The Supreme Court of the United States will settle a multi-district circuit court conflict that will likely determine the ability of the mortgage lending industry to determine on its own what to charge borrowers at the point of origination. In deciding earlier this month to accept Freeman v. Quicken Loans Inc., the high court will confront the question of whether a plaintiff must demonstrate an unearned fee for a real estate settlement service was divided between two or more persons in order to establish that a violation of Section 8(b) of the Real Estate Settlement Procedures Act occurred.
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The Consumer Financial Protection Bureau has issued the first iteration of its supervision and examination manual, along with its examination procedures for mortgage servicing, in part so that financial services providers know what to expect during their examinations. The first section of the manual describes the CFPB’s compliance supervision and examination process. The second part outlines the bureau's examination procedures, including both general instructions and procedures for determining compliance with specific regulations. The final section provides templates for reporting risk assessments, examination results and supervision plans.
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Rep. Jeff Miller, R-FL, chairman of the House Veterans’ Affairs Committee, reportedly has instructed his staff to start looking into allegations that a number of mortgage lending institutions charged illegal fees to veterans who refinanced their homes. Committee staff members reportedly met with Department of Veterans Affairs officials to discuss the allegations, which were made public earlier this month by a federal court in Atlanta. “I will reserve judgment on the appropriate next course of action, to include the potential for a full Committee hearing, after having the opportunity to review the results of the staff investigation,” Miller said in a letter to Rep. Bruce Braley of Iowa, the ranking Democrat on the committee’s subcommittee on economic opportunity.
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MetLife’s bank division has become the first major lender to say it plans to exit the mortgage business because of increased regulation. MetLife Bank announced it put its Home Loans unit up for sale earlier this month, a move that followed its decision to explore the sale of its depository business. “Today’s uncertain marketplace and regulatory environment require a tremendous amount of resources – both in terms of people and capital – to effectively compete in and profitably grow the forward mortgage business,” the company said. “Doing so would divert these resources away from MetLife’s primary focus on its global insurance and employee benefits businesses.”
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The recently issued state regulator examination guidelines for compliance with the federal loan originator compensation regulations “continue the game of hot potato,” according to Kristie Kully, of counsel with the K&L Gates law firm. “While there are many significant questions that remain in understanding and implementing the loan originator compensation restrictions, the new state Conference of State Bank Supervisors/American Association of Residential Mortgage Regulators examination guidelines do not (and cannot really be expected to)…
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The Consumer Financial Protection Bureau last week began testing a revised design of its integrated consumer mortgage disclosure prototypes with consumers and industry in the Albuquerque, NM, area, the agency revealed. The latest pair, dubbed “Pinyon” and “Yucca,” represent a fixed‐rate and an adjustable‐rate mortgage, respectively. Both forms include sections on loan terms, projected payments, closing costs, calculating settlement costs, calculating cash to close, comparisons, other considerations and verify receipt. But the Yucca version adds an adjustable interest rate table.
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A number of colleagues of former Ohio Attorney General Richard Cordray made a media and lobbying blitz last week, writing Senate leadership to urge their comrade be confirmed as the director of the Consumer Financial Protection Bureau, and holding a conference call with members of the press to highlight their appeal. Writing Senate Majority Leader Harry Reid, D-NV, and Senate Minority Leader Mitch McConnell, R-KY, many members of the National Association of Attorneys General went to bat for one of their own, calling him “both brilliant and balanced.”
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Alabama. Last week, in Reed v. Chase Home Finance LLC, the U.S. District Court for the Southern District of Alabama rejected a mortgage lender defendant's motion to dismiss or amend a putative class action alleging a violation of the Truth in Lending Act. Plaintiff Reed alleged defendant Chase Home Finance failed to provide the borrower with notice that it was a new creditor as required by TILA Section 1641(g) when it was assigned an ownership interest in plaintiff's mortgage and note. The defendant argued that plaintiff’s position that the note was assigned to defendant, explicitly pled in the complaint, has to be “supported by factual material rendering the assertion plausible.”
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Federal Housing Finance Agency. HARP Changes Announced. With a chorus growing inside the Washington, DC, beltway that the Obama administration must do more to help struggling homeowners refinance, the Federal Housing Finance Agency this week announced a number of changes to the Home Affordable Refinance Program in an effort to attract more eligible homeowners who can benefit from refinancing their mortgages. HARP is the only refinance program that enables underwater borrowers to take advantage of low interest rates and other refinancing benefits that would otherwise be beyond their reach in a more normal market environment. This program will continue to be available to borrowers with loans sold to Fannie or Freddie on or before May 31, 2009, with current loan-to-value ratios above 80 percent.
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The U.S. Senate voted late last week to approve an amendment to a federal spending bill that was offered by Sens. Bob Menendez, D-NJ, and Johnny Isakson, R-GA, to reinstate the higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that expired on Sept. 30. Those limits dropped to $625,500 in a number of high-cost markets on Oct. 1, and would be restored to $729,750 through December 2013 under the Menendez/Isakson amendment. The National Association of Home Builders was pleased.
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