Compliance

Browse articles from all of our Newsletters related to Compliance.

March 16, 2017 - Inside Mortgage Finance

FCC Weighs Revised Phone-Contact Standards That Could Interfere with Mortgage Business

A request from two consumers for changes to the Telephone Consumer Protection Act would interfere with mortgage origination and servicing operations, according to the Consumer Mortgage Coalition. The CMC submitted a comment letter to the Federal Communications Commission late last week in response to a petition submitted to the FCC in January. The petition called for the FCC to re-write parts of the TCPA and require express consent to be in writing from consumers regarding certain communications from companies, including mortgage lenders and servicers. The petition would define express consent as not being provided even when a person to be called knowingly provides a phone number to a lender on a loan application. Anne Canfield, executive director of the CMC, said...


March 13, 2017 - Inside the CFPB

Other News in Brief

Nationstar in the CFPB’s Crosshairs Over HMDA Reporting. Nationstar, the residential mortgage servicer, revealed recently it is being investigated by the CFPB over issues related to complying with the Home Mortgage Disclosure Act.... Non-Agency MBS Issuers Like the Legal Protection of the ATR. Congressional Republicans may be working on legislation to repeal and replace many regulations required by the Dodd-Frank Act, but some issuers of mortgage-backed securities are actually pushing to maintain some of the regulations.... Trump Executive Order on Regulatory Red Tape Unlikely to Apply to CFPB. Will the Bureau Comply Anyway? The executive order that President Trump signed in the middle of February that requires every federal agency to establish a regulatory reform task force to eliminate red tape probably does not apply to the CFPB, according to industry experts....


March 13, 2017 - Inside the CFPB

CFPB Rules Have Hindered, May Yet Help, Adoption of E-Mortgages

Mortgage lenders’ efforts at compliance with post-financial crisis regulation, largely from the CFPB, shifted their focus from fully implementing e-mortgage processes but also helped them develop the necessary technology to move forward with them in the future, according to a new report from analysts at Moody’s Investors Service. “Following the crisis, lenders focused on adapting technology to implement regulations such as the ability-to-repay [qualified mortgage] rule and the TILA-RESPA Integrated Disclosure rule rather than on e-mortgages,” the analysts said. “The implementation of those regulations has, however, led to advancements in the technology needed to originate e-mortgages by providing, for example, a seamless data feed between the mortgage loan application and the disclosure documents.” Further, “Some lenders and servicers have also ...


March 13, 2017 - Inside the CFPB

TRID Triggered Most 2016 Mortgage QC Headaches

The CFPB’s integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act proved to be the primary source of mortgage lenders’ quality control (QC) headaches in 2016, the first full year of the rule’s implementation, a new industry report concluded. According to a review of thousands of post-close QC audits performed by MetaSource, a Utah-based third-party mortgage compliance service provider, TRID accounted for 12 of the top 15 findings of QC issues. The six most frequent findings were issues with TRID requirements. The single most frequent issue involved correspondence of information listed in the Calculating Cash to Close table on page 3 of the closing disclosure (CD) to the information cited on the last ...


March 13, 2017 - Inside the CFPB

RESPA Experts See Positive Elements in CFPB Consent Orders

With legal briefs continuing to be filed in PHH Corp. v. CFPB, mortgage experts on the Real Estate Settlement Procedures Act see a bit of a silver lining, along with multiple warnings, in the handful of consent orders the CFPB brought against other industry defendants on the RESPA front. Earlier this year, the CFPB brought a $3.5 million enforcement action against Prospect Mortgage, accusing the firm of illegal kickbacks for mortgage business referrals from two real estate brokers, and in an unusual twist, a mortgage servicing operation. The bureau also acted against ReMax Gold Coast and Keller Williams Mid-Willamette, the brokers, and Planet Home Lending, the mortgage servicer – all of whom it accused of taking illegal kickbacks. During an exclusive ...


