Browse articles from all of our Newsletters related to Legislation.

February 27, 2015 - Inside Mortgage Trends

If You’re Not Testing for TRID, You’re Late

Conversations with executives at leading industry technology vendors suggest that if mortgage lenders are not already testing their systems and processes for compliance with the impending integrated disclosure rule from the Consumer Financial Protection Bureau, they are already behind the curve. Tech vendors have been working with some of their clients for months already, and in some cases for more than a year, testing systems and process as they prepare for “TRID,” the Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure rule. Scott Stucky, chief strategy officer at DocuTech, said...

February 26, 2015 - Inside Mortgage Finance

Republicans Likely to Use Different Strategies To Restructure CFPB vs. Changing Bureau Rules

As Republican leaders in Congress stake out hard-line positions on structural changes to the Consumer Financial Protection Bureau, Democrats are responding by digging in their heels, raising the prospects of more gridlock. Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee, recently stated his desire to pull the CFPB within the orbit of the congressional appropriations process. He is also interested in changing the leadership structure of the bureau from a single director to a governing board. Ranking Member Jeff Merkley, D-OR, and other Democrats are opposed...

February 23, 2015 - Inside the CFPB

Worth Noting

Rep. Waters Wants Clarity on Corinthian Student Loan Refunds. House Financial Services Committee Ranking Member Maxine Waters, D-CA, wants more clarity about the recent agreement to provide $480 million in financial relief to students wrestling with predatory loans from now-defunct Corinthian Colleges. In letters to CFPB Director Richard Cordray and David Hawn, president and CEO of Education Credit Management Group, the company that acquired a majority of the college’s campuses, Waters said, “[A]s you both well know, the student loan servicing industry, much like the mortgage servicing industry, has often worked as a disservice to its customers. “Furthermore, students who are to receive private debt relief were intentionally misled when the debt was incurred, and there is undoubtedly confusion among ...

February 23, 2015 - Inside the CFPB

Bureau Grants Longer Loan Estimate Disclosure Window

In an unannounced development late last week, the CFPB granted an industry request to tweak its pending integrated disclosure rule by issuing a final rule allowing a three-business-day window for lenders to revise a loan estimate form. This is longer than the one-day window that was proposed back in October and the same-day requirement included in the original mortgage disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The bureau received comments from industry trade associations, creditors, technology vendors, and other industry representatives addressing the proposed change. All comments supported the proposal to relax the timing requirement, but most advocated extending it to three business days. Most commenters argued that a next-business-day requirement presents ...

February 20, 2015 - Inside FHA Lending

VA to Issue Final ‘Qualified Mortgage’ Rule in May

The Department of Veterans Affairs expects to have a finalized Qualified Mortgage (QM) rule by May to help clear up some issues that have arisen since the agency issued an interim final rule last spring. The VA issued the interim QM rule for comment on May 9, 2014, to define which VA loans will have QM status under the ability-to-repay (ATR) rule. Issued by the Consumer Financial Protection Bureau, the ATR rule provided temporary QM status to loans eligible for FHA insurance and guaranties by the VA and the Department of Agriculture’s Rural Housing Service. Eligible government-backed loans must be 30-year fixed-rate with no interest-only, negative amortization or balloon features. Total points and fees must not exceed 3 percent of the total loan amount for loans of $100,000 or more. Loans that meet the definition of a temporary VA-eligible QM are considered as in compliance with the ATR rule. They are designated as “safe harbor QMs,” provided they are not ...

February 20, 2015 - Inside FHA Lending

CFPB Takes Action Against Deceptive Advertising

The Consumer Financial Protection Bureau recently sued a reverse mortgage lender and issued consent decrees against two other mortgage companies for misleading consumers with false advertising about FHA-insured mortgage products. The CFPB filed suit against All Financial Services (AFS), a Maryland-based reverse mortgage lender, in the federal district court in Baltimore alleging that the lender disseminated misleading ads for Home Equity Conversion Mortgage loans between November 2011 and December 2012. In addition, AFS allegedly failed to maintain copies of the ads as required by the CFPB under its reverse mortgage regulations. According to court filings, the CFPB alleges that the lender/broker mailed out ads using materials and language that seemed to indicate that it was a federal entity or an affiliate of a government entity. All AFS ads appeared as if they were ...

