A number of recent headline-generating fair lending settlements may have focused largely on issues of pricing disparities, but there has been a sea change among policymakers these days moving in the direction of greater access to mortgage credit, some industry experts say. During an Inside Mortgage Finance webinar this week, Jeffrey Naimon, a partner in the Washington, DC, office of the BuckleySandler law firm, said the industry is seeing a pendulum swing from the focal point of concern being loan pricing to loan access. “Especially during the time when subprime loans were available, there was a lot of concern that minority borrowers were being steered into higher-cost subprime loans,” he told attendees. “The adoption of the loan originator compensation rule by the Consumer Financial Protection Bureau affected...

Provident Funding, one of the largest wholesale mortgage lenders in the nation, has agreed to pay $9 million in damages for funding loans with higher broker fees on mortgages made to African Americans and Hispanics over a five-year period ending in 2011. According to a statement and notice of charges put out late last week by the CFPB, the privately held lender charged roughly 14,000 minorities higher “total broker fees” than white borrowers. The $9 million will feed a settlement fund that will pay minorities harmed by the practice. “The higher fees were not based on the borrowers’ creditworthiness or other objective criteria related to borrower risk or loan characteristics, but on their race or national origin,” the CFPB said...

CFPB May Review Lender-Paid MI. Pricing on lender-paid mortgage insurance policies has come down over the past several months, apparently spurring the CFPB to take a look at what’s going on behind the curtain. Citing industry officials who claim to have knowledge of the situation, Inside Mortgage Finance, an affiliated publication, reported late last week that the powerful consumer regulator may focus on whether there is some kind of quid pro quo going on between lenders and mortgage insurers. In particular, the CFPB is interested in the discounting of LPMI in exchange for a lender sending more of its MI business to an insurer and whether such a practice violates the Real Estate Settlement Procedures Act, the newsletter reported. In ...

CFPB, Justice Department Engaged in Fair-Lending Investigations. The Department of Justice’s Civil Rights Division was engaged in 10 joint fair- lending probes with the CFPB at the end of 2014 as the result of referrals from the bureau, according to a recently released report to Congress. In five of the probes, the parties were in the midst of pre-suit negotiations, the report indicated. “In addition, seven joint investigations with the CFPB, which were initiated before 2014, are ongoing,” the report continued.The division received a total 18 referrals in 2014: 15 from the CFPB and three from the Federal Deposit Insurance Corp. Of those 15 referrals from the bureau, seven had to do with issues of race/national origin, three with ...

The CFPB and the Navajo Nation took joint action last week against companies and individuals who allegedly operated an illegal tax-refund scheme. The alleged scam was based on tax-preparation franchises steering low-income consumers, including many citizens of the Navajo Nation, toward high-cost tax-refund-anticipation loans, the bureau said. The complaint identified Jeffrey Scott Thomas, who through his company, J Thomas Development of NM, Inc., owned four H&R Block tax-preparation franchises in New Mexico. The bureau and the Navajo Nation did not find that H&R Block participated in this scheme, the CFPB said, and H&R Block terminated its relationship with those franchises, which then closed in September 2014. “Before they closed, the tax franchises catered largely to low-income citizens of the Navajo ...

The CFPB’s latest Supervisory Highlights report identified a number of issues observed during examinations related to mortgage origination, fair lending, consumer reporting, debt collection, and deposits. “In one or more examinations, examiners found that branch managers were loan originators and owners of related marketing services entities,” the report said. Examiners “found instances of improperly allocated expenses on branch income statements which resulted in marketing services entities receiving income based on the profitability of retail loans originated by branch managers. Consequently, branch managers, as owners of the marketing services entities, received compensation based on the terms of transactions originated by the branch managers themselves.” In these cases, bureau examiners directed that compensation to loan originators based on a term of a ...

Loan Modification Trial Payment Plans for Forward Mortgages. The Department of Housing and Urban Development has announced requirements for trial plan duration, required signatures, and reporting for trial payment-plan agreements, and the conditions under which FHA deems a TPP to have failed.Lenders must implement the requirements in Mortgagee Letter 2015-07 for all TPPs offered to borrowers on or after June 1, 2015. FHA Publishes Additional Sections of HUD Single-Family Policy Handbook. The FHA has published additional sections for the SF Handbook, including the following: Doing Business with FHA – Lenders and Mortgagees Doing Business with FHA – Other participants in FHA Transactions – Appraisers; Quality Control, Oversight and Compliance – Lenders and Mortgagees; Quality Control Oversight, and Compliance – Other Participants in FHA Transactions – Appraisers ...

The Department of Justice shows no sign of letting up in its pursuit of FHA lenders that originate improperly underwritten mortgages that later result in significant taxpayer losses. MetLife Home Loans, which is no longer in operation, became the newest addition to the government’s growing list of financial institutions that opted to settle allegations brought under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act, in connection with the origination and servicing of FHA-insured mortgages. Under the agreement, MetLife will pay $123.5 million to resolve allegations that its predecessor it “[turned] a blind eye to mortgage loans that did not meet basic FHA underwriting standards,” and stuck the FHA and taxpayers with the bill when the loans defaulted. In June 2013, MetLife Bank merged into MetLife Home Loans, a mortgage finance company ...

A number of industry groups ramped up their efforts to convince the CFPB to revisit its auto financing enforcement policy, after the release of an industry-funded report that challenged the analysis that undergirds it. The impetus behind the challenge is a Charles River Associates study commissioned by the American Financial Services Association that analyzed the complexities of the indirect finance market and evaluated the CFPB’s current fair lending investigations, with special attention to the proxy methodology used by the bureau. The CRA study concluded that “observed variations in ‘dealer reserve’ at the financial institution portfolio level are mitigated when market complexities are considered and adjustments are made for proxy bias and error.” This suggests to industry representatives that there are ...

FHA lenders should spend the next couple of months familiarizing their staff with the requirements in the FHA’s new Single Family Housing Policy Handbook to ensure proper implementation of the changes on June 15, 2015, according to compliance experts. The impending changes in the Single Family Handbook are complex and significant. Lenders will need proper legal guidance to navigate and understand hundreds of pages of consolidated housing policies and guidance, as well as substantive changes to FHA requirements, said K&L Gates experts in a recent analysis. The handbook is a consolidated, authoritative source of single-family housing policy and is meant as a one-stop resource for FHA lenders. It gathers and streamlines all FHA requirements, which are currently spread throughout various handbooks, mortgagee letters and other documents, making it easier for lenders to ...