Legislation

Browse articles from all of our Newsletters related to Legislation.

February 8, 2016 - Inside the CFPB

In Brief: Facing the Music

Wells Fargo Settles with FHA for a Record $1.2 Billion. Wells Fargo, the largest player in the Ginnie Mae market, last week agreed to pay the Department of Justice and Department of Housing and Urban Development $1.2 billion to settle FHA underwriting claims. In a filing with the Securities and Exchange Commission, Wells noted that the agreement “resolves certain civil claims that the federal government had pending” against the lender tied to FHA lending from 2001 to 2010. But it also covers “other potential civil claims relating” to the megabank’s government production in other time periods as well. The megabank, which also is the nation’s largest overall home lender and servicer, saw the settlement coming and booked an additional “legal ...


February 8, 2016 - Inside the CFPB

In Brief: CFPB Calendar

TRID Webinar to Focus on Construction Lending Issues. The Federal Reserve next month plans to host officials from the CFPB to present a webinar on questions related to the bureau’s integrated disclosure rule in the context of construction lending. The event is to be held Tuesday, March 1, 2016, from 2 p.m. to 3 p.m. Eastern time. Those interested in viewing the live event may register online at https://www.webcaster4 .com/Webcast/Page/577/13246. Additional information and resources related to the TRID rule may be accessed at the CFPB’s website. CFPB the Target of House Republicans Again This Week. The House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit plans to examine the CFPB’s “assault on access to credit and trampling of ...


February 8, 2016 - Inside the CFPB

In Brief: Vendor Update

DocMagic Software Product Certified for TRID. DocMagic, a provider of document preparation, compliance, eSign and eDelivery solutions, recently received certification for its SmartCLOSE software product by the Mortgage Industry Standards Maintenance Organization, a nonprofit subsidiary of the Mortgage Bankers Association. Specifically, SmartCLOSE has been awarded what is known as a Standard Level Certification for the TILA/RESPA Integrated Disclosure (TRID) rule. According to the MBA, the objective behind SmartCLOSE is to bring lenders, settlement service providers, and other relevant entities together inside a secure environment to share, edit, validate, audit, track and collaborate on documents, data and fees. SmartCLOSE received Standard Level certification for MISMO Version 3.3 within the TRID business domain. “With the Uniform Mortgage Data Program (UMDP) quality initiatives ...


February 8, 2016 - Inside the CFPB

In Brief: More About TRID

Will TRID Errors Crimp Earnings? Market observers have been hearing reports that TRID errors and closing delays definitely will be affecting first quarter 2016 earnings, at least for certain nonbanks. The big test for nonbank mortgage stocks is expected to come later this month when PHH Corp., the parent of PHH Mortgage, the nation’s ninth largest servicer, reports 4Q15 results. PHH, which is battling the CFPB over RESPA issues, also has been smacked around by servicing write-downs. It likely got some relief on that score in 4Q15. Stay tuned... CFPB Tries to Clear the TRID Air on Construction Loans. Not only has the CFPB’s TRID rule delayed closings in the conventional market, but it’s being reported that the regulation has ...


February 8, 2016 - Inside the CFPB

Potential RESPA Class-Action Launched Against PHH, Realogy

A complaint has recently been filed in U.S. District Court for the Central District of California in an attempt to initiate a class-action case against PHH Corp. and Realogy Holdings Corp. and some of their subsidiaries and affiliates for allegedly deceptive and collusive practices in violation of the Real Estate Settlement Procedures Act. The case references and appears to be inspired, at least in part, by the enforcement action the CFPB brought against PHH in 2014 in which the bureau alleged the lender violated RESPA by illegally referring borrowers to mortgage insurance companies in exchange for kickbacks. In that case, PHH Corp. v. CFPB, the U.S. Court of Appeals for the District of Columbia is set to hear oral arguments on ...


