The CFPB has frequently failed to provide the mortgage industry with enough guidance to ensure proper compliance with its substantial outpouring of new rules and regulations, resulting in “regulation by enforcement” far too often, according to a new white paper issued by the Mortgage Bankers Association.“Director Richard Cordray has argued that the bureau’s enforcement regime provides ‘detailed guidance for compliance officers’ and that it ‘would be compliance malpractice for the industry not to take careful bearings from [consent] orders about how to comply with the law,’” the white paper pointed out. “Unfortunately, the reality is that the bureau’s enforcement program offers only fragmentary glimpses of how the bureau interprets the laws and regulations it enforces.” Instead of giving the ...

Much of the historical discussion about the mortgage industry going fully digital and adopting e-mortgages has revolved around cost savings, greater efficiencies, validating compliance and other benefits. But at the end of the day, the biggest reason is that lenders’ customer base is increasingly focused on digital technology, and lenders need to go where the borrowers are. “That’s where the consumers are, right? Finally, everybody’s going online to shop for most of their products, and mortgages are starting to happen the same way,” said Tim Anderson, director of eServices for DocMagic, during a webinar last week sponsored by Inside Mortgage Finance. “They’re going out there looking for rates and pricing, they’re looking for real estate. If you want to capture that marketplace, you meet them out there in cyberspace.” Scott Stephen, president of the online division of Guaranteed Rate, noted...

Lenders and investors at the ABS East conference this week hit officials from the Consumer Financial Protection Bureau with a number of complaints about the agency’s mortgage rules. The bureau officials suggested that data will have more of an impact on policy changes than general complaints. Patrick Orr, a policy analyst at the CFPB, reiterated that the bureau is accepting feedback and considering changes or guidance for the TILA-RESPA Integrated Disclosure rule, special qualified-mortgage standards that apply to loans eligible for sale to the government-sponsored enterprises and aspects of the ability-to-repay rule, among other issues. A representative from one lender said...

When House Financial Services Committee Chairman Jeb Hensarling, R-TX, first introduced the second version of his Financial CHOICE Act, he acknowledged the comprehensive regulatory relief package might not make it through the Senate in one piece. He said he had a “short game” and a “long game,” suggesting he was open to small, incremental change while still pushing forward with more comprehensive change over the long haul. Last week, the Financial Institutions and Consumer Credit Subcommittee executed a little of that “short game” strategy, holding a hearing to consider a handful of legislative proposals to foster a more efficient federal financial regulatory regime, including two mortgage-related bills. The potentially more significant bill is...

Members of Congress wasted no time getting to work on the CFPB when they returned to the nation’s capital last week after the Labor Day holiday. A subcommittee of the House Financial Services Committee held a hearing to consider a few legislative proposals to foster a more efficient federal financial regulatory regime, including a soon-to-be introduced TRID Improvement Act. Slated to be introduced by Rep. French Hill, R-AR, the TRID Improvement Act of 2017 would amend the Real Estate Settlement Procedures Act and the Truth in Lending Act to expand the period in which a creditor is allowed to cure a good-faith violation on a loan estimate or closing disclosure from 60 to 210 days after consummation. The bill also ...

The biggest mortgage lenders and the national industry trade groups have yet to formally submit comments to the CFPB regarding the bureau’s proposal that would close the so-called black hole associated with the agency’s integrated disclosure rule. But smaller players aren’t waiting around for the big dogs to weigh in and are expressing their support for the agency’s proposed solution. Monica Montgomery, head of mortgage compliance for Dubuque Bank & Trust, said she fully supports removing the four-business-day limit for providing closing disclosures for purposes of resetting tolerances and determining if an estimated closing cost was disclosed in good faith. “There are many circumstances where a closing is delayed beyond the control of the creditor after a CD had been ...

Legal liability in the context of the so-called black hole in the CFPB’s TRID integrated disclosure rule remains a source of much anxiety for mortgage lenders, according to experts such as Rod Alba, senior vice president of mortgage markets, financial management and public policy for the American Bankers Association. “For lenders in general, [the biggest concern] is simply the liability that results from allowing the transaction to be negotiated until the last minute,” he said last week in an interview. “We don’t like telling the consumer, ‘You’re now three business days from closing; we can no longer negotiate and you must go through on this deal.’ That’s not pleasant.” Alba continued: “The consumer may say, ‘Well, no, that chimney has ...

The Consumer Financial Protection Bureau has begun receiving public comments in response to its proposal to close the so-called black hole in its integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. Interviews this week found that top experts dealing with the issue are pleased the bureau is addressing the problem, which is among the most significant issues related to the new disclosure regime. “Although the ‘black hole’ is highly technical, the impacts on lenders are significant,” noted former CFPB official Benjamin Olson, now a partner with the BuckleySandler law firm in Washington, DC. He noted...

The CFPB’s so-called TRID 2.0 amendments, and the related proposal to deal with the “black hole” problem – the limited ability of a lender to reset tolerances with a closing disclosure – were published in the Aug. 11, 2017, Federal Register. That act establishes Oct. 10, 2017, as the effective date of the TRID 2.0 amendments, as well as the comment deadline for the black hole proposal. The amendments, which were finalized in July, essentially codify the CFPB’s informal guidance on various issues and make additional clarifications and technical amendments. They also create tolerances for the total of payments, adjust a partial exemption mainly affecting housing finance agencies and nonprofits, and extend coverage of the Truth in Lending Act/Real Estate Settlement Procedures ...

If lawmakers and regulators are interested in bringing capital back to the private mortgage market and facilitating borrower access to credit in a responsible manner, they must make much-needed reforms to a handful of key mortgage rules promulgated by the CFPB, according to bond giant Pacific Investment Management Co. One recommended revision is eliminating the expansion of assignee liability for investors under the CFPB’s ability-to-repay rule. “Currently under the Dodd-Frank Act, mortgage investors are liable for mistakes made by lenders in the mortgage origination process for certain mortgage loans that are not deemed qualified mortgages,” said PIMCO. “Since investors have no role or discretion in the mortgage origination process, we believe this is not only nonsensical, but also has the ...