March 13, 2017 - Inside the CFPB

Appeals Court Blocks State National Bank from PHH Case

The years-long legal battle that PHH Mortgage and PHH Corp. have been waging with the CFPB continues to take sudden and unexpected turns. One recent example: PHH filed a brief in opposition to the plaintiffs in State National Bank of Big Spring, Texas, et al. v. Lew from intervening in the mortgage lender’s case with the CFPB. …


March 13, 2017 - Inside the CFPB

PHH Corp. Makes its Case Again In RESPA Dispute with CFPB

PHH Corp. and related parties again made a full defense of their position in their legal struggle with the CFPB over alleged misconduct under the Real Estate Settlement Procedures Act. PHH made five primary arguments to the U.S. District Court of Appeals for the District of Columbia Circuit, the first of which was that the CFPB is unconstitutionally structured and must be invalidated. …


March 13, 2017 - Inside the CFPB

Multiple State AGs Detail Their Support of PHH in Case With CFPB

The attorneys general of 15 states came to the defense of PHH Corp. and related parties in their case with the CFPB over the agency’s interpretation and enforcement of the Real Estate Settlement Procedures Act. The AGs of Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Nevada, Oklahoma, South Dakota, Texas, West Virginia and Wisconsin focused on the constitutional issues in the case, with not a single mention of the statutory questions related to the act. The AGs made three major arguments in support of PHH’s position. First, they asserted that the separation of powers plays a critical role in preserving the division of authority within the federal system, and the CFPB’s governance structure violates the separation of powers ...


March 13, 2017 - Inside the CFPB

The Government, As Expected, Switches Sides in PHH Case

The Trump administration has subtly signaled its support for PHH Corp. in the mortgage lender’s long-running dispute with the CFPB over alleged violations of the Real Estate Settlement Procedures Act. In recent days, the Department of Justice asked the U.S. Court of Appeals for the District of Columbia Circuit for permission to file an amicus brief in the case by March 17, one week after the deadline the court had given PHH to file its response to the court’s decision to grant the CFPB’s request for an en banc rehearing. The court has since granted the administration’s request for the one-week extension. In its request, the Justice Department said, “As this court recognized in calling for the views of the ...


March 3, 2017 - Inside FHA/VA Lending

FHA Primes Lenders for LRS, Defect Taxonomy; System to Go Live in 2Q

The FHA is nearing full implementation of a new loan review system (LRS) for managing FHA’s Title II single-family quality-control processes. No specific implementation date has been set but it could be sometime in the second quarter, the agency said. The LRS builds on FHA’s efforts to align the documentation of loan-review results. In addition, it incorporates the Single-Family Housing Loan Quality Assessment Methodology or defect taxonomy. The FHA said the new system would not be used to manage any aspect of the agency’s standard loan origination or endorsement processes. Rather, it would be used to review of test cases submitted by lenders seeking unconditional direct-endorsement authority. It would be used as well for various post-endorsement reviews of forward single-family loans. After the ...


February 27, 2017 - Inside the CFPB

CFPB Begins Look at Alternative Data for ‘Credit Invisible’ Borrowers

The CFPB recently issued a request for information into ways to expand access to credit for consumers who are “credit invisible,” that is, those who don’t have enough credit history to generate a credit score. The bureau issued the RFI to drum up public feedback on “the benefits and risks of tapping alternative data sources such as bills for mobile phones and rent payments to make lending decisions about consumers whose lack of credit history might otherwise block opportunities.” According to the CFPB, there are 26 million Americans who are credit invisibles. “Another 19 million consumers have a credit history that has gone stale, or is insufficient to produce a credit score under most scoring models,” said the agency. The ...


February 27, 2017 - Inside the CFPB

HUD Reportedly Set to Begin Redlining Probe of CIT Group

The Department of Housing and Urban Development is apparently poised to begin an investigation of allegations of redlining on the part of CIT Group, Pasadena, CA, through its CIT Bank subsidiary, the successor to OneWest Bank, after agreeing to accept a complaint against the lender filed by the California Reinvestment Coalition. The CRC alleges the bank violated and continues to violate the Fair Housing Act by providing residential real estate-related transactions in a manner that discriminates on the basis of race, color and national origin. Specifically, the complaint alleges that since at least 2011, CIT Bank discriminated in marketing and originating housing-related products, as evidenced by the low number of mortgages it made to African-American, Asian-American and Latino borrowers in ...