February 20, 2015 - Inside FHA Lending

Lenders Urged to Study Changes in New Handbook

FHA lenders should spend the next couple of months familiarizing their staff with the requirements in the FHA’s new Single Family Housing Policy Handbook to ensure proper implementation of the changes on June 15, 2015, according to compliance experts. The impending changes in the Single Family Handbook are complex and significant. Lenders will need proper legal guidance to navigate and understand hundreds of pages of consolidated housing policies and guidance, as well as substantive changes to FHA requirements, said K&L Gates experts in a recent analysis. The handbook is a consolidated, authoritative source of single-family housing policy and is meant as a one-stop resource for FHA lenders. It gathers and streamlines all FHA requirements, which are currently spread throughout various handbooks, mortgagee letters and other documents, making it easier for lenders to ...

February 19, 2015 - Inside Mortgage Finance

Sen. Johnson’s Letter on a ‘Definitional Error’ Regarding the QM Rule was Apparently a Fake

A letter addressed to the Consumer Financial Protection Bureau regarding a “definitional error” in the drafting of the qualified mortgage provisions in the Dodd-Frank Act that was supposedly penned by Sen. Tim Johnson, D-SD, has turned out to be a fake. According to an email from Drey Samuelson, who served as the former senator’s chief of staff until his recent retirement, “the letter in question was not authorized nor sent by Sen. Johnson, and he has communicated that fact to director [Richard] Cordray.” A CFPB staffer confirmed...

February 12, 2015 - Inside Mortgage Finance

Policymakers Weigh Relief for Small Banks, CUs From DFA, Trickle-Down Exams, Best Practices

Lawmakers and regulators alike cited the recent move by the Consumer Financial Protection Bureau to liberalize its ability-to-repay rule somewhat as an example of the kind of adjustments that can be made to help ease the regulatory burden for smaller financial institutions, especially those operating in underserved markets. “A few weeks ago, the CFPB announced changes to its mortgage rules – a win for small lenders, particularly those in underserved rural areas,” said Sen. Sherrod Brown, D-OH, ranking member of the Senate Banking, Housing and Urban Affairs Committee, during a hearing early this week. “There is...

February 12, 2015 - Inside Mortgage Finance

Inter-Party Differences Hinder Action in Congress on Mortgage Finance Reform

Internal differences among Democrats and Republicans – let alone the strong differences between the two parties – have prevented Congress from resolving the conservatorship of the two government-sponsored enterprises, according to industry analysts. At the ABS Vegas conference this week sponsored by the Structured Finance Industry Group and Information Management Network, two people with intimate knowledge of matters in the House and Senate pointed to inter-party issues regarding GSE reform. Andrew Olmem, a partner at the law firm of Venable and a former Republican chief counsel and deputy staff director at the Senate Committee on Banking, Housing, and Urban Affairs until 2013, noted...

February 12, 2015 - Inside Mortgage Finance

HUD Secretary Castro Faces the Music in First Encounter With GOP Critics on House Financial Services Committee

Department of Housing and Urban Development Secretary Julian Castro faced the wrath of the GOP majority during a House Financial Services Committee hearing this week on the state of the FHA, focusing on the agency’s recent decision to cut annual mortgage insurance premiums. While Castro may have been warned about stepping into the lion’s den, he appeared ill-prepared for the confrontation with Republicans, unable to answer basic questions such as FHA’s net income, overall delinquency rate and the serious delinquency rate for 2014. Democrats, on the other hand, helped the embattled secretary regain his footing by expressing support for FHA’s efforts and putting perspective on some of FHA’s actions to strengthen the Mutual Mortgage Insurance Fund and help qualify more borrowers for FHA credit. Committee Chairman Jeb Hensarling, R-TX, set...

