Email this page Print-Friendly PDF
Print this page


To subscribe to receive Goodwin Procter alerts and publications click here


  1. CFPB and FDIC Issue Joint Enforcement Action Related to Credit Card Add-on Products
  2. CFPB Issues First Decision and Order on Petition to Modify or Set Aside Civil Investigative Demand
  3. CFPB Announces Consumer Advisory Board Members
  4. CFPB Releases Safe Harbor Countries List for Remittance Transfers
  5. CFPB Testifies About Semi-Annual Report
  6. CFPB Seeks Comment on Information Collection for Pilot Short-Form Credit Card Agreement
  7. CFPB Releases Study Finding that Credit Scores Differ between Lenders and Consumers
  8. House Committee on Small Business Releases CFPB’s Responses to Questions on Impact of Regulations on Small Businesses THG
  9. CFPB Releases Draft Five-Year Strategic Plan
  10. FFIEC Releases 2011 HMDA Data
  11. FTC Focused on FCRA Enforcement
  12. FTC Finalizes Changes to Agency Procedure to Streamline Its Investigative Process
  13. FHFA Releases Report on Its Loan Repurchase Program
  14. OCC Issues Supervisory Guidance on Rental Properties
  15. FDIC Issues New Classification System for Citing Consumer Protection Violations
  16. FHFA Imposes Higher Origination Costs for Mortgages Backed by GSEs in Five States
  17. Maryland Court of Appeals Rules Foreclosing Lender Cannot Be Bona Fide Purchaser Where It Has Constructive Notice
  18. Third Circuit Dismisses Suit Alleging FDCPA Violations in Foreclosure
  19. Bank Settles Class Action Over Finance Charge Hikes
  20. Texas State Court Holds That Proof of Sale Was Not Commercially Reasonable
  21. Federal Court Holds Massachusetts Private Mortgage Insurance Law is Preempted by HOLA
  22. Federal Court Holds Loan Servicer Exempt Under TILA “Administrative Convenience” Safe Harbor When Conducting Foreclosure
CFPB Issues First Decision and Order on Petition to Modify or Set Aside Civil Investigative Demand

The CFPB recently denied a petition to set aside a civil investigative demand. The ruling, the first of its kind, is the result of a petition filed by the subject—a mortgage lender—of an investigation into whether the practice of ceding premiums from private mortgage insurance companies to captive reinsurance subsidiaries of mortgage lenders violated the Real Estate Settlement Procedures Act and the Consumer Financial Protection Act. In its civil investigative demand, the CFPB’s Enforcement Team requested interrogatories and documents in five areas: (1) the mortgage lender’s captive reinsurance contracts, terms, and negotiations; (2) referrals of business from the mortgage lender to mortgage insurance providers; (3) financial statements reflecting funds ceded to the mortgage lender’s captive reinsurer by mortgage insurers and reinsurance claims paid or projected; (4) actuarial, accounting, and other analyses of the legitimacy of the captive reinsurance arrangements; and (5) promotion and marketing of captive reinsurance arrangements. The mortgage lender vigorously opposed the CFPB’s request and filed a petition challenging portions of the CID, such as that insufficient notice of the purpose of the investigation was provided, and that the CID was overbroad and imposed an undue burden (e.g., covers its entire mortgage business).

In denying the petition to set aside the CID, the CFPB first noted that CIDs serve the important function of closing the “substantial information gap” between the CFPB and a subject company. According to the CFPB, the CFPA and its implementing regulations authorize it to issue a CID whenever it “has reason to believe” that the subject has information or documents “relevant to a violation.” Citing Oklahoma Press Publ’g Co. v. Walling, 327 U.S. 186, 209 (1946), the CFPB noted its broad latitude in the use of investigative subpoenas, which facilitate the CFPB’s determination of the likelihood that a potential violation has occurred and/or is occurring. In reaching its decision, the CFPB concluded that the mortgage lender did not meet the standard set by courts in challenging an administrative subpoena as overbroad—that the information sought was irrelevant to the investigation or caused an undue burden. Of importance is the CFPB’s apparent admonishment of the subject company for failing to make a “good faith effort” to negotiate the terms of the CID, serving as a cautionary tale to future parties of the importance of the mandatory meet and confer requirements prior to filing a petition to modify or set aside a CID.

© 2014 Goodwin Procter LLP. All rights reserved. This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP, Goodwin Procter (UK) LLP or their attorneys. Prior results do not guarantee similar outcome.

Goodwin Procter LLP is a limited liability partnership which operates in the United States and has a principal law office located at 53 State Street, Boston, MA 02109. Goodwin Procter (UK) LLP is a separate limited liability partnership registered in England and Wales with registered number OC362294. Its registered office is at Tower 42, 25 Old Broad Street, London EC2N 1HQ. A list of the names of the members of Goodwin Procter (UK) LLP is available for inspection at the registered office. Goodwin Procter (UK) LLP is authorized and regulated by the Solicitors Regulation Authority.