain collections practices. That would mark the first regulations ever issued under the Fair Debt Collection Practices Act, a four-decade-old federal law governing the industry.

In October, the CFPB plans to take final action on these draft rules, it said. Additional action to cement a recent proposal that focused on time-barred debt disclosures is slated “at a later date.”

Furthermore, this fall, the agency plans to propose new Home Mortgage Disclosure Act rules. They’d address information lenders must report and, “in light of consumer privacy interests,” how the collected data is disclosed publicly.

“As consumers seek temporary relief from lenders, the pandemic is impacting the operations of financial companies that are eager to help their customers during this unprecedented time,” said CFPB Director Kathleen L. Kraninger.

“The Bureau, along with our state and federal partners, has released prior guidance encouraging financial institutions to work constructively with borrowers and other customers affected by COVID-19 to meet their financial needs, added Kraninger.

About Author: Chuck Green

Chuck Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune and others covering various industries, including real estate, business and banking, technology, and sports.

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