Consumer Financial Protection Bureau Director Richard Cordray again came under fire from Congressional Republicans who remain opposed to the bureau and its level of power and authority, and concerned about its impact on smaller mortgage lending entities. During a hearing last week of the Senate Banking, Housing and Urban Affairs Committee, Sen. Richard Shelby, R-AL, the ranking Republican, once again recited his refrain of concern about just how accountable the CFPB is, starting with how the bureau has exercised its authority, citing...

In another sign of just how anxious the mortgage lending community is about the Consumer Financial Protection Bureau’s pending ability-to-repay rulemaking, especially the aspects that deal with qualified mortgages, the leading industry trade groups again wrote to CFPB Director Richard Cordray late last week to reiterate their views and concerns. In particular, they said they wanted to express their continued strong support for a QM that meets three critical requirements, the first of which is that the QM “must be broadly...

Sixteen industry trade groups urged the Consumer Financial Protection Bureau to abandon a proposal to create a new, higher “all in” annual percentage rate calculation that would include additional fees and charges. The APR measure is one part of the CFPB’s massive proposed rule designed to streamline and harmonize mortgage disclosure requirements under the Truth in Lending Act and Real Estate Settlement Procedures Act. The trade groups pointed out that the bureau’s own research indicates that consumers confuse the APR...

The Community Mortgage Banking Project, the Housing Policy Council of The Financial Services Roundtable, and the Mortgage Bankers Association recently expressed concern to the Consumer Financial Protection Bureau about some aspects of the agency’s proposed rulemaking on high-cost mortgages that would implement changes to the Home Ownership and Equity Protection Act as per the Dodd-Frank Act. The changes would establish new definitions of points and fees and prepayment penalties as well as new restrictions and requirements...

As the Consumer Financial Protection Bureau’s forthcoming ability-to-repay/qualified mortgage rulemaking continues to keep the mortgage lending community up at night, talk of a compromise legal standard has moved beyond the zero-sum/either-or approach that would involve either a rebuttal presumption or a safe harbor. Speaking at the North Carolina Bankers Association’s American Mortgage Conference in Raleigh, NC, last week, some industry representatives suggested it could be both – or more precisely, first one and then the other...

The Securities and Exchange Commission has decided to set aside efforts to standardize credit ratings due to serious concerns raised by credit rating agencies and other market participants. Instead, the SEC said it will focus on rulemaking under the Dodd-Frank Act to achieve transparency in credit rating performance and in the methods used to determine credit ratings. In a mandated report to Congress on the standardization of credit ratings, the SEC said...

Uncertainty about risk in a rapidly changing regulatory environment and the still destabilized economics of the housing market continue to keep private capital from returning to the mortgage market, according to industry officials at this week’s American Mortgage Conference sponsored by the North Carolina Bankers Association. “Everybody’s very concerned about the role of the government, that the government is supporting too much of the marketplace today,” said Meg Burns, senior associate director for housing and regulatory policy for the Federal Housing Finance Agency. “But it’s really hard to envision how people can pull back from that government support when we don’t actually understand not only who holds the credit risk but what the requirements are for retaining that risk in terms of capital.” All of the Dodd-Frank Act regulations that are still in play are...

Two years after the enactment of the Dodd-Frank Act, banks with mortgage operations are faced with the question of whether to build up or scale back their mortgage lending operations, or simply divest and wait for a more favorable regulatory environment. Financial institutions are beginning to feel the impact of Dodd-Frank as the Consumer Financial Protection Bureau carries out its mandate to write rules based on the law’s goal of targeting systemic risk and protecting consumers. But while ...

One of the most worrisome elements to emerge so far in the Consumer Financial Protection Bureau’s proposed rule on mortgage loan originator compensation is the agency’s consideration of factors that may serve as proxies for prohibited transaction terms and how they may be used to restrict originator compensation. The CFPB proposal would implement statutory changes made by the Dodd-Frank Act to the Truth in Lending Act/Regulation Z loan originator compensation rule, including a new, additional restriction on the imposition of any upfront discount points, origination points or fees on consumers under certain circumstances. The proposal provides...

$7.5 Million FHA Mortgage Fraud Scheme. The Department of Justice has filed charges against top executives of a real estate brokerage for their participation in a mortgage fraud scheme that may cost the FHA $7.5 million in losses. Indictments were unsealed earlier this month in Manhattan federal court charging Mitchell Cohen and Erin Davis, the owner and sales manager, respectively, of Buy-A-Home, a real estate brokerage business in Queens, NY. The criminal charges follow a civil fraud lawsuit filed by the U.S. Attorney’s Office for the Southern District of New York last December against ...