February 8, 2016 - Inside the CFPB

Recent RFI Shows Bureau May Accommodate Industry on HMDA

Last month’s issuance by the CFPB of a request for information (RFI) regarding its Home Mortgage Disclosure Act resubmission guidelines likely reflects the bureau’s recognition of the additional workload the pending new rule represents, as well as a willingness to hear what the industry has to say about it. In October 2015, the bureau finalized its rule updating the reporting requirements under its HMDA rule, which will significantly expand the amount of information lenders will submit to the agency. “Given these changes, the current resubmission guidelines may need to be updated, and the bureau is seeking feedback on what modifications may be appropriate,” the agency said in early January. But in a recent online blog post, Brooks Bossong, a member ...


February 8, 2016 - Inside the CFPB

The Bloom is Off the Rose On the CFPB’s ‘Clarifying Letter’

Remember the Dec. 29, 2015, “clarifying letter” that CFPB Director Richard Cordray sent to the Mortgage Bankers Association? Initially, the letter relieved industry anxiety regarding TRID errors, at least to some degree. But over the past few weeks, certain lenders have once again grown nervous and are reporting resistance by secondary market investors that are turning down their mortgages because of TRID errors. For loan buyers, the issue is assignee liability. The MBA is believed to be a key player trying to persuade the bureau to publish the letter in the Federal Register. An industry lobbyist noted that one week after the clarifying letter came to light, MBA “applied immediate pressure to get the letter into Register form. The CFPB ...


February 8, 2016 - Inside the CFPB

Life Under TRID: Is TRID Suddenly Driving Mortgage Merger and Acquisition Activity?

Normally during this time of year, the mergers and acquisitions game is somewhat quiet in the mortgage industry, but concerns over compliance with the CFPB’s integrated disclosure rule known as TRID are sparking some lenders to consider selling and getting out. That’s the opinion of Chuck Klein, managing partner of Mortgage Banking Solutions, who said, “I’m as busy as I’ve ever been this time of year.” Speaking on the Internet radio program “Lykken on Lending” recently, the M&A advisor noted that mortgage company owners are “disturbed about the cost and risk of noncompliance.” He added that the TRID rule promulgated by the CFPB “has gotten everyone’s attention,” in particular, owners of nonbanks who have all their personal net worth tied ...


February 5, 2016 - Inside MBS & ABS

Agency MBS Issuance Down Slightly in January Despite Increase in Purchase-Mortgage Activity

Fannie Mae, Freddie Mac and Ginnie Mae produced a combined $88.96 billion of single-family MBS in January, a modest 1.4 percent decline from December, according to a new ranking and analysis by Inside MBS & ABS. Ginnie production was actually up 7.2 percent from the previous month, while both the government-sponsored enterprises posted declines in new issuance. January’s agency MBS production included...[Includes two data tables]


February 4, 2016 - Inside Mortgage Finance

House GOP Launches Salvoes at GSEs, FHA, CFPB; Dems Play Defense as White House Budget Delayed

Republicans on the House Financial Services Committee this week pushed through their version of fiscal year 2017 budget views and estimates (BVE), taking aim at government-sponsored enterprises Fannie Mae and Freddie Mac, as well as FHA and the Consumer Financial Protection Bureau. The minority Democrats tried to amend the broader GOP package 10 times, but each amendment went down to defeat on a party-line basis. There were no Republican amendments offered. On the issue of Fannie, Freddie and housing finance reform, Republicans on the committee said...


February 4, 2016 - Inside Mortgage Finance

Analysts Suggest Tight Underwriting Prevented 1.2 Million Mortgages in 2014, Lenders Point to Buyback Uncertainty

If lenders used the seemingly sensible underwriting standards that were in place in 2001, some 1.2 million more mortgages would have been originated in 2014, according to estimates by the Urban Institute’s Housing Finance Policy Center. Laurie Goodman, director of the HFPC, said lenders have “plenty of room to safely ease credit.” An underwriting index from the HFPC suggests that originators are accepting little risk in terms of borrower or loan characteristics, hindering a recovery in the mortgage market and the broader economy. Lenders note...


