Dodd-Frank Act

Browse articles from all of our Newsletters related to Dodd-Frank Act.

October 21, 2016 - Inside FHA/VA Lending

HUD Urges IG to Reconsider Cost of Delayed Conveyance, Foreclosure

The Department of Housing and Urban Development called on its inspector general to reassess estimated financial losses to the FHA insurance fund, which an IG audit attributed to lengthy delays of servicer foreclosures and property conveyances. A recent audit report by the HUD inspector general alleges that HUD paid approximately $2.23 billion in claims for an estimated 239,000 properties that missed foreclosure and conveyance deadlines. According to the IG report, HUD paid an estimated $141.9 million for servicers’ claims for “unreasonable and unnecessary” debenture interest on the distressed loans, as well as $2.09 billion in servicer claims for holding the properties past their foreclosure and conveyance deadlines. While it was necessary for servicers to pay for property-preservation costs, HUD should not have paid for holding costs, the ...

October 20, 2016 - Inside Mortgage Finance

PHH Ruling Expected to Slow CFPB’s Enforcement Roll, But Just How Much is a Matter of Debate

Last week’s closely-watched appeals court ruling in the wrangling between PHH Mortgage and the Consumer Financial Protection Bureau over Section 8 of the Real Estate Settlement Procedures Act is being widely viewed by many as a clipping of the agency’s wings. But expectations about just how restrained the CFPB will be in enforcement actions going forward vary from compliance attorney to compliance attorney. Lawyers with the Stinson Leonard Street law firm pointed out that the director still holds all of the same enforcement power as before, despite the court’s conclusion that the bureau’s leadership structure, with a sole, independent director who can only be removed for cause, is unconstitutional. “For example, the CFPB administrative appeals process is...

October 17, 2016 - Inside the CFPB

Supporters, Opponents of Dodd-Frank Put Out Dueling Claims

The White House Council of Economic Advisers put out a report recently downplaying the negative effects that the Dodd-Frank Act has had on community banks. “Economic evidence finds that community banks remain strong across a range of measures, from lending growth to geographic reach, including their performance since financial reform passed in 2010,” the report stated. The Obama administration report also asserts that access to community banks remains robust and their services have continued to grow in the years since Dodd-Frank has taken effect, “though this trend has not been uniform across community banks, with mid-sized and larger community banks seeing stronger growth than the smallest ones,” it conceded. “At the same time, though, many community banks – especially the smallest ...

October 17, 2016 - Inside the CFPB

PHH Wins Big Showdown With CFPB, Agency Likely to Appeal

PHH Mortgage – and the rest of the mortgage industry, for that matter – came out with a clear and decisive win against the CFPB last week when the U.S. Court of Appeals for the District of Columbia Circuit vacated the $109 million disgorgement order imposed on the lender by the director of the bureau, Richard Cordray. PHH argued that the CFPB incorrectly interpreted RESPA Section 8 to bar so-called captive reinsurance arrangements involving mortgage lenders such as PHH, their affiliated reinsurers and private mortgage insurers. The lender also asserted that, in any event, the CFPB departed from the consistent prior interpretations issued by the Department of Housing and Urban Development, and that the bureau then retroactively applied its new interpretation of ...

October 17, 2016 - Inside the CFPB

Court Declares CFPB Leadership Structure Unconstitutional

Last week, the U.S. Court of Appeals for the District of Columbia Circuit brought the powerful CFPB down to earth in its legal wrangling with PHH Mortgage, ruling that two aspects of the bureau’s structure – the dismissal of the director of the agency only for cause, and the single directorship as opposed to a multi-member bipartisan commission – were unconstitutional. “As an independent agency with just a single director, the CFPB represents a sharp break from historical practice, lacks the critical internal check on arbitrary decision-making, and poses a far greater threat to individual liberty than does a multi-member independent agency,” wrote Circuit Judge Brett Kavanaugh on behalf of the court. “All of that raises grave constitutional doubts about the CFPB’s ...

October 17, 2016 - Inside the CFPB

PHH Ruling Seen as a Big Threat To CFPB Enforcement Actions

The CFPB took a whipping last week in the long-awaited court ruling in its dispute with PHH Mortgage – so much so, in fact, that not only are its future enforcement actions likely to be curtailed, but even past actions might be challenged by the affected industry participants. “The ramifications of this case go far beyond restricting the CFPB’s reach, clarifying the interpretation of the Real Estate Settlement Procedures Act, and resolving the question of how statutes of limitation apply to the CFPB’s enforcement actions,” said Craig Nazzaro, of counsel with the Baker Donelson law firm in Atlanta, in a review of the case. As he sees it, this case makes clear that the bureau has exceeded its bounds and that ...