February 12, 2015 - Inside Mortgage Finance

Two Modestly Bright Spots in Slowing 4Q14 Mortgage Origination Market: Jumbo and Home-Equity Lending

The two best things about the mortgage origination market in the fourth quarter were that it meant 2014 wasn’t as bad as once feared, and that refinance demand had picked up. But a new Inside Mortgage Finance analysis and ranking reveals two other positive trends: the jumbo and home-equity markets continued to gain strength in the final three months of 2014. Lenders originated an estimated $67 billion of jumbo mortgages during the fourth quarter, up 3.1 percent from the previous period. Home-equity production bounced 5.0 percent higher, to an estimated $21 billion. Neither gain was...[Includes two data charts]

February 9, 2015 - Inside the CFPB

CFPB Slams Subprime Credit Card Co. for $2.7 Million in Refunds

Last week, the CFPB ordered Continental Finance Company, LLC, a subprime credit card originator, marketer and servicer based in Newark, DE, to refund approximately $2.7 million to consumers who were charged allegedly illegal fees. The bureau also imposed a $250,000 civil penalty on Continental. The CFPB alleged that Continental “engaged in deceptive acts or practices by making false statements regarding certain fees charged consumers in connection with credit cards,” and by “representing, expressly or impliedly, that certain security deposits consumers provided for certain credit cards” would be insured by the Federal Deposit Insurance Corp. The company also violated the Truth in Lending Act and its implementing Regulation Z by requiring some consumers to pay fees exceeding the 25 percent limit ...

February 5, 2015 - Inside Mortgage Finance

CFPB Proposes Broad QM Exemption for Portfolio Loans Held by Small Lenders; A Crack in the Dam?

The Consumer Financial Protection Bureau made a few industry hearts skip a beat last week when it proposed loosening some of the parameters of the ability-to-repay rule for small lenders and for those providing credit to rural and underserved communities. Under the bureau’s proposal, small lenders could hold an unlimited number of mortgages in portfolio without sacrificing their “small creditor” status under the ATR rule. In and of itself, the change isn’t that big a deal. But what really captured some industry representatives’ imagination was the possibility that it might represent a liberalization of the bureau’s attitude toward portfolio loans in the context of the ATR rule and more concessions ahead. Under the CFPB’s proposal, the definition of “small creditor” would expand...

January 29, 2015 - Inside Mortgage Finance

Wells, Chase Settle With CFPB Over Kickback Allegations, But Mystery Lender Escapes Wrath

Wells Fargo and JPMorgan Chase reached a financial settlement with the Consumer Financial Protection Bureau and the Maryland attorney general last week over allegations related to illegal mortgage kickbacks involving some of their loan officers and Genuine Title, a title company based in Maryland that went out of business last spring. The two government agencies are seeking civil penalties of $24 million from Wells Fargo and $600,000 from JPMorgan Chase. They also want $10.8 million from Wells and $300,000 from JPMorgan Chase in redress for consumers whose loans were involved in the marketing arrangement at issue. The CFPB and the Maryland AG also took action...

January 26, 2015 - Inside the CFPB

Worth Noting

Obama Vows Vetoes to Dodd-Frank Changes. President Barack Obama touted the Dodd-Frank Act during his recent State of the Union speech as well as the growth of the CFPB, and threatened a veto should the Republican-controlled Congress pass any additional fixes to Dodd-Frank. “Today, we have new tools to stop taxpayer-funded bailouts, and a new consumer watchdog to protect us from predatory lending and abusive credit card practices,” Obama said. “We can’t put the security of families at risk by taking away their health insurance, or unraveling the new rules on Wall Street, or refighting past battles on immigration when we’ve got a system to fix. And if a bill comes to my desk that tries to do any of ...

January 26, 2015 - Inside the CFPB

Bureau Position Upheld as SCOTUS Sides With Borrower on Rescission

When it comes to legal cases at the Supreme Court of the United States, score one for the CFPB. Earlier this month, in Jesinoski v. Countrywide, the SCOTUS essentially upheld the bureau’s position on borrower rescission of a mortgage under the Truth in Lending Act. Specifically, the high court unanimously ruled that TILA only requires written notice to a mortgage lender within three years in lieu of requiring a borrower to formally file a lawsuit within that time span. Under TILA, a borrower may rescind a mortgage within the first three days of consummation of the transaction or the delivery of the mandated disclosures required. However, if a lender fails to make the disclosures demanded under TILA, this right is ...

