CFPB Issues NPRM to Delay Compliance With QM Rule; Sues Payment Processor

The Consumer Financial Protection Bureau yesterday made a pair of announcements — delaying the enactment date of a rule that was set to go into effect July 1 and filing a lawsuit against a payment processor and its former chief executive for aiding clients that were taking advantage of individuals by tricking them into purchasing unnecessary services.

The CFPB is seeking to delay the mandatory compliance date with its Qualified Mortgage rule until October 1, from July 1. The Qualified Mortgage rule will presume that home loans are being made based on a determination by the lender that the borrower will be able to repay the loan. The delay in the compliance date is intended to “ensure homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need,” the CFPB said in a release. Extending the compliance date allows the current definition of a qualified mortgage, which is based on a borrower’s debt-to-income ratio, to remain in effect until October 1.

Comments on the proposed rule are due before April 5.

The CFPB also announced it had filed a lawsuit against

Brightspeed Solutions and its founder and former chief executive, Kevin Howard, for knowingly processing payments for companies that were defrauding consumers. Brightspeed, which shut down in 2019, was used by companies that were allegedly offering consumers technical support services, but were instead “tricking” consumers, especially older Americans, “into purchasing expensive and unnecessary antivirus software or services.” Brightspeed allegedly processed $71 million of payments for more than 100 such companies. The processor knowingly continued to work with companies even though there were more than 1,000 consumer complaints filed, as well as inquiries from police departments across the country, and return rates that averaged more than 20%.