Mortgage compliance experts say there’s still a strong need for the Consumer Financial Protection Bureau to provide more guidance about acceptable business relations under Section 8 of the Real Estate Settlement Procedures Act. One of the issues that came to the fore in the bureau’s enforcement action against PHH Mortgage was lenders’ relationships under marketing services agreements. Even though banks these days may be using MSAs to a lesser extent than nonbanks, there is still a need for the CFPB to more clearly delineate do’s and don’ts. “On the lender side of the mortgage industry, there is...
The long-running legal confrontation between PHH Corp. and the CFPB took another turn right before the holidays, with the nation’s eighth largest lender telling the District of Columbia Circuit Court of Appeals that its three-judge panel got it right in October when it ruled the CFPB’s leadership structure is unconstitutional. “The panel grounded its decision in existing Supreme Court precedent and other settled authority,” the company said. “It remedied a violation of the separation of powers by allowing the agency to continue to operate subject to basic constitutional constraints, without addressing the decision’s effect on past actions.” Further, “the panel interpreted the Real Estate Settlement Procedures Act according to its plain language and consistently with every other circuit to consider ...
The important constitutional issue of separation of powers, and the perhaps somewhat unorthodox manner in which the three-judge panel of the District of Columbia Circuit Court of Appeals concluded that the CFPB’s leadership structure is unconstitutional, justify the court granting the bureau’s request for a rehearing en banc in its dispute with PHH Corp., the U.S. Justice Department told the court. “The conferral of broad policymaking and enforcement authority on a single person below the president, whom the president may not remove except for cause ... raises a significant constitutional question that the Supreme Court has not yet squarely confronted,” the DOJ said. To date, the nation’s highest court has sanctioned a limitation on the power to remove principal officers ...
Mortgage-related issues will be a big component of the CFPB’s fair lending priorities for 2017, the bureau indicated in an online blog post late last year. Among the issues for the mortgage industry are redlining and servicing. “While the bureau has taken important strides in our efforts to protect consumers from credit discrimination and broaden access to credit, we continue to identify new and emerging fair lending risks and we will monitor institutions for compliance,” said Patrice Ficklin, associate director of the CFPB’s Office of Fair Lending. Going forward, then, the bureau is increasing its focus in three key areas, the first of which is redlining. “We will continue to evaluate whether lenders have intentionally avoided lending in minority neighborhoods,” ...
CFPB Again Moves Against Finance Company. Late last month, the CFPB took its second legal action against Military Credit Services, LLC, a Norfolk, VA-based finance company, accusing the company of making loans with improper disclosures.... TransUnion Agrees to $19.4 Million Settlement. TransUnion, one of the largest credit reporting agencies in the U.S., has agreed to settle a dispute with the CFPB over the company’s practices related to the advertising, marketing and sale of consumer reports, credit scores or credit marketing products to consumers, the firm said in a recent Form 8-K filing with the Securities and Exchange Commission....
The Consumer Financial Protection Bureau has fined three reverse-mortgage lenders $790,000 in combined civil penalties to resolve charges of deceptive advertising to consumers. The bureau also ordered American Advisors Group (AAG), Reverse Mortgage Solutions (RMS) and Aegean Financial to stop the misleading ads and to implement compliance plans that include an advertising compliance policy. The misleading ads allegedly violate the federal Mortgage Acts and Practices – Advertising Rule (Regulation N) and the Dodd-Frank Act. AAG is the largest originator of FHA-insured reverse mortgages in 2016, with a 13.9 percent share of the HECM market. RMS third with a 4.11percent share, while Aegean, in 27th place, accounts for 0.48 percent. The three lenders allegedly ran ads that similarly misrepresented that a consumer with a reverse mortgage could not lose the ...
A recent ruling by Florida’s Fifth Court of Appeal, if finalized, will affect any FHA foreclosure case that references the Department of Housing and Urban Development’s mandatory face-to-face interview with borrowers, according to industry attorneys. In Palma v. JPMorgan Chase Bank, Nat’l Ass’n, et al., the state appellate court found that HUD’s face-to-face interview requirement is “a condition precedent to foreclosure” for Florida mortgages that specifically incorporate the HUD regulation. Prior to the decision, no Florida appellate court has held that HUD’s requirement constitutes a condition precedent to foreclosure, according to attorneys with the Richmond, VA, law firm McGuireWoods. “Although this decision is not yet final and rehearing is likely, it has far-reaching impacts on the conditions and evidence required for foreclosure trials throughout Florida and is the ...
Appraisal-related issues cause more than one out of every 10 purchase-mortgage applications to be denied, according to CoreLogic. Below-contract appraisals comprised 11.3 percent of the first-lien purchase-loan appraisals ordered through the CoreLogic/FNC Collateral Management System, according to Yanling Mayer, director of research in CoreLogic’s office of chief economist. The CMS is a workflow and compliance platform used by many lenders, servicers and appraisal management companies. Mayer noted...
With rates at the highest they’ve been in 27 months, mortgage lenders have to make sure they keep their costs as low as possible to be competitive. At the same time, they have to retain and attract the most productive loan officers, while still staying within the bounds of the loan originator compensation rule from the Consumer Financial Protection Bureau. During a webinar sponsored by Inside Mortgage Finance this week, Paul Hindman, managing director at Grid Origination Services, said loan officer recruiting is not just about the Benjamins. “In no particular order, should they decide to explore, loan officers will evaluate and compare the following when assessing the right model match: company brand and culture ([including] mission, vision and values); compensation clarity, [and] loan products and consistent rates/pricing,” he said. Also important are...
PHH Corp. has until Dec. 22, 2016, to respond to an order by the District of Columbia Circuit Court of Appeals related to its battle with the CFPB over alleged violations of the Real Estate Settlement Procedures Act. The appeals court had directed the lender to reply to the bureau’s petition for an en banc rehearing of the recent ruling by a three-judge panel of the court. Back in October, the panel determined that two aspects of the CFPB’s structure – the dismissal of the director of the agency only for cause and the single directorship as opposed to a multi-member bipartisan commission – were unconstitutional. Additionally, the judges found in favor of the company’s arguments, among others, around the correct interpretations ...