The CFPB recently released some non-binding policy guidance on early compliance with the 2016 amendments to its 2013 mortgage servicing rules, including a three-day grace period. Each of the changes are scheduled to take effect on either Thursday, Oct. 19, 2017, or Thursday, April 19, 2018. This is a problem for mortgage servicers who face the very real prospect of operating under one set of rules one day and having to switch systems, policies and procedures to comply with another set of rules the very next day. The regulator acknowledged this was an issue and decided to give the industry what amounts to a three-day grace period. “The bureau has heard concerns that these midweek effective dates for the 2016 ...

During the American Bankers Association’s 2017 regulatory compliance conference, held last month in Orlando, a top industry expert discussed and elaborated upon the work she and her colleagues have engaged in to prepare their institution for the upcoming TRID 2.0 clarifying rulemaking, which remains inexplicably delayed at the CFPB. Elizabeth Fredrickson, a vice president at Wells Fargo Bank, told an audience at a breakout session that her compliance team began with a “keep or kill” exercise back in March for all of the CFPB rules. “We brought stakeholders together and talked about what we liked and what we did not like, what we need and what we could do,” she explained. “Really, our conversation about TRID revolved around the fact ...

The CFPB’s ability-to-repay/qualified mortgage rule hit the mortgage market at a difficult time and is compounding problems many homebuyers are having accessing credit, and the industry hope now is that the bureau will take the critical market dynamics into consideration as it undertakes its review of the ATR rule and revises it accordingly. That was one of the key takeaways from a breakout session at the American Bankers Association’s annual regulatory compliance conference last month in Orlando.“We understand why the rule came into existence, obviously. But what it did is typical when the pendulum goes too far in one direction, then things go too far the other way,” said Richard Andreano, a partner in the mortgage banking unit at ...

The CFPB’s Equal Credit Opportunity Act Valuations Rule may not be much in the spotlight these days, but there are still some key compliance issues that test lenders. The rule updated ECOA’s Regulation B, requiring lenders to provide applicants for first-lien loans on a dwelling with copies of appraisals, as well as other written valuations, developed in connection with the application, whether or not the applicants request copies. One of the challenges of the rule involves timing, according to Elizabeth Fredrickson, a vice president at Wells Fargo Bank. “There’s a concern about the waiver provisions and the timing and having to get those really, essentially, more up front, than within the [required] timeframe,” she said during a panel discussion at ...

A top official at the CFPB rejected industry claims that the bureau has backed off of rulemaking and amped up its enforcement activity in the wake of the 2016 elections. Speaking during a regulatory panel at the 2017 American Bankers Association’s regulatory compliance conference in Orlando last month, Virginia O’Neill, senior vice president for the ABA’s Center for Regulatory Compliance, said, “There seems to have been a pause in rulemaking. Yet at the same time, it feels like there’s an uptick in enforcement. It’s concerning to everybody out there.” Christopher D’Angelo, associate director of supervision, enforcement and fair lending at the bureau, disputed that perception. “There’s been a lot of chatter lately about this idea that somehow our enforcement activity ...

There has not been a lot of recent enforcement activity from the CFPB in terms of its loan originator compensation rule, but industry participants shouldn’t get complacent, according to some top compliance professionals. “We’ve seen the bureau say a couple different times that this is going to be a priority, and they’ve put out a few bulletins on this rule. But we’ve seen very little enforcement activity in this space,” said Maria Earley, a partner with the Reed Smith law firm in Washington, DC, during a panel discussion at the American Bankers Association’s 2017 regulatory compliance conference, held last month in Orlando.That being said, compliance professionals must not let their guard down. “Document everything. Step through with the regulators ...

As much as the False Claims Act has been a formidable government enforcement tool against FHA loan originators, the statute is also being used increasingly against mortgage servicers, according to compliance experts. Within the last 18 months, the DOJ has expanded FCA use to reverse mortgages and loan servicing, according to Phil Schulman and Krista Cooley, both partners in Mayer Brown’s Washington office and members of the firm’s Consumer Financial Services group, during a recent podcast. While the Department of Justice has consistently used the FCA and its treble-damage provision to enforce FHA loan origination rules, the economic downturn and foreclosure crisis has put...

The Mortgage Bankers Association is calling for a moratorium on future claims against FHA lenders under the False Claims Act to give the Department of Housing and Urban Development sufficient time to streamline its defect taxonomy and revise its loan-level certification requirements. In letters to HUD and the Department of Justice, the MBA said the FHA has yet to issue clear standards identifying specific errors that could trigger an FCA claim and those that do not. FCA enforcement actions can result in very significant damage to a lender’s reputation and bottom line, warned Dave Stevens, MBA president and chief executive officer. Although FHA lenders work hard to ensure compliance with strict underwriting and documentation standards, origination, insurance and servicing depend heavily on human efforts, which could easily result in technical errors, he added. While lenders process ...

The chair of the Senate Judiciary Committee is looking into whether monies from mortgage-settlement funds were channeled to partisan advocacy and community organizations that Congress had previously defunded. In a recent letter to Attorney General Jeff Sessions, Chairman Chuck Grassley, R-IA, revived a long-standing request by the committee for a list of all settlement agreements reached during the Obama administration that involved alleged payments to community groups. Grassley’s request came in the wake of Session’s June 7 directive prohibiting the DOJ from entering into any settlement agreements that provide for payment to third parties that were not directly harmed by the alleged misconduct. Sessions said the directive ends the previous administration’s practice of requiring or encouraging defendants to make payments to third parties as a condition of settlement. The directive would ...

The VA condominium-financing process can be difficult for both veteran borrowers and lenders, according to experts at a recent VA lender conference. The big issue for borrowers is finding a condo development that has VA approval or one that can obtain approval quickly enough to complete the loan process in the shortest time possible. A development that has a high number of foreclosures, a significant number of condo owners that are behind on their association dues, or pending litigation against the homeowner association is unlikely to win VA approval, experts said. Such factors could put the VA and the lender at risk. As such, securing VA approval for a development is crucial. In 2009, VA stopped accepting HUD/FHA condo project approvals in lieu of a VA project review, said Phyllis Chilton, valuation officer at VA’s Phoenix regional loan center. Condo projects that were accepted previously by ...