If one of the sponsors of the Dodd-Frank Act supports giving mortgage lenders an enforcement break when the CFPB’s integrated disclosure rule kicks in later this year, you know something serious is afoot. Such is indeed the case. Rep. Brad Sherman, D-CA, one of the original backers of Dodd-Frank, has crossed the partisan aisle in the House Financial Services Committee to join Rep. Steve Pearce, R-NM, in introducing H.R. 2213. Their bill would grant lenders a temporary safe harbor from enforcement of the rule integrating the required mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act. More specifically, H.R. 2213 would protect lenders from private lawsuits and regulatory enforcement actions through Dec. 31, 2015, ...
Read More
CFPB Director Richard Cordray continues to appear steadfast in his refusal to accommodate the mortgage industry by providing some sort of soft enforcement period for the new integrated disclosure rule, which is set to kick in Aug. 1, 2015. In a recent letter to Rep. Blaine Luetkemeyer, R-MO, one of the members of Congress who has been pressing the director for some kind of an enforcement grace period, Cordray was too discreet to come right out and say “no” to members of Congress. Instead, he told the congressman that the bureau shares his desire for “a smooth and successful implementation of the integrated disclosure rule, and we continue to work closely with all stakeholders to support that goal.” Cordray then ...
Read More
CFPB Director Richard Cordray tried to reassure attendees at the National Association of Realtors’ trade expo last week that the impact of the bureau’s pending integrated disclosure rule isn’t going to be as dramatic as many fear – particularly the concern that the three-day disclosure requirement is going to delay loan closings. “The timing of the closing date is not going to change based on any problems you discover with the home on the final walk-through, even matters that may change some of the sales terms or require seller’s credits,” Cordray said. On the contrary, the bureau “listened carefully to your concerns” and limited the reasons for closing delays to only three narrow sets of circumstances. They are: any increases to ...
Read More
The Mortgage Bankers Association continues to forward to the CFPB questions and requests for clarifications on a number of issues related to the bureau’s integrated disclosure rule that have yet to be adequately addressed, such as changes to the Closing Disclosure (CD) after scheduled closing. “There are limited options under the rule, in the event a lender has provided a closing disclosure and closing is delayed for unforeseen circumstances outside the lender’s and/or the borrower’s control,” said the MBA in correspondence to the bureau. Similarly, there may be borrower and seller changes to the purchase terms. “Under the current rule and commentary, the lender apparently has no ability to provide a revised Loan Estimate (LE) or CD and re-compute the ...
Read More
Most of the mortgage industry cannot reliably confirm whether it will be ready to fully comply with the CFPB’s pending integrated disclosure rule, according to a new member survey by the American Bankers Association. Based on approximately 800 responses from bankers nationwide, “Our survey reveals that an overwhelming 74 percent of banks are using a vendor or consultants to assist with TRID implementation,” Bob Davis, head of mortgage markets at the ABA, said in a letter to CFPB Director Richard Cordray. Community banks in particular are highly dependent on the ability of vendors to deliver technology-related services that are critical to bank compliance efforts, according to Davis. “Interestingly, though, bankers from large institutions were over-represented in the survey, which implies ...
Read More
Contrary to other segments of the mortgage industry, a huge majority of title professionals will be ready to play ball when the CFPB’s TILA/RESPA integrated disclosure rule goes live Aug. 1, 2015, according to a survey conducted by the American Land Title Association. “Ninety-two percent of our survey respondents indicated their company will be prepared to implement the new forms and comply with the CFPB’s regulation,” said Michelle Korsmo, ALTA’s chief executive officer. “The land title insurance industry has been a leader in preparing the real estate industry for the new disclosures and that is reflected in the preparedness of our members.” However, perhaps not so surprisingly, collaboration with lenders and real estate agents, and potential closing delays top the ...