February 4, 2016 - Inside Mortgage Finance

Industry Wants CFPB’s ‘Clarifying Letter’ on TRID Errors Put in the Federal Register for Legal Protection

Different factions of the mortgage industry are strongly urging the Consumer Financial Protection Bureau to place its yearend “clarifying letter” on TRID errors into the Federal Register, believing that it would provide stronger legal protection. According to interviews conducted by Inside Mortgage Finance, TRID errors – even minor ones – continue to be a chief reason why certain secondary market investors are rejecting mortgages, in particular non-agency product. The fear for these investors is assignee liability, that they could be sued for TRID errors even though they had nothing to do with the loan’s origination. One paragraph in the Dec. 29 letter from the CFPB to the Mortgage Bankers Association begins...


January 29, 2016 - Inside FHA/VA Lending

VA Issues Guide to Understanding Interim Qualified Mortgage Rule

The Department of Veterans Affairs has issued guidance to help VA lenders understand better the agency’s interim final rule on a borrower’s ability to repay and qualified mortgages. The guidance was published in a frequently asked questions (FAQs) format to clarify and explain both the VA’s ATR and QM standards. The VA interim final rule became effective on May 9, 2014, the date it was published in the Federal Register. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires residential mortgage lenders to make a reasonable and good faith determination that the consumer has a reasonable ability to repay the loan according to its terms. The statute directed the Consumer Financial Protection Bureau to develop and implement an ATR/QM rule. Under the CFPB’s final rule, a qualified mortgage is a category of loans that have certain, more stable features that ...


January 28, 2016 - Inside Mortgage Finance

Much at Stake for Industry as Court Sets Date for Oral Arguments in Dispute Between PHH and CFPB

The mortgage industry’s continued use of marketing services agreements and other affiliated business arrangements hangs in the balance in a long-running dispute between PHH Corp. and the Consumer Financial Protection Bureau, which will be the subject of oral arguments April 12, 2016, before the U.S. Court of Appeals for the District of Columbia. “The PHH appeal is one of the most important Real Estate Settlement Procedures Act opinions to be decided by the courts in decades,” legal expert Phillip Schulman told Inside Mortgage Finance this week. “It will determine whether Section 8(c)(2) of the act merely clarifies the Section 8(a) anti-kickback provisions of the statute, as CFPB Director Richard Cordray claims, or whether it creates a safe harbor that exempts payments from a RESPA violation if those payments are for goods provided or services rendered, as the plain language of the act and several previous circuit courts have held.” Further, “This appeal will have...


January 28, 2016 - Inside Mortgage Finance

Existing Home Sales Bounce Back in December; Many Lenders Suggest They’ve Adapted to TRID

Existing home sales increased by 14.7 percent in December compared with the previous month, according to data from the National Association of Realtors, suggesting that issues involving the Consumer Financial Protection Bureau’s disclosure rule were temporary. NAR said 5.46 million sales of existing homes were completed in December, on a seasonally adjusted basis, up from 4.76 million the previous month, marking the largest monthly increase ever recorded by the group, on a percentage basis. Existing home sales in November were down by 10.5 percent from the previous month as lenders grappled with the new TRID disclosure rule. “While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates...


January 28, 2016 - Inside Mortgage Finance

A Secondary Market Develops for ‘Scratch & Dent’ TRID Loans; Even PIMCO is Eyeing the Sector

With nonbanks fearing they could be stuck with error-laden mortgages that violate the integrated disclosure rule, a secondary market has developed for this new breed of “scratch and dent” loans, according to interviews conducted by Inside Mortgage Finance. One investor, requesting his firm’s name not be identified, said his shop bought such a mortgage for 90 cents on the dollar. Participants in the market – including investors and traders – concede...