January 26, 2015 - Inside the CFPB

Wells, JPMorgan Settle With CFPB Over Mortgage Kickback Claims

Wells Fargo and JPMorgan Chase settled with the CFPB and the Maryland Attorney General last week, resolving allegations of participating in an illegal marketing kickback scheme with Genuine Title, a title company that has since gone out of business. The government agencies alleged that Genuine Title gave the banks’ loan officers cash, marketing materials and consumer information in exchange for business referrals. The CFPB and the Maryland AG also took action against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, both of Baltimore, for their alleged involvement. The two government agencies are seeking $24 million in civil penalties from Wells Fargo and $600,000 in civil penalties from JPMorgan Chase. They also want $10.8 million from Wells ...

January 23, 2015 - Inside FHA Lending

Low Rates, High Demand Power VA’s 3Q14 Surge

Production of loans with a VA guaranty was moderately strong in the third quarter of 2014, thanks to lower rates and increased demand for the no-downpayment loans, according to Inside FHA Lending’s analysis of the latest agency data. A 14.1 percent quarter-to-quarter surge helped the industry end last year’s first nine months with a total of $76.3 billion in VA loans, mostly purchase home mortgages taken out by a younger generation of war veterans. VA streamline refinancing also accounted for a substantial chunk of originations, 19.2 percent. Volume jumped from $19.5 billion in the first quarter of 2014 to $26.5 billion the following quarter. Lenders closed out the third quarter with $30.2 billion. Stanley Middleman, chief executive officer of Freedom Mortgage, said VA lending is on the upswing, driven by low interest rates. He thinks the VA home loan guaranty program has been ... [ 1 chart ]

January 23, 2015 - Inside MBS & ABS

FDIC Proposes Clarification on Interplay Between Risk Retention and Securitization Safe Harbor

The Federal Deposit Insurance Corp. took an action this week aimed at reducing confusion regarding the interplay between the banking regulator’s securitization safe harbor and risk-retention requirements recently set by federal regulators. Under the FDIC’s securitization safe harbor, if certain requirements are met, the FDIC, in its capacity as receiver or conservator of an insured depository institution, won’t recover or reclaim securitized assets when exercising its authority to repudiate contracts. In 2010, the FDIC added a risk-retention requirement to the safe harbor. For securitized assets to qualify for the FDIC’s safe harbor, sponsors of deals issued in 2011 and beyond must retain...

January 23, 2015 - Inside MBS & ABS

SCOTUS Ruling in TILA Rescission Case Could be Trouble for Non-Agency MBS, SFIG Brief Suggests

Last week, the U.S. Supreme Court unanimously ruled that the Truth in Lending Act only compels a borrower to file a written notice within three years of consummation in order to rescind a mortgage if the lender fails to provide the required disclosure, instead of formally filing a lawsuit within that period. This could spell bad news for the non-agency RMBS space, according to an amicus brief the Structured Finance Industry Group filed with the high court in the case, Jesinoski v. Countrywide Home Loans, Inc. The first problem SFIG noted with the position that the SCOTUS eventually upheld is that it will have a chilling effect on non-agency MBS. “A determination that mere notice is sufficient to effect a rescission would reverberate through all segments of the RMBS market, creating significant hurdles for originators, issuers, ratings agencies, servicers, and trustees alike, while breeding doubt among investors regarding the value of future and already-issued private-label RMBS,” said the trade group. That’s...

January 22, 2015 - Inside Mortgage Finance

Outgoing Senate Democrat Pressed CFPB to Iron Out Wrinkle in QM Points-and-Fees Calculation

Shortly before he left office, the former chairman of the Senate Banking, Housing and Urban Affairs Committee urged the Consumer Financial Protection Bureau to fix a problem that may prevent some loans from being classified as qualified mortgages. Former Sen. Tim Johnson, D-SD, said the problem in the CFPB’s points-and-fees definition was the result of a drafting error in the Dodd-Frank Act, which established the qualified mortgage under the ability-to-repay regulation. Loans with points and fees exceeding 3 percent can still be legal under the ATR, but the lender doesn’t get the liability protection afforded QMs. “The calculation of points and fees for purposes of determining what is a qualified mortgage was not intended...


With the recent dip in interest rates, how do you feel about loan volumes this year?

We see loan production ending 2015 flat compared to 2014.
We’re optimistic that our originations will rise by 10 to 20 percent year over year.
We’re really optimistic: We expect production to increase by 20 percent or better from last year.
We’re not so bullish. Originations for us may actually fall.

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