FHA to Extend Short Refi Program. The FHA has announced its intent to extend its Short Refinance Program for borrowers in negative equity positions. A mortgagee letter will be issued soon to announce the extension. Feedback Period extended for Draft Servicing Section of Proposed Single Family Handbook. The FHA is extending the comment period for the draft servicing section of the Single Family Housing Policy Handbook through Nov. 14, 2014 to allow stakeholders additional time to study and comment on the proposed section. The original deadline date was Oct. 17. CFPB Updates Reverse Mortgage Guide. The Consumer Financial Protection Bureau recently updated its reverse mortgage guide on its website to account for recent changes made by the Department of Housing and Urban Development to its Home Equity Conversion Mortgage program. The updated guide highlights new limits to ...

As Inside the CFPB was going to press, the bureau announced a $35 million enforcement action against Flagstar Bank for allegedly blocking borrowers’ attempts to save their homes, in violation of the CFPB’s mortgage servicing rules. This is the first enforcement action the bureau has initiated based on the new regulation. The regulator alleged that the bank closed borrower applications due to its own excessive delays. “Flagstar took excessive time to review loss mitigation applications, often causing application documents to expire,” said the agency. “To move its backlog, Flagstar would close applications due to expired documents, even though the documents had expired because of Flagstar’s delay.” The CFPB also accused the bank of delaying the approval or denial of borrower ...

Corinthian Colleges accused the CFPB earlier this month of wrongly disparaging the career services assistance the for-profit company offers and of mischaracterizing both the purpose and practices of its “Genesis” lending program. The CFPB filed a lawsuit against the company earlier this month. In a statement provided to Inside the CFPB, Corinthian Colleges said the bureau’s complaint ignores “clear, easily obtainable evidence” that thousands of its graduates are hired into permanent positions by large and small employers across the U.S. every year. Instead, the complaint cites isolated incidents at Corinthian’s 97 U.S. campuses that violated company policy regarding job placement policies, the firm added. “The CFPB is aware of these cases because Corinthian identified the issues, took strong action to ...

Ginnie Mae has unveiled new plans for issuer standards as well as steps to boost liquidity in the mortgage servicing rights (MSR) market. Agency officials at a summit hosted by Ginnie Mae this week in Washington, DC, said both actions are designed to avoid issuer failures and to preserve residential mortgage servicing as an economically viable activity and MSRs as an attractive asset class. The officials said changes will be made to Ginnie’s mortgage-backed securities program to support the agency’s transformation from a pre-crisis bank-driven government MBS program to a post-crisis program where non-depositories and smaller financial institutions play a much bigger role. By the middle of next year, approximately a third of Ginnie MSRs will have changed hands over the previous four years, agency officials said. Many of the new owners of the servicing rights are ...

Approved issuers must ensure that loans have the requisite federal insurance or guarantee before bundling them for securitization, cautioned Ginnie Mae. Loans that fail Ginnie’s “loan matching” review will be tagged as “uninsured” and will not be accepted for securitization, according to John Kozak, a Ginnie Mae account executive and a panelist at a conference sponsored by the agency this week. Ginnie Mae uses loan matching to screen for mortgages that may have been endorsed on paper but have not been actually insured or guaranteed by either the FHA, VA or the Department of Agriculture’s Rural Housing Development. Every month, Ginnie Mae takes a certain lender’s entire mortgage portfolio and throws it up against the agency’s insured/guaranteed database in search for loan mismatches. To do this, the agency uses “two-string match” criteria, which consist of a ...

An estimated $336 million out of a $614 million settlement that JPMorgan Chase agreed to pay for not complying with FHA requirements will go towards stabilizing the agency’s ailing Mutual Mortgage Insurance Fund. On Feb. 4, 2014, the U.S. Attorney’s Office for the Southern District of New York took over a whistleblower lawsuit and started an investigation of Chase on behalf of the government for alleged violations of the False Claims Act. The whistleblower or “relator” alleged that Chase, an approved FHA direct endorsement lender, had not followed FHA requirements when underwriting loans, causing the MMIF to incur significant losses when the borrowers defaulted on their loans. The U.S. Attorney filed suit against Chase based on the results of an audit conducted by HUD’s Inspector General that looked into the bank’s underwriting and refinancing of FHA loans. The lawsuit alleged that ...

CFPB Deputy Director Steve Antonakes told attendees at the North Carolina Bankers Association’s mortgage conference last week that lenders need to start prepping for the bureau’s impending TILA/RESPA Integrated Disclosure rule, known in bureau-speak these days as the “TRID.” While the use of the TRID’s new Loan Estimate and Closing Disclosure forms is not required until August 2015, “mortgage lenders should already be working on the new rule and getting ready now,” Antonakes urged. “Significant changes to business operations and technology platforms will require close collaboration with third-party service providers. “While many mortgage institutions are already deep into implementing these changes, we want to make sure that everyone understands the need to be focusing on August 2015 now,” Antonakes emphasized...

The CFPB’s integrated disclosure rule will be “treacherous” for mortgage lenders and will likely be as challenging to comply with as its massive size and complexity suggests, according to top industry experts. Speaking to attendees of an Inside Mortgage Finance webinar last week on the CFPB’s TILA/RESPA Integrated Disclosure rule – known as “TRID” – Rod Alba, senior regulatory counsel for the American Bankers Association, rattled off a number of concerns that mortgage lenders still have with the new rule, which is set to take effect Aug. 1, 2015. “The regulation is enormously voluminous in length. The sheer size of this rule, we think, makes this regulation treacherous for banks in terms of liability, in terms of enforcement, in terms of understanding ...

Long-time leaders in the money transfer space Western Union and MoneyGram – along with relative newcomer PayPal – are collectively responsible for a huge 62 percent of the complaints consumers filed with the CFPB about their wire transfer transactions over the last year, according to a new analysis and ranking by Inside the CFPB. Western Union had the dubious distinction of leading the way with 356 cumulative gripes from the second quarter of 2013 to the second quarter of 2014. The biggest belly-ache about the company fit into the “fraud or scam” category, with 160 such citations, followed by “money not available as promised,” which was cited by 56 consumers. MoneyGram came in with the second-largest number of consumer grievances (215), with ...

The CFPB recently warned credit card companies of the risk of engaging in deceptive and/or abusive acts and practices in connection with solicitations that offer a promotional annual percentage rate (APR) on a particular transaction – such as convenience checks, deferred interest/promotional interest rate purchases, and balance transfers – over a defined period of time. The bureau said it is concerned that some companies are luring consumers with offers of reduced or zero interest for a specific purchase or balances transferred from another credit card, and then hitting them with surprise interest charges. In CFPB Bulletin 2014-02, the bureau states that it has observed that some card issuers do not adequately convey in their marketing materials that a consumer who accepts such ...