Legislation

Browse articles from all of our Newsletters related to Legislation.

March 26, 2015 - Inside Mortgage Finance

Lender Pleas for ‘Soft’ Enforcement of TRID Falling On Deaf Ears, Industry Complains About Complaints

The mortgage industry isn’t achieving any more success than lawmakers on Capitol Hill in convincing the Consumer Financial Protection Bureau to take it easy on lenders when it’s time to start enforcing its integrated disclosure rule. Speaking at the American Bankers Association’s government relations event in Washington, DC, earlier this week, Virginia O’Neill, head of regulatory compliance for the trade group, recounted for attendees the experience of one community bank ...


March 23, 2015 - Inside the CFPB

Briefs

CFPB Updates TRID Documentation. Last week, the CFPB put out some updates to the implementation materials for its integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The updated material lines up with the rule that was published Feb. 19, 2015, that modifies the 2013 TILA/RESPA integrated disclosure rule (TRID). This rule extends the timing requirement for revised disclosures when consumers lock a rate or extend a rate lock after the Loan Estimate is provided and permits certain language related to construction loans for transactions involving new construction on the LE. Additionally, the bureau is making non-substantive corrections, including citation and cross-reference updates and wording changes for clarification purposes, to various provisions of ...


March 23, 2015 - Inside the CFPB

Settlement Agents May be Outside Looking In as Big Lenders ‘DIY’

It looks like some of the biggest mortgage lenders in the nation will be closing their loans themselves largely without closing agents, once the CFPB’s integrated disclosure rule kicks in Aug. 1, 2015, one top vendor representative revealed recently. And that might put the big banks at a competitive advantage vis-à-vis their nonbank rivals. “Because this is a paradigm shift, and because the liability is staying on the lender side – both in terms of the accuracy of the disclosure and in the timing – we’ve heard some of the bigger lenders are going to close the loans themselves instead of using settlement agents,” John Vong, CEO of ComplianceEase, told Inside the CFPB recently. “For some of the banks, they have already ...


March 23, 2015 - Inside the CFPB

Small Servicer Changes Welcomed, Successor in Interest, Not So Much

The changes the CFPB wants to make to its 2013 mortgage servicing rules under the Real Estate Settlement Procedures Act and the Truth in Lending Act got a mixed reception from the mortgage industry. The proposed rule was issued in mid-December, and the public comment period closed last week. The proposed amendments cover nine primary topics: successors in interest, definition of delinquency, requests for information, force-placed insurance, early intervention, loss mitigation, prompt payment crediting, periodic statements, and small servicer issues. The Independent Community Bankers of America was pleased with the bureau’s proposed amendment to the small servicer definition that will permit a small servicer to service, for a fee, mortgage loans that are seller-financed transactions subject to certain limitations. ...


March 23, 2015 - Inside the CFPB

Industry Asks CFPB for ‘Soft’ Enforcement Period for TRID

More than a dozen industry organizations asked the CFPB last week to implement a “restrained enforcement and liability” or “grace period” through the end of 2015 for those seeking to comply in good faith with its integrated disclosure rule after its August 1, 2015, effective date. “There are ... situations – such as what will occur if a closing cannot go forward on schedule because of occurrences outside the control of the parties – that are not addressed by the regulation which still require additional guidance,” the collection of 16 trade groups said in a joint letter to CFPB Director Richard Cordray. “We would like to use this grace period to identify pain points with stakeholders and then meet with bureau staff ...


March 20, 2015 - Inside FHA/VA Lending

Around the Industry

Loan Modification Trial Payment Plans for Forward Mortgages. The Department of Housing and Urban Development has announced requirements for trial plan duration, required signatures, and reporting for trial payment-plan agreements, and the conditions under which FHA deems a TPP to have failed.Lenders must implement the requirements in Mortgagee Letter 2015-07 for all TPPs offered to borrowers on or after June 1, 2015. FHA Publishes Additional Sections of HUD Single-Family Policy Handbook. The FHA has published additional sections for the SF Handbook, including the following: Doing Business with FHA – Lenders and Mortgagees Doing Business with FHA – Other participants in FHA Transactions – Appraisers; Quality Control, Oversight and Compliance – Lenders and Mortgagees; Quality Control Oversight, and Compliance – Other Participants in FHA Transactions – Appraisers ...


March 19, 2015 - Inside Mortgage Finance

CFPB Successor-in-Interest Provisions Pose Legal Risks, Could Promote Fraud, Lender Reps Warn

The Consumer Financial Protection Bureau’s proposal to significantly expand the regulatory requirements related to successors in interest poses legal risks, threatens personal privacy and could foster instances of fraud, mortgage industry officials said. The provisions related to successors in interest are part of a package of proposed amendments to the bureau’s 2013 mortgage rules under the Real Estate Settlement Procedures Act and the Truth in Lending Act ...