January 25, 2016 - Inside the CFPB

CFPB News in Brief

PHH, CFPB Have a Court Date. The U.S. Court of Appeals for the District of Columbia has scheduled to hear oral arguments in the case of PHH Corp. v. CFPB on April 12 at 9:30 am ET. Analysts at Compass Point Research & Trading said in a client note that “the oral argument date is consistent with our expectations and supports our 4Q16 estimate for a decision.” The crux of the dispute is the bureau’s assertion that PHH violated the Real Estate Settlement Procedures Act by illegally referring borrowers to mortgage insurance companies in exchange for kickbacks. Back in January 2014, the CFPB initiated an administrative proceeding against PHH. Administrative Law Judge Cameron Elliot subsequently held that PHH’s referrals of ...


January 25, 2016 - Inside the CFPB

More About TRID

Here are the Top 10 TRID Deficiencies, According to One Lender. The folks at Stearns Correspondent Lending recently published a list of the top 10 compliance deficiencies associated with the CFPB’s integrated disclosure rule, as follows: 1. The Closing Disclosure was not provided to the borrower within three business days of the closing date. 2. Various unspecified issues with the Loan Estimate. 3. The Loan Estimate was not disclosed to the borrower within three business days of the application date. 4. Borrower(s) did not receive the Loan Estimate within four business days of the closing date. 5. The lender failed to provide a valid change of circumstance for all subsequent Loan Estimates in the file. 6. The lender failed to ...


January 25, 2016 - Inside the CFPB

CHLA Urges CFPB to Require Universal Loan Originator Test

On the three-year anniversary of the adoption of the CFPB’s final loan originator compensation rule, the Community Home Lenders Association wrote the bureau, renewing its call for “ending the exemption bank loan originators enjoy from passing a mortgage competency test.” The Jan. 20, 2013, LO comp rule implemented Section 1402(b)(1)(A) of the Dodd-Frank Act, which requires that all mortgage loan originators be “qualified.” In the final rule, the CFPB elected not to impose a Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) test requirement on bank loan originators or impose other related SAFE Act requirements that are imposed on non-bank LOs. Subsequently, the CHLA has called for higher bank loan originator qualifications standards, including a mandatory universal requirement ...


January 25, 2016 - Inside the CFPB

HMDA Rule Adds to Regulatory Burden, Privacy Concerns

Credit union representatives are urging the CFPB to address the increased regulatory burden associated with complying with the bureau’s new Home Mortgage Disclosure Act regulation, as well as related privacy issues the new rule raises. “The final rule added a significant number of new data points to the reporting requirements established in Regulation C, while modifying almost all the existing data points,” said Alexander Monterrubio, regulatory affairs counsel for the National Association of Federal Credit Unions, in a recent comment letter to the CFPB. While some of the data points were specifically mandated by the Dodd-Frank Act, many of them were added at the bureau’s discretion, and that will prove to be problematic. “These discretionary data points have swelled the ...


January 25, 2016 - Inside the CFPB

TRID Non-Compliance Risk is Modest for Investors: Fitch

Investors in non-agency U.S. residential mortgage-backed securities are unlikely to face much in the way of risk stemming from lender non-compliance with the new requirements of the CFPB’s integrated disclosure rule known as TRID, according to analysts at Fitch Ratings. “Although the frequency of non-compliance issues will likely be elevated initially as lenders implement the new changes, those non-compliance issues are not likely to translate into higher risk for bondholders,” the analysts said in a recent report. Their initial due diligence sampling of prime jumbo mortgages in the secondary market has revealed a high level of compliance issues thus far. However, most of them appear to be good-faith errors. The ratings service is continuing its discussions with market participants on ...


