There was a significant increase last year in the number of coordinated examinations of non-bank financial services companies between the CFPB and state banking regulators. The number of such exams rose from nine in 2014 to 16 in 2015, the State Coordinating Committee of the Conference of State Bank Supervisors reported recently in its annual report. Examinations that are scheduled between the SCC and the CFPB are performed simultaneously between state regulators and the CFPB. The examinations involve coordinated planning, shared resources, concurrent onsite visits, and sharing of confidential and non-confidential supervisory information, including findings and reports of exam. The SCC also indicated there was “an expansion into new industry types as the CFPB established additional supervision authority by rule.” ...

The CFPB last week filed an administrative consent order against a former Wells Fargo employee, for running an alleged illegal mortgage “fee-shifting” scheme, fining him $85,000 and banning him from working in the mortgage industry for a year. The bureau accused David Eghbali, formerly a loan officer for the Wilshire Crescent Wells Fargo branch in Beverly Hills, CA, of referring a substantial number of loan closings to a single escrow company, New Millennium Escrow, Inc., which allegedly shifted its fees from some customers to others at his request. “While employed by Wells Fargo from November 2007 through July 2015, in connection with originating federally related mortgage loans to consumers primarily for personal, family or household purposes, respondent provided real-estate settlement ...

The CFPB’s pending Home Mortgage Disclosure Act rule significantly expands the industry’s data-reporting requirements – and the risk of possible disclosure of a borrower’s personal information along with it – something the bureau still has not addressed to the industry’s satisfaction, according to one top attorney. “The implementation date of the rule is fast approaching and the mortgage industry still has not received any answers in regards to their data privacy concerns,” Craig Nazzaro, of counsel in the Atlanta office of the Baker Donelson law firm, said in a blog posting earlier this month. He noted that mortgage industry representatives have repeatedly raised their privacy concerns about the new rule with the bureau. However, “the CFPB has thus far avoided addressing these ...

More Gripes About TRID Dribble In. After what seemed like a lull in hearing complaints from lenders regarding the integrated disclosure rule known as TRID, the gripes are picking up again. At least that’s what we detected from some originators a few days ago. One loan broker who works the southern California market said she’s been telling some clients that it will take an extra seven days to close. “It was 15 before wholesale caught up, but now they’re behind again due to heavy sales volume.” Broker Slams Bureau’s Complaint Database. While he was running for a House seat in West Virginia, mortgage trade group president Marc Savitt was mostly quiet on issues tied to the CFPB. But now that ...

Examination reviews by the Consumer Financial Protection Bureau for compliance with the integrated disclosure rule known as TRID are now in full swing, according to leading industry attorneys. That was the biggest take-away from a panel of three legal experts who were featured in a webinar hosted by Inside Mortgage Finance late last week that focused on CFPB examinations and how lenders can navigate their way through them. Although TRID was not a key focus of the webinar, it did come up as a topic during the question-and-answer period. The attorneys were asked...

Guild Mortgage vowed to defend itself against government charges that it improperly originated and underwrote mortgages, which later caused millions of dollars in losses to the FHA and taxpayers. In a statement released after the Department of Justice filed its complaint in federal district court in Washington, DC, last week, Mary Ann McGarry, president and chief executive officer of Guild Mortgage, said the government’s action is unwarranted and meritless. “The implication that any default on an FHA loan by a borrower represents wrongdoing by the lender is not justified...

FHA activity was lackluster in the first three months of 2016 as loan originations fell 7.8 percent from the prior quarter, according to Inside FHA/VA Lending’s analysis of agency data. The weak first-quarter production of $53.5 billion appeared to continue a trend from 2015, which saw the fourth quarter close with $58.1 billion, down significantly from $73.7 billion in the third quarter. In contrast, FHA originations fared better year-over year. Loan production was up 35.6 percent in the first quarter compared to the same period last year. Purchase lending totaled $36.5 billion in the first three months with overall production trending downward during the period. Borrowers in the 640-679 and 680-719 credit score ranges made up the bulk of new endorsements for January and February, the latest FHA data show. It is unlikely that trend will change even if March endorsements were added. Between all ... [ 2 charts ]

Recent circuit court rulings may bolster FHA lenders’ defense against the government’s heavy use of the False Claims Act in FHA lending cases, according to industry attorneys. In the years following the financial crisis, the Department of Justice and the relators bar have used the FCA aggressively to target banks and nonbank mortgage lenders for losses incurred by FHA due to poor underwriting and false certifications. The DOJ and the Department of Housing and Urban Development have recovered billions of dollars through settlements with various mortgage lenders and servicers, using increasingly creative theories of liability to hold them responsible for FHA losses. This week, the DOJ filed a lawsuit in federal court in Washington, DC, accusing Guild Mortgage of improper origination and underwriting of FHA-insured mortgage loans from January 2006 through December 2011. As in ...

There are important details in the recent M&T Bank settlement with the Department of Justice and in this week’s announced filing of a lawsuit against Guild Mortgage that could help lenders avoid a potential false claims lawsuit, according to industry observers. The government’s complaints against the two FHA lenders were brought under the False Claims Act, which penalizes acts that intend to defraud the government and taxpayers. The government has been using this powerful statutory tool in the mortgage arena in its attempt to recover FHA losses arising from fraud and noncompliance with agency requirements. As in previous FCA cases against FHA lenders, both M&T Bank and Guild Mortgage were accused of false certification, lax underwriting, poor quality control, failure to review early payment defaults, and failure to self-report deficient loans and remediate problems in a timely manner. In addition, the ...

Trade groups representing lenders, homebuilders and appraisers have asked Congress to hold a hearing this year on the future of appraisal regulation.In a joint letter, five industry groups urged the Senate Committee on Banking, Housing and Urban Affairs to reevaluate oversight of the appraisal industry and the current federal regulatory structure for real estate appraisal.The committee last held an appraisal oversight hearing in 2004. Federal appraisal regulations have been untouched since the enactment of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, the trade groups noted. In addition, the groups asked that both federal and state responsibilities be reassessed to see if they continue to serve consumers and market participants well, as well as promote competition in the marketplace. In addition to federal regulation, states regulate appraisers as well. The groups want to know from Congress whether federal oversight of appraisers is still necessary.