February 27, 2017 - Inside the CFPB

Maryland Looks to Exceed CFPB Standards for Servicing Transfers

Two years after first proposing a regulation addressing mortgage servicing rights transfers, the Maryland Commissioner of Financial Regulation recently issued a revised iteration that could have a big effect on the mortgage servicing industry, according to attorneys with the Ballard Spahr law firm. According to a summary by the attorneys of the technical language of the proposed regulation, for any transfer of MSR involving at least 7,500 loans, the transferee servicer would have to report certain information to the commissioner at least 30 days before date of the transfer. Specifically, the transferee servicer would have to “report whether the transfer involves a subservicing agreement or an agreement for the sale of mortgage servicing rights; the names of the parties to ...


February 27, 2017 - Inside the CFPB

How to Accurately Estimate Property Taxes in Line with TRID

In a competitive mortgage market with increasingly knowledgeable and demanding borrowers, it is essential that originators implement proper processes and controls to produce accurate property tax data collection, analysis and estimation, according to an online blog posting by Dominique Lalisse, an analyst with CoreLogic. One of the critical components of the new loan origination process that has emerged under the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure rule is property- tax amount estimation for residential properties, she pointed out. “The estimating process is conducted during the initial stages of origination in order to complete the required loan estimate (LE) provided to the borrower,” Lalisse said. “With increased scrutiny around the preparation of the LE, lenders must ...


February 27, 2017 - Inside the CFPB

Ditching CFPB Mortgage Rules Would Hurt RMBS, Moody’s Warns

If federal policymakers do away with the CFPB’s mortgage rules without proper replacements, the credit quality of residential mortgage-backed securities could be compromised, analysts at Moody’s Investors Service said in a recent report. The analysts were providing a review of President Trump’s recent executive order related to the Dodd-Frank Act. “Any significant repeal of the Dodd-Frank Act’s mortgage-related provisions without effective alternatives would weaken residential RMBS credit quality because these provisions have strengthened the credit quality of mortgage originations, improved servicing practices and bolstered the credit integrity of RMBS structures,” the analysts said. The report is significant because it flies in the face of the traditional industry narrative that the bureau’s mortgage rules have been nothing but an onerous burden ...


February 27, 2017 - Inside the CFPB

Judge Rules Harbour Portfolio Advisors Must Comply With CID

Harbour Portfolio Advisors of Dallas, one of the largest providers of seller-financed homes in the U.S., must comply with a civil investigative demand from the CFPB for documents and other information, according to a recent ruling by Judge Nancy Edmunds of the U.S. District Court for the Eastern District of Michigan, in Detroit. The main issue here, according to the respondents in the case, is whether the bureau’s investigative authority extends to their selling, marketing and servicing of a financial product called an agreement for deed (AFD), otherwise known as a “contract for deed” or a “land installment contract.” An AFD is a written agreement to purchase residential property, whereby the seller agrees to deliver a deed to the purchaser ...


February 27, 2017 - Inside the CFPB

Bureau Eyeballing Altisource Over Services Provided to Ocwen

It looks like the CFPB may be prepping an enforcement action against Altisource Portfolio Solutions over certain unspecified technology services provided to Ocwen, its largest customer, according to Altisource’s 10-K filing with the Securities and Exchange Commission, filed in recent days. “[O]n Nov. 10, 2016, Altisource received a Notice and Opportunity to Respond and Advise (NORA) letter from the CFPB indicating that the CFPB is considering a potential enforcement action against Altisource relating to an alleged violation of federal law that primarily concerns certain technology services provided to Ocwen,” the firm said. On Dec. 15, 2016, Altisource provided a written response to the NORA letter setting forth the legal, policy and factual reasons why it believes an enforcement action is ...