January 25, 2016 - Inside the CFPB

Survey Finds Continued Minor Effect of TRID, No Big Impact

The latest installment of the Campbell Surveys/Inside MortgageFinance HousingPulse Survey of real estate agents again found widespread, but generally minor, disruptions to mortgage closings throughout the United States due to the CFPB’s integrated disclosure rule known as TRID. TRID did affect December closings, manifesting as the second month of slight increases in closing times and in the percent of missed closings. “Most housing market metrics continue to be strong, despite the onset of TRID and the entry into the winter season,” said the report, which is sponsored by Inside Mortgage Finance, an affiliated newsletter. Further, “Closing times metrics are still showing a minor effect of TRID, and the predicted significant impact in December did not materialize.” The report also provided ...


January 25, 2016 - Inside the CFPB

Attorneys Highlight Take-Aways, Limits of TRID ‘Clarifying’ Letter

The recent letter from CFPB Director Richard Cordray to the Mortgage Bankers Association clarifying certain aspects of the bureau’s integrated disclosure rule has some important take-aways – and certain limitations – the industry should be mindful of, according to some top industry attorneys. In a recent online blog posting, attorneys Donald Lampe and Leonard Chanin of Morrison & Foerster LLP identified a handful of key take-aways for mortgage market participants related to the TRID rule. First, “If mortgage loan originators and others involved in the origination, financing and sales of mortgage loans are not familiar with the benefits of [specific] Know Before You Owe disclosure cure provisions, now is the time to assess them,” the attorneys began. They then noted that Cordray’s ...


January 25, 2016 - Inside the CFPB

Life Under TRID: TRID Compliance Mess Continues, Many Investor Woes

Although the CFPB recently issued a “clarifying” letter on errors tied to the TRID integrated disclosure rule, deep concerns remain among originators that fund non-agency product for sale into the secondary market. Moreover, according to interviews conducted by Inside Mortgage Finance, an affiliated publication, some nonbank lenders are seeing noticeable increases in origination costs because loans are taking longer to close and therefore remain on warehouse lines for an extended period of time. Because nonbanks fund almost all of their production using warehouse credit, the implication boils down to this: already squeezed profit margins are going to shrink. Industry efforts to comply with the new disclosures, which merge requirements of the Truth in Lending Act and the Real Estate Settlement ...


January 22, 2016 - Inside MBS & ABS

Non-Agency MBS Issuers Working to Deal with Risk- Retention Requirements, Seasoned Loans a Focus

About a month after risk-retention requirements took effect for newly issued non-agency MBS, industry participants continue to work on complying with the standards set by the Dodd-Frank Act. Non-agency MBS issued on Dec. 24, 2015, and beyond are subject to risk-retention standards. The standards will apply to other MBS and ABS asset types for deals issued on and after Dec. 24 of this year. The first jumbo MBS subject to risk-retention requirements is scheduled...


January 21, 2016 - Inside Mortgage Finance

Little Evidence of TRID Damage So Far at Big Banks, As Volumes Already Seem to be Bouncing Back

Earnings season has begun, and among the biggest financial institutions and mortgage lenders that have reported thus far, there’s been little evidence of damage to the bottom line as a result of the Consumer Financial Protection Bureau’s integrated disclosure rule known as TRID. At top-ranked Wells Fargo, total loan production for the fourth quarter was $47 billion, versus $55 billion in the third quarter, and $44 billion in the fourth quarter of 2014, something Chairman and CEO John Stumpf attributed to seasonality as well as TRID. During an earnings-related conference call with investors last week, Stumpf was asked...


January 21, 2016 - Inside Mortgage Finance

Closing Times on Mortgaged Home Sales Lengthened In December, With Some Blame Placed on TRID

There’s mounting evidence that the Consumer Financial Protection Bureau’s disclosure rule is having an impact on home sales and purchase mortgages, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. In December, closing times on mortgage-financed home purchases continued to stretch out and fewer sales closed on time. Tom Popik, research director of Campbell Surveys, said the CFPB’s Truth in Lending/Real Estate Settlement Procedures Act disclosure rule appears to have caused slight increases in closing times and the share of missed closings for the second month in a row. “Closing time metrics are still showing...