October 13, 2016 - Inside Mortgage Finance

Traditional Interpretation of RESPA Sec. 8 Gets a Boost as Court Sides With PHH in CFPB Dispute

The traditional interpretation of Section 8 of the Real Estate Settlement Procedures Act that the mortgage industry has relied on for decades was vindicated this week when a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit sided with most of the arguments advanced by PHH Mortgage in its dispute with the Consumer Financial Protection Bureau. The crux of the dispute has been the bureau’s assertion that PHH violated RESPA by steering business to private mortgage insurers that purchased reinsurance from a captive insurer owned by PHH. Most large lenders and all private MIs engaged in these arrangements prior to the housing market collapse. Early on in the case, an administrative judge agreed...

October 3, 2016 - Inside the CFPB

Dodd-Frank Mortgage Rules Benefitted Wealthy, Professors Say

Two academics assert in a new white paper that the Dodd-Frank Act mortgage rules promulgated by the CFPB that were designed to protect consumers actually harmed middle-class borrowers and benefitted the wealthy. “Dodd-Frank aimed at reducing mortgage fees and abuses against vulnerable borrowers, but increased the costs of originating mortgages,” said University of Maryland professors Francesco D’Acunto and Alberto Rossi in their new paper. “We find it triggered a substantial redistribution of credit from middle-class households to wealthy households.” A back-of-the-envelope calculation that keeps constant the mortgage demand characteristics of 2010 shows financial institutions reduced their production of medium-sized loans by 15 percent in 2014, and increased making large loans by 21 percent, they said. D’Acunto and Rossi also found ...

September 23, 2016 - Inside MBS & ABS

Industry Participants Have Difficulty Determining Who’s Responsible for Risk Retention from Certain Issuers

The complex financing arrangements used by certain investors and a lack of clarity from federal regulators can make it difficult to determine the entity responsible for meeting risk-retention requirements in some MBS and ABS, according to Charles Sweet, senior counsel at the law firm of Morgan Lewis. The Dodd-Frank Act generally required the sponsor of a security to retain at least 5.0 percent of the risk from the security. Sweet said determining the sponsor of an MBS or ABS can be fairly straightforward when one company originates the assets, services the receivables and initiates securitization, as in the case of an ABS backed by automobile retail contracts from a captive finance company of a car manufacturer. However, where securitization roles are more dispersed, Sweet said...

September 19, 2016 - Inside the CFPB

Hensarling Bill Also Would Make Revisions to CFPB Mortgage Rules

H.R. 5983, the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act by Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, has incorporated the provisions of a number of bills that have either already passed the committee or the full House of Representatives and that would affect ...

September 19, 2016 - Inside the CFPB

Lawmakers Pass Multiple Changes To CFPB, With Industry Support

Republicans on the House Financial Services Committee had enough votes, despite one defection, to pass a comprehensive alternative to the Dodd-Frank Act that includes a host of changes to the CFPB. The most significant them would be replacing the single directorship with a five-member bipartisan commission and subjecting the agency to the congressional appropriations process. The legislative vehicle they used was H.R. 5983, the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act, formally introduced 10 days ago by committee ...

September 16, 2016 - Inside MBS & ABS

House Panel Passes Dodd-Frank Reform Alternative That Would Eliminate Risk-Retention Requirements for ABS

Republicans running the House Financial Services Committee had enough votes, in spite of one defection, to push through a legislative markup this week a comprehensive overhaul of the Dodd-Frank Act that would eliminate the pending risk-retention requirements for ABS other than residential mortgages, among other provisions. The GOP’s preferred legislative vehicle is H.R. 5983, the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act, dropped in the legislative hopper a week ago by Rep. Jeb Hensarling, R-TX, committee chairman. “Many post mortems of the financial crisis posit...


After the November elections, how long will it take for a new Congress and White House to pass GSE reform legislation?

I’m confident a bill will be passed the first year.


2 to 3 years. GSE reform is complicated.


Sadly it won’t happen in a Clinton or Trump first term.


Not in my lifetime.


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