February 27, 2017 - Inside the CFPB

CFPB Exams of Nonbank Mortgage Originators Jumped Last Year

The number of mortgage-related examinations by the CFPB declined in most areas tracked by Inside the CFPB last year – with one glaring exception: The bureau’s examinations of nonbank mortgage originators, which surged 69.2 percent, according to data provided to this newsletter under the Freedom of Information Act. Such supervisory activity on the part of the CFPB directed towards depository institutions, in comparison, fell 23.3 percent year over year, and plunged 66.7 percent from the third quarter of 2016 to the fourth. That being said, depositories have borne the bulk of the brunt of the bureau’s mortgage origination scrutiny, with 21 exams in 2014 versus just 7 for nonbanks that year. In 2015, the story was the same, with banks getting [with exclusive data chart] ...


February 27, 2017 - Inside the CFPB

State National Bank Plaintiffs Want In on En Banc Rehearing of PHH

It’s not just the defenders of the CFPB that are itching to enter the legal fray between the bureau and PHH Corp. The plaintiffs in State National Bank of Big Spring, Texas, et al. v. Lew have also filed a motion to intervene in the en banc proceeding. The plaintiffs – State National Bank of Big Spring, TX, the 60 Plus Association and the Competitive Enterprise Institute – had previously asked the federal district court for the District of Columbia to consolidate their 2012 lawsuit against the CFPB with that of PHH. However, they were recently denied. In their subsequent petition to the U.S. District Court of Appeals for the DC Circuit, the plaintiffs noted, “More than 18 months ago, this court ...


February 27, 2017 - Inside the CFPB

Democrats, Advocates Again Ask to Intervene in PHH v. CFPB

Each of the parties that were rebuffed recently in their attempts to intervene in the controversial legal dispute between PHH Corp. and the CFPB decided they wouldn’t take “no” for an answer. Each of them again filed a motion with the U.S. District Court of Appeals for the District of Columbia Circuit seeking permission to intervene in the case, contrary to prevailing appeals court rules. Earlier this month, Democrat attorneys general from 16 states and the District of Columbia submitted a petition for rehearing en banc. Also, Sen. Sherrod Brown, D-OH, and Rep. Maxine Waters, D-CA, submitted a motion for rehearing en banc, as did a handful of public interest, consumer advocacy groups. All seek to inject themselves into the ...


February 27, 2017 - Inside the CFPB

Appeals Court Gives CFPB a Win, Agrees to En Banc Rehearing

Could this be an omen of the decision to come? Earlier this month, the U.S. Court of Appeals for the District of Columbia Circuit granted the CFPB’s request for an en banc rehearing in its controversial legal dispute, PHH Corp. v. CFPB. “Upon consideration of respondent’s [CFPB] petition for rehearing en banc, the briefs amici curiae in support of the petition, the response of the United States to the petition, the response of the petitioners [PHH Corp.] to the petition, the supplemental response of petitioners, and the vote in favor of the petition by a majority of judges eligible to participate, it is ordered the petition be granted,” 10 of the court’s 11 justices wrote in their ruling. One of ...


February 13, 2017 - Inside the CFPB

Other News in Brief

Hensarling Threatens to Use Budget Reconciliation Process to Push Through CHOICE Act 2.0. Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, raised some industry eyebrows last week when details of his new, more aggressive Financial CHOICE Act got leaked to the press, and he indicated he might use the budget reconciliation process to push the bill through Congress.... CFPB Brings Legal Action Against Debt Relief Law Firms, Attorneys. The CFPB recently sued Howard Law PC, Williamson Law Firm LLC, and Williamson & Howard LLP, as well as attorneys Vincent Howard and Lawrence Williamson, in federal court, accusing them of collaborating to charge illegal fees to consumers looking for debt relief....


February 13, 2017 - Inside the CFPB

PHH Succeeds in Fending Off Intervenors in Dispute with CFPB

PHH Corp. won another round against some new antagonists in its dispute with the CFPB over alleged violations of the Real Estate Settlement Procedures Act. Earlier this month, a three-judge panel of the U.S. District Court of Appeals for the District of Columbia Circuit agreed with the lender and refused to allow three separate efforts to intervene in the case. In a simple, single-page order, the three judges “ordered that the motions be denied.” The ruling affects an effort by Sen. Sherrod Brown, D-OH, and Rep. Maxine Waters, D-CA, to insert themselves in the case on behalf of the CFPB. The lawmakers had warned the appeals court that if their effort to intervene was denied, they would seek recourse from ...


