In a move that further complicates the 50-state settlement discussions between the mortgage servicing industry and state attorneys generals, Massachusetts Attorney General Martha Coakley, D, has sued a handful of top mortgage lending banks for allegedly pursuing illegal foreclosures and “deceptive loan servicing.”The targets of Coakley’s actions are Bank of America, Wells Fargo, JP Morgan Chase, Citi and GMAC, as well as Mortgage Electronic Registration System, Inc.“The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis,” Coakley said. “Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law. Our action today seeks real accountability for the banks’ illegal behavior and real relief for homeowners.”
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The mortgage lending community now has a prime opportunity to bring the Consumer Financial Protection Bureau up to speed on the concerns it has with a number of the regulations it has to contend with.Last week, the CFPB formally solicited public input on how to streamline the regulations that have been promulgated under more than a dozen consumer financial laws that the agency inherited from seven federal agencies as per the Dodd-Frank Wall Street Reform and Consumer Protection Act.“The inherited regulations serve important public policy purposes and provide key protections to consumers,” the CFPB said in its proposed notice and request for information, which was published in the Dec. 5, 2011, Federal Register. “But the bureau believes there may be opportunities to streamline the inherited regulations by updating, modifying, or eliminating outdated, unduly burdensome or unnecessary provisions.”
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The Consumer Financial Protection Bureau is seeking public input on its plans to collect information about legal actions filed by state officials under authority granted in Section 1042(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This section of the law grants state attorneys general and state regulators the authority to bring legal actions against financial institutions to enforce provisions of Title X of Dodd-Frank and its implementing regulations. Back in July, the CFPB put out an interim final rule laying out the notification procedures regarding state legal action taken. The interim final rule establishes that notice should be provided at least 10 days before the filing of an action, with certain exceptions, and sets forth a limited set of information which is to be provided with the notice.
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The Office of the Comptroller of the Currency provided a status update on the efforts that 12 bank and thrift mortgage servicers are making to comply with the foreclosure practice consent orders they were issued in the spring, a review that documents the extent to which servicing reforms are being implemented.As such, the document may foretell some of the kinds of industry “best practices” that will form the basis of national servicing standards one day.For example, each servicer has established policies and procedures for providing single points of contact to assist borrowers throughout the loan modification and foreclosure processes.
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The Obama administration began the week with a media blitz to drum up support for the presidentfs embattled nominee to head up the Consumer Financial Protection Bureau, Richard Cordray, as a vote by the full Senate on his nomination could come on Thursday, Capitol Hill sources indicate.Sunday evening, the White House released a report warning of the dangers American consumers face in the financial marketplace without a director at the helm.gWithout a director, Americans will not be protected from falling prey to many of the harmful practices that contributed to the worst financial crisis since the Great Depression,h the report said. gEvery day that the CFPB goes without a director is another day that American families remain at risk.h
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The Consumer Financial Protection Bureau remains a hot topic on Capitol Hill, especially among Republican lawmakers who think it’s got far too much power and far too little accountability. House Financial Services Oversight and Investigations Subcommittee Chairman Randy Neugebauer, R-TX, recently wrote to Treasury Special Advisor Raj Date, seeking a “detailed account of how the Consumer Financial Protection Bureau has spent the funds that have been transferred to it by the Federal Reserve, and CFPB’s plans for those funds that have been transferred but not yet spent.”
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In an unpublicized move, industry sources indicate that the Consumer Financial Protection Bureau told mortgage lending representatives in a Nov. 21 conference call that it has made several systems and process changes related to its mortgage consumer complaint system, in response to a joint comment letter the industry had submitted. Further, the CFPB is said to be already training participating financial institutions on the new system, which is expected to be fully operational any day now. Large banks (those with assets in excess of $10 billion) are to be covered by the system.
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A Federal judge in California rejected a servicer’s motion to dismiss a putative class action that accused the servicer of wrongly rejecting a borrower's mortgage modification application and of improperly starting foreclosure proceedings.In Gaudin v. Saxon Mortgage Services Inc., the plaintiff argued that a trial modification plan provided to her by the lender represented a binding contract that required Saxon to evaluate the plaintiff under the Home Affordable Modification Program, and to provide a permanent loan mod, provided all conditions of the trial plan were satisfied.In requesting a dismissal, Saxon argued that the trial plan only required it to evaluate the borrower’s eligibility for a modification, and did not require Saxon to offer a modification.
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Massachusetts. In Culhane v. Aurora Loan Services of Nebraska, the United States District Court for the District of Massachusetts late last week granted the defendant’s motion for summary judgment, finding that Aurora, as holder of the plaintiff’s mortgage by assignment from Mortgage Electronic Registration Systems Inc., and as the servicer of the loan, could exercise the statutory power of sale and foreclose under Massachusetts laws. U.S. District Court Judge William G. Young held MERS may serve as the mortgagee as the lender’s nominee, MERS has the authority and right, and may assign mortgages in which it is named as the mortgagee, and such mortgages are valid and enforceable. Further, the judge concluded that, “The court holds that there was no flaw in this process. Under Massachusetts law, MERS lawfully held the legal title to Culhane’s mortgage in trust first for Preferred and subsequently for Deutsche.”
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Consumer Financial Protection Bureau.Federal Deposit Insurance Corp.Federal Reserve Board.National Credit Union Administration.Office of the Comptroller of the Currency. Big Institutions Under CFPB Oversight. The Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the Federal Reserve Board, the National Credit Union Administration and the Office of the Comptroller of the Currency announced together that banks, thrifts and credit unions with more than $10 billion in total assets will be subject to direct CFPB supervision, examination and enforcement with respect to federal consumer financial protection laws.
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The House Financial Services Financial Institutions and Consumer Credit Subcommittee plans a hearing on Tuesday, Dec. 6, on the examination relief bill (H.R. 3461) that panel Chairman Shelley Moore Capito, R-WV, and ranking member Carolyn Maloney, D-NY, introduced on Nov. 17. H.R. 3461, among other things, would require more timely examination reports; more information about the facts the agency relied upon to make its exam decisions; and more precise, consistent and understandable classification standards…
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