Roughly 14 percent of the 12,500 mortgage complaints the CFPB has received to date from U.S. military personnel, veterans and their dependents involve problems with refinancing, and the issues they face have been changing over time, according to a new report from the bureau. “As the housing market has rebounded, we hear less about veterans struggling to refinance their loans when facing a financial hardship or imminent default and more about the problems associated with refinancing when they are using it as a tool to get potentially more favorable loan terms,” the CFPB document stated. The agency then delved into some of the specific gripes being lodged against mortgage companies. “We receive many complaints from veterans who believe they are ...

The Department of Justice lost its bid to have an FHA lawsuit against Quicken Loans heard in the nation’s capital after a federal judge this week ordered the case transferred to federal district court in Michigan. Judge Reggie Walton of the U.S. District Court for the District of Columbia agreed with Quicken that the proper forum for adjudicating the government’s False Claims Act case is the Eastern District Court in downtown Detroit. While the court agreed that the case has national implications, it also noted the “strong local interest in this matter in the Eastern District of Michigan,” where “Quicken Loans underwrote the FHA loans at issue, endorsed those loans, and certified its compliance as to those loans.” While certain factors weighed against the transfer, the alleged unlawful activity occurred in or near Detroit, where the lender is headquartered and most of its employees are located. The case, U.S. v. Quicken Loans, ...

Aggressive refinance solicitation can be a double-edged sword for lenders: It could either result in increased VA refi business or, as the Consumer Financial Protection Bureau found out, consumer complaints. Since the CFPB began taking mortgage-related complaints in 2012, it has received more than 12,500 complaints from servicemembers, veterans, and their families. Of those complaints, 1,800 were related to VA refinancing. The VA offers two types of refinancing options to eligible borrowers – the VA cash-out refinance and the VA streamline refi, or Interest Rate Reduction Refinance Loan (IRRRL). In a cash-out refi, the veteran homeowner can refinance a VA or non-VA loan into a lower-rate VA loan and take cash out of home equity to pay off a debt, finance an educational pursuit or pay for a home improvement. The VA will guaranty up to the full value of the home. On the other hand, an IRRRL can only refinance a ...

State housing finance agencies’ downpayment assistance poses minimal risk to the FHA, and the scope of the problem is nowhere near the size suggested by the Department of Housing and Urban Development’s inspector general, according to a new study by the Urban Institute. The study’s conclusion would appear to bolster HUD’s defense of permissible downpayment assistance in a disagreement with the agency’s inspector general. The dispute arose from an IG audit of NOVA Financial & Investment Corp., an originator of FHA-insured mortgages with downpayment assistance provided by state housing finance agencies (HFAs). In a July 2015 report on NOVA’s audit, the IG alleged that some HFAs were allowing downpayment assistance that was being paid for through higher mortgage rates, in violation of FHA requirements for downpayment assistance. It also put FHA’s mortgage insurance fund at ...

TRID Implementation Inconsistency Among Lenders Continues to Drive Title Agent Costs. The First American Real Estate Sentiment Index for the third quarter of 2016 found that lenders are inconsistently implementing the CPFB’s integrated disclosure rule, and that is driving up costs for title agents.... Mortgage Complaints Still High, But Drop Noticeably in 3Q16 From Year-Ago Levels. The latest monthly consumer complaint report from the CFPB found that mortgages remain among the top three sore spots for borrowers, but had a noticeable drop from the third quarter of 2015 to the same period this year....

The Department of Housing and Urban Development inspector general, over the last several weeks, has reported a series of final civil actions that resulted in an enforcement action or monetary settlement between an FHA lender and the federal government. On Oct. 6, the IG announced the results of an audit of TXL Mortgage Corp., a direct endorsement lender, in Houston. The audit found TXL in violation of HUD requirements and that it had no acceptable quality-control plan in place. Specifically, 16 of the 20 sample loans the IG reviewed did not comply with HUD standards. Of the 16 loans, eight had significant underwriting defects and failed to qualify for FHA mortgage insurance. Two loans qualified but were over-insured, according to the report. As a result, TXL exposed HUD to more than $713,000 in unnecessary insurance risk and caused the department to incur more than ...

Back in August, the CFPB proposed to dump the current “dispute” function in the consumer complaint closing process and replace it with a short survey – an idea that went over like a lead balloon with the mortgage industry. Through the proposed survey, a customer would have the opportunity to state, using a one- to five-point scale, whether he agreed or disagreed with the following three statements regarding the company’s response to, and handling of, his complaint. They are: “The company addressed all of my issues,” “I understood the company’s response,” and “The company did what it said it would do.” The customer would also be given the opportunity to provide a narrative description to explain the rating. The Consumer Bankers ...

Trade groups representing the mortgage industry wrote to the Consumer Financial Protection Bureau late last month to express their opposition to the agency’s proposal to incorporate a short survey into its consumer complaint closing process, which would replace the current “dispute” function. Under the CFPB’s proposal, which was published in the Aug. 1, 2016, Federal Register as a notice and request for comment rather than a formal proposed rule, consumers would have the option to provide feedback on a company’s response to and handling of their complaints via all channels including online, phone, fax and mail. Consumers would be able...

The initial material defect rate of FHA loans has increased to 50 percent in the third quarter of 2016 from the previous quarter, according to the latest FHA Lender Insight report on quality control. A good portion of the defective mortgage loans, however, has been mitigated during the post-endorsement technical review process, the report indicated. In the second quarter, the initial material defect rate had been flat, averaging 47.4 percent over the last eight quarters. The latest report show the top five mitigated findings, which reflect the number of initially unacceptable ratings and the number of findings mitigated for loans between April and June, 2016. Some 6,312 FHA loans comprised the sample, and they consisted of purchase loans (71.0 percent), streamline refinance (13.5 percent), rate and term refis (9.0 percent), and Home Equity Conversion Mortgages (6.7 percent). In addition, ...

The Department of Veterans Affairs is urging VA lenders, borrowers and other participants in its loan guaranty program to adopt recommended standards, equipment and activities to reduce water and energy usage and to ease the impact of natural disasters. The VA has recommended wind-hazard standards, resilient building and retrofitting standards, a water- and energy-saving program, and property-and-energy conservation strategies to help VA borrowers protect their homes against storms, flooding, earthquakes and other calamities. VA made clear it allows, but does not require, any of the recommended standards, strategies or equipment. The programs are strictly voluntary, it said. The agency noted the increasing incidence of extreme weather events, earthquakes and flooding, which makes planning and building in the most resilient and economically feasible ways all the ...