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Inside the CFPB

December 13, 2010

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Playing It Safe May Raise Fair Lending Issues

New penalties and remedies under the Wall Street Reform and Consumer Protection Act could force mortgage lenders to play it safe by limiting their originations to loans that meet ability-to-repay and risk retention exemption requirements, according to compliance experts. However, that kind of a response to tighter regulations could... Read More

Lenders Get Heat for Biased Lending, Overages

The Department of Housing and Urban Development and the Department of Justice have announced separate enforcement actions against FHA mortgage lenders whose alleged discriminatory lending policies resulted in either higher loan costs for minorities or complete denial of their loan applications. HUD last week announced... Read More

Bair Calls for QRM Rules to Set the ‘Gold Standard’ for Market Reform

Rules regarding “qualified residential mortgages” should allow servicers to use best practices in easing losses through loan modifications, among other things, Federal Deposit Insurance Corp. Chairman Sheila Bair told lawmakers. In recent testimony before the Senate Committee on Banking, Housing and Urban Affairs on mortgage servicing issues, Bair said... Read More

Lenders Oppose Expanding AML to Nonbanks; Stick to SARs, They Say

The mortgage banking industry urged the Treasury Department’s Financial Crimes Enforcement Network to limit its anti-money laundering requirements solely to submissions of suspicious activities reports if the agency proceeds with a proposal to extend regulations to nonbank mortgage providers. Currently, only banks and other insured depository institutions must... Read More

Agencies Issue Final Appraisal Guidance, Industry Seeks Changes

While new final appraisal guidance appears to adequately cover collateral valuation practices, industry stakeholders continued to call for clarifications and changes, some of which may require overstepping the bounds of the new guidelines, according to federal regulators. In the final document issued... Read More

Warren Says Current Rules Provide Only Temporary Relief from Abuses

As a new regulator, the Bureau of Consumer Financial Protection has a chance to fundamentally change the way mortgage credit is explained and provided and not just depend on narrow rules that ban the latest abuses, according to Elizabeth Warren, chief architect of the fledgling agency. In recent remarks to the Consumer Federation of America, the special adviser to the president and the Treasury Department said... Read More

NY Requires Lenders to Repay Borrower Legal Fees if They Lose

Legislation has been signed into law in New York that requires mortgage lenders that lose in a mortgage foreclosure action to pay the borrower’s legal fees. The new amendment to the state’s Real Property Law, Section 282, applies solely to residential real property, according to Bruce Bergman, a foreclosure attorney and a partner with the New York law firm Berkman, Henoch, Peterson, Peddy & Fenchel. The provision covers... Read More

State Roundup

Indiana. The state appellate court rejected a loan servicer’s argument that the Department of Housing and Urban Development’s mortgage servicing regulations apply only to the relationships between mortgagees and the government. In Lacy-McKinney v. Taylor, Bean & Whitaker Mortgage Corp., the Indiana Court of Appeals held... Read More

Federal Roundup

Securities and Exchange Commission.Conflicts-of-Interest Rule Exemption Extended. The SEC has extended the temporary exemption of new structured finance securities issued outside the country by non-U.S. issuers from a conflicts-of-interest rule. Under the SEC’s Nov. 23 order, nationally recognized statistical ratings organizations (NRSROs) do not have... Read More

Worth Noting

Lender Processing Services, which played a prominent role in the “robo-signing” foreclosure mess, has quit the due diligence business, apparently because of heavy legal woes. Due diligence was no longer compatible with LPS’ long-term core strategy business strategy, Michelle Kersch, a senior VP for marketing at LPS, acknowledged... Read More

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