February 13, 2017 - Inside the CFPB

Latest RESPA Case Reveals New Things About CFPB Enforcement

An analysis by the Mortgage Bankers Association of the CFPB’s latest foray back into the enforcement of the Real Estate Settlement Procedures Act noted that some of the allegations in the consent orders would have been troubling under the enforcement regime of the Department of Housing and Urban Development. However, the orders also highlight several new points in the way the bureau is enforcing Section 8 of RESPA, the MBA said. “These include that the arrangements steer consumers, exclude other competitors, and were arrived at based on internal analyses of business and that click-throughs to lenders in joint marketing arrangements somehow amount to compensated referrals,” the trade group said. Further, the consent order addressing Planet Home Lending also clarifies that ...


February 13, 2017 - Inside the CFPB

Brokers, Servicer Also Sanctioned By CFPB in Prospect RESPA Case

In addition to bringing an enforcement action against Prospect Mortgage for alleged violations of the Real Estate Settlement Procedures Act, the CFPB also acted against ReMax Gold Coast and Keller Williams Mid-Willamette, two real estate brokers, and Planet Home Lending, a mortgage servicer – all of whom it accused of taking illegal kickbacks from the lender. Specifically, the CFPB accused both brokers of participating in “certain lead agreements and desk license agreements” with Prospect Mortgage, and of accepting payments from the lender in exchange for referrals in violation of RESPA and its implementing regulation, Regulation X. The bureau also said RGC’s agents “required hundreds of consumers wishing to place an offer on one of their properties offered for sale to pre-qualify ...


February 13, 2017 - Inside the CFPB

CFPB Back in RESPA Enforcement Game With Standard Interpretation

The CFPB recently brought a more traditional interpretation to its enforcement of the Real Estate Settlement Procedures Act in an action against Prospect Mortgage, two real estate brokers and a mortgage servicer that focuses on alleged kickbacks for referrals of mortgage business. Among the lender’s alleged violations of RESPA was the use of lead agreements to pay brokers for referrals. According to the CFPB’s consent order, Prospect entered into such agreements with more than 200 different counterparties, most of which were real estate brokers. Under these arrangements, Prospect paid the counterparty for each lead it received. However, these counterparties went “well beyond simply transferring information about prospective buyers,” the CFPB alleged. They also referred prospective buyers to Prospect’s loan officers....


February 13, 2017 - Inside the CFPB

Lawmaker Seeks Clarity on CFPB Compliance With ‘Freeze’ Memo

Rep. Tom Graves, R-GA, chairman of the House Appropriations Financial Services Subcommittee, recently wrote to CFPB Director Richard Cordray seeking official clarification regarding the agency’s compliance with a memorandum entitled, “Regulatory Freeze Pending Review.” The memo was sent by White House Chief of Staff Reince Priebus, on behalf of President Donald Trump, to the heads of all executive departments and agencies late last month. The departments and agencies were generally directed to “send no regulation to the Office of the Federal Register until a department or agency head appointed or designated by the president … reviews and approves the regulation.” Further, regulations that have been sent to the OFR but not published in the Federal Register are to be immediately...


February 10, 2017 - Inside MBS & ABS

Securitization Industry Participants Pushing for Delay Of Pending Swap-Margin Posting Requirements

Swap-margin posting requirements established by federal regulators are set to take effect on March 1. The Structured Finance Industry Group is leading a push for delayed implementation as securities issuers are having trouble determining how to comply with the standards. The swap-margin rules were required by the Dodd-Frank Act and drafted in 2015 by federal banking regulators and the Commodity Futures Trading Commission. Unlike requirements set by European regulators, the U.S. rules lack a general exemption from compliance for securitization special-purpose vehicles. Securitization SPVs issue various types of MBS and ABS. SFIG noted...


Poll

With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

Do you think your shop will loosen standards over the coming three months?

Yes, but not by much.

47%

Yes, by a lot.

5%

Yes and, heck, we may even do non-QM lending.

14%

No, not at all.

26%

No and we may even tighten credit.

7%