March 9, 2015 - Inside the CFPB

CFPB Proposes Suspending TILA Requirement for CC Issuers

Issuers of open-end credit cards would get a one-year break from the Truth in Lending Act/Regulation Z requirement to forward their credit card agreements to the CFPB on a quarterly basis for posting in a public database on the agency’s website, under a proposed rule the bureau issued recently. The proposal would temporarily suspend card issuers’ obligations to submit agreements to the bureau for a period of one year (i.e., four quarterly submissions), in order to reduce burden while the bureau works to develop a more streamlined and automated electronic submission system. Other requirements, including card issuers’ obligations to post currently offered agreements on their own websites, would be unchanged under the proposal. “The bureau recognizes that its proposed temporary ...


March 9, 2015 - Inside the CFPB

TRID Will Demand Much From Lenders on Multiple Levels

This is the first in a series on industry efforts to prepare for compliance with the CFPB’s integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. According to Scott Stucky, chief strategy officer at DocuTech, mortgage lenders need to engage TRID preparation on multiple levels. “They’ve obviously got to be ready from a technology perspective, so working with their origination system and document solution provider, they should be in the testing phase at this point in time,” he told Inside the CFPB recently. “Even if it’s rudimentary testing, even if it’s just very basic and they can’t get everything completely together, they should be doing some basic evaluation,” he added. “That’s because, in ...


March 9, 2015 - Inside the CFPB

Fannie/Freddie ‘Patch’ to ATR Rule Will be Extended if Needed

The CFPB’s ability-to-repay rule will likely be revised if Congress fails to enact legislation to reform the government-sponsored enterprises by the time the rule’s Fannie Mae/Freddie Mac “patch” expires in six years. Appearing before the House Financial Services Committee last week, CFPB Director Richard Cordray and committee chairman Jeb Hensarling, R-TX, went back and forth over the accuracy of a study the Federal Reserve did a few years ago about the potential impact the ATR rule could have on the market, specifically in terms of limiting borrower access to credit. Cordray said he disagreed with the findings of the report, asserting that the Fed’s study was based on provisions that were substantially different than what were ultimately adopted. Hensarling then ...


March 9, 2015 - Inside the CFPB

HMDA Rule Out This Summer, With Extended Implementation Period

CFPB Director Richard Cordray told members of Congress last week that the bureau’s final rule on Home Mortgage Disclosure Act reporting would likely come out sometime this summer, perhaps in July. He also indicated there would be a significant amount of time for mortgage lenders to get in compliance with it. He did not, however, provide any more detail such as a specific timetable. During last week’s hearing of the House Financial Services Committee, Rep. Randy Hultgren, R- IL, said small financial institutions are concerned about the proposal. “CFPB’s efforts thus far to narrowly tailor proposed HMDA requirements have been insufficient,” he said. “Even though the Dodd-Frank Act mandates 17 new data fields, the CFPB has proposed an additional 20 ...


March 9, 2015 - Inside the CFPB

Expect No Quarter From CFPB On Enforcement of the TRID

A key take-away from last week’s hearing of the House Financial Services Committee was a clear indication that the CFPB plans to fully enforce its integrated disclosure rule when the Aug. 1, 2015, effective date kicks in. The rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act was finalized in November 2013. During the hearing this past Tuesday, Reps. Randy Neugebauer, R-TX, and Brad Sherman, D-CA, both pressed CFPB Director Richard Cordray on whether he would be open to a 60-day enforcement delay or a “restrained enforcement” period when the TILA/RESPA integrated disclosure rule – the TRID – goes live. Cordray did not come right out and say he would refuse to accept or implement one, but ...


March 5, 2015 - Inside Mortgage Finance

CFPB to Fully Enforce TRID Disclosure Requirements, HMDA Rule Likely Out This Summer, Cordray Says

The head of the Consumer Financial Protection Bureau held his ground this week against pressure from Republican and Democrat lawmakers to take it easy on mortgage lenders in enforcing the bureau’s integrated disclosure rule. During a hearing before the House Financial Services Committee, Reps. Randy Neugebauer, R-TX, and Brad Sherman, D-CA, pressed CFPB Director Richard Cordray to consider a 60-day enforcement delay or a “soft enforcement” period when the new mortgage disclosures take effect Aug. 1. The new rule creates an integrated disclosure framework under the Truth in Lending Act and Real Estate Settlement Procedures Act, commonly known as TRID. Cordray did not come right out...


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/VA 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/VA 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/VA 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]


Poll

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.

36%

We’re optimistic that our originations will rise by 10 to 20 percent year over year.

44%

We’re really optimistic: We expect production to increase by 20 percent or better from last year.

12%

We’re not so bullish. Originations for us may actually fall.

8%

Housing Pulse