January 15, 2016 - Inside FHA/VA Lending

Radian Asserts Compliance as PMIERS Became Effective

Radian Guaranty became the first among seven private mortgage insurers to declare compliance with the regulatory capital standards under the Private Mortgage Insurer Eligibility Requirements (PMIERs). Radian met its PMIERs goals after receiving $325 million in cash and marketable securities from its parent Radian Group in exchange for a surplus note. In addition, the parent firm contributed $50 million to an exclusive affiliated reinsurer of Radian Guaranty. Radian Group expects the capital cushion to increase based in part on expected future financial performance at its MI subsidiary. Monies from other sources, including a profit commission of about $8 million based on performance to date, and $8.5 million in prepaid supplemental ceding commission also contributed to the MI’s capital. Hence, Radian Guaranty is not expected to require any additional capital contributions in order to ...


January 15, 2016 - Inside FHA/VA Lending

TRID Compliance Excluded from FHA Post-Endorsement Reviews

FHA lenders are uneasy over whether issues raised by the Consumer Financial Protection Bureau’s new integrated disclosure rules could affect FHA lending. Although the issues cited by lenders are not FHA issues per se, these lenders are concerned that such uncertainties may cause problems for their FHA business, according to mortgage industry consultant Brian Chappelle, a principal at Potomac Partners. For example if a lender cures a mistake and the cure results in a reimbursement of, say, $100 to the borrower at closing, would that be considered a violation of the Department of Housing and Urban Development’s minimum 3.5 percent cash-investment requirement for FHA loans. “I don’t think it is a violation, but lenders are worried about how HUD might interpret it,” said Chappelle. “It is well after closing and it is obviously not a gift given to the borrower. It is ...


January 15, 2016 - Inside MBS & ABS

Are Due Diligence Firms Leading Secondary Market Investors to Reject Loans Due to Minor TRID Errors?

By now the word is out: Certain unnamed secondary market investors are turning away mortgages because of compliance errors, expressing the opinion they do not want to be on the “liability hook” for any origination errors under the new integrated disclosure rule known as TRID. The Mortgage Bankers Association recently singled out a jumbo investor that’s been rejecting 100 percent of the loans offered by originators. The trade group declined to identify the investor, but other ...


January 14, 2016 - Inside Mortgage Finance

Mortgage Originations Expected to Remain Strong Heading into 2016, with a Backlog Attributed to TRID

A significant amount of mortgage originations that were set to be completed before the end of 2015 were pushed into early 2016, according to industry analysts. The closing issues could be related to the Consumer Financial Protection Bureau’s “TRID” integrated disclosure rule, with first quarter production expected to see a boost as lenders adjust to the new requirements. Late this week, JPMorgan Chase offered the first look at origination trends for major lenders ...


January 11, 2016 - Inside the CFPB

In Brief: Other News

CFPB Makes Annual Threshold Adjustments Per HMDA, TILA Regulations. Late last month, the CFPB issued two final rules regarding annual threshold adjustments under the implementing regulations for the Home Mortgage Disclosure Act and the Truth in Lending Act. Under the HMDA regulation, Reg. C, the asset-size exemption for banks, savings associations and credit unions will remain at $44 million. As a result, such institutions with assets of $44 million or less as of Dec. 31, 2015, are exempt from collecting HMDA data in 2016. “An institution’s exemption from collecting data in 2016 does not affect its responsibility to report the data it was required to collect in 2015,” the CFPB said. The rule became effective Jan. 1, 2016, and applies ...


January 11, 2016 - Inside the CFPB

In Brief: More About TRID

Technical Corrections to the TRID Made With No Fanfare. Over the holidays, the CFPB quietly made what it characterized as “non-substantial” technical corrections to its integrated mortgage disclosures final rule under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z). The November 2013 publication of the bureau’s TRID rule