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Inside the CFPB

July 9, 2012

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CFPB Releases Mortgage Disclosure Proposal

As Inside Regulatory Strategies was going to press this week, the Consumer Financial Protection Bureau was releasing a detailed proposed rule to integrate the mortgage disclosures consumers are entitled to under the Real Estate Settlement Procedures Act and the Truth in Lending Act. The proposal is accompanied by new “loan estimate” and “closing disclosure” forms to present the costs and risks of the loan in clearer terms. “The forms benefit consumers by using plain language and a format that will help them understand their loans,” the CFPB said... Read More

CFPB Issues Privileged Info Final Rule

The Consumer Financial Protection Bureau last week issued a final rule to codify protections for privileged information submitted by financial institutions. The rule makes clear that an institution that provides privileged information to the CFPB does not waive any privilege it may have related to third parties, affirming what the agency said in January to the financial institutions under its supervisory authority. It also makes clear that bureau sharing of privileged information to another federal or state government agency does not waive any privilege that might apply... Read More

Industry Reps, Analysts Lament CA ‘Grand Theft Mortgage’ Plan

Three jurisdictions in California are raising a lot of industry hackles over a plan that could lead to the use of eminent domain to seize currently performing underwater mortgages and force a restructuring of their terms. It’s a plan “more like Grand Theft Mortgage than a silver bullet” for the region’s housing woes, according to former Fannie Mae executive Edward Pinto. At issue is a resolution adopted last week by California’s San Bernardino county and the cities of Ontario and Fontana in which the jurisdictions entered into a joint powers agreement. Under the resolution... Read More

Issa Report Slams Countrywide’s VIP Program, Fannie Relationship

House Oversight and Government Reform Committee Chairman Darrell Issa, R-CA, released a report last week that took another look at Countrywide Financial’s “Friends of Angelo” and “VIP Program,” concluding that Countrywide used the latter to lobby policymakers as well as to strengthen its relationship with Fannie Mae. According to the report, Countrywide reached an exclusive agreement with Fannie in 1999 to sell the government-sponsored enterprise billions of dollars in mortgages at a discounted rate. “The agreement led to a period of codependence and mutual growth,” the report noted... Read More

Basel III Could Give Nonbank Mortgage Lenders an Edge

The Basel III capital standards regime proposed last month by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. could give nonbank mortgage companies a boost at the expense of their bank competitors, according to analysts at Keefe Bruyette & Woods. “The downturn in the mortgage market wiped out most nonbank mortgage lenders, and most mortgage origination and servicing moved into the banking system. Since 2009, nonbanks have started to increase their presence in mortgage banking. We believe that Basel III could further... Read More

Servicers, Regulators Haven’t Maximized Borrower Outreach

Federal banking regulators and private-sector mortgage servicers have gradually stepped up their efforts to reach out to eligible borrowers facing foreclosure and have taken steps to improve their communication materials. However, they have not undertaken certain “best practices” such as conducting readability tests or using focus groups that might have maximized their potential outreach, the Government Accountability Office said in a new report. “Staff at the Board of Governors of the Federal Reserve System said that this was, in part, a trade off to expedite the remediation... Read More

Rep. Garrett Takes on HUD’s Disparate Impact Proposed Rule

Rep. Scott Garrett, R-NJ, chairman of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, successfully attached an amendment to H.R. 5972, the Department of Housing and Urban Development Appropriations Act, 2013. Garrett’s amendment would gut the disparate impact rule proposed by HUD last September by prohibiting the agency from using any of the agency’s funding to “promulgate, issue, establish, implement, administer, finalize, or enforce” the rule. The congressman’s amendment has strong support from the mortgage... Read More

SCOTUS Declines to Consider First American RESPA Case

The Supreme Court of the United States surprised many industry and legal observers late last month by deciding it would not take on a key dispute under the Real Estate Settlement Procedures Act. “The writ of certiorari is dismissed as improvidently granted,” the high court said in a terse announcement. At issue in First American Financial v. Edwards is whether someone who has not suffered any actual damages from alleged RESPA violations has the legal standing to sue in federal court. The SCOTUS decision to not rule on the case, after deciding a year ago to take it on, means the... Read More

CA Poised to Enact Portions of National Servicing Settlement

California is about to become the first state to enact into law a large portion of the national mortgage servicing settlement that state and federal government officials negotiated this year with the nation’s top five banks and apply it to all lenders. The state legislature passed the Homeowner Bill of Rights last week (AB 278/SB 900). The Democrat-controlled state Assembly approved the bill on a 53-25 vote, with the Senate endorsing the measure 25-13. The legislation will force large lenders to provide a single point of contact, eliminate dual tracking and impose significant civil... Read More

State Roundup

California. Former IndyMac CEO Michael Perry and CFO Scott Keys agreed to a $6.5 million settlement to resolve a class-action lawsuit by shareholders who accused the executives of concealing how badly the mortgage lender’s financial position had deteriorated when they were buying company stock from March 1, 2007, to May 12, 2008. A shareholder’s motion for preliminary approval submitted last week said the pending settlement is “a reasonable resolution” of the dispute and ensures that shareholders will at least make some financial recovery. Florida. In Fuller v. MERS, U.S. District... Read More

Federal Roundup

House of Representatives.Hearing on Impact of Dodd-Frank. The House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises plans a hearing Tuesday, July 10, on the impact of the Dodd-Frank Act on customers, credit and job creators. The witness list includes the American Securitization Forum and the Securities Industry and Financial Markets Association.House of Representatives.Hearing on Impact of Dodd-Frank on Financial Services Competition... Read More

Worth Noting

Twenty-five states are thinking about revising their foreclosure laws to make it harder for lenders to seize properties, out of concern that inefficient loan modifications are leading to unnecessary foreclosures, the Wall Street Journal reported last week. That would prove costly for borrowers in the future, according to Mortgage Bankers Association CEO David Stevens. Should all 50 states decide to go down their own path, lenders are going to have multiple processes, each with their own little nuances, and every single penny of that cost will be borne by tomorrow's borrowers... Read More

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