Read More
Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee, released the text of his pending regulatory relief bill last week. Among a handful of CFPB-related provisions is one that would grant qualified mortgage status under the bureau’s ability-to-repay rule for residential loans held in portfolio. However, as per the draft Financial Regulatory Improvement Act of 2015, certain conditions would have to apply. To begin with, the lender/creditor would have to hold the loan in portfolio from its inception, or any acquirer of the loan must continue to hold it in portfolio. Additionally, the mortgage cannot have been acquired through securitization, nor can it have certain forbidden features, like negative amortization, interest-only provisions, or a loan ...
Read More
The CFPB sued Ohio-based Nationwide Biweekly Administration, Loan Payment Administration, and their owner, Daniel Lipsky, in federal district court last week, accusing them of misrepresenting the interest savings consumers will achieve through a biweekly mortgage payment program called the “Interest Minimizer” and misleading consumers about the cost of the program. Under the program, consumers who enroll send Nationwide half their monthly mortgage payment every two weeks, effectively making one additional monthly payment per year. According to the bureau, Nationwide charges consumers a setup fee of up to $995 to enroll in the program and charges consumers between $84 and $101 in payment processing fees each year they remain enrolled. According to the bureau’s complaint, the defendants made misrepresentations about the ...
Read More
The CFPB has launched a public inquiry into student loan servicing practices that create repayment challenges, hurdles for distressed borrowers, and economic incentives that may affect the quality of service. The bureau said it has observed that many borrowers are experiencing significant student debt stress. “Consumers have complained about billing problems associated with payment posting, prepayments and partial payments,” it said. The CFPB has also heard from distressed borrowers that student loan servicers aren’t being very useful in helping them avoid defaults and delinquencies. “Distressed borrowers complain that they are given the runaround when they ask for help, they have a hard time getting straight answers from servicing staff, and that the staff is untrained or unequipped to deal with ...
Read More
The CFPB recently announced it brought an enforcement action against Sprint and Verizon, alleging illegal “cramming” of hundreds of millions of dollars in unauthorized third party charges on customers’ mobile phone accounts. Under the terms of proposed consent orders, which are pending court approval, the pair will provide $120 million in consumer refunds, as well as pay $38 million in federal and state fines. The problem stemmed from the alleged failure on the part of Sprint and Verizon to properly monitor their outsourced processing of payments to third party vendors for digital purchases. “The lack of oversight by Sprint and Verizon allowed the vendors to have nearly unfettered access to consumers’ wireless accounts,” said the CFPB. “The billing systems for ...
Read More
The top three operations in the debt collection business all saw their consumer complaint numbers fall both quarter over quarter and year over year, according to a new analysis by Inside the CFPB. Fourth-ranked Enhanced Recovery Co. was the only one of the top five to see increases in both timeframes, and they were doozies: a 96.5 percent jump QoQ and a huge spike of 184.1 percent YoY. Citibank, the only financial institution in the top tier, was uneven, with complaints up a small 6.3 percent QoQ, but down a substantial 28.5 percent YoY. This dynamic seemed in full play for the entire industry, with many firms doing well, some doing poorly [with an exclusive chart] ...
Read More
CFPB Updates Mortgage Origination Examination Procedures to Reflect TRID. The CFPB has put out an updated version of its Supervision and Examination Manual’s Mortgage Origination examination procedures. The latest iteration features guidance on how its compliance examiners will examine loan disclosures and the terms of closed-end residential mortgages that are subject to the pending integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. Of the manual’s eight modules, the updated TRID examination procedures are reflected in module #4. “Examiners should obtain and review a sample of complete loan files to assess the entity’s compliance,” states the new section of the manual. “If consumer complaints regarding mortgage origination and closing indicate potential violations of ...
Read More
CFPB May Review Lender-Paid MI. Pricing on lender-paid mortgage insurance policies has come down over the past several months, apparently spurring the CFPB to take a look at what’s going on behind the curtain. Citing industry officials who claim to have knowledge of the situation, Inside Mortgage Finance, an affiliated publication, reported late last week that the powerful consumer regulator may focus on whether there is some kind of quid pro quo going on between lenders and mortgage insurers. In particular, the CFPB is interested in the discounting of LPMI in exchange for a lender sending more of its MI business to an insurer and whether such a practice violates the Real Estate Settlement Procedures Act, the newsletter reported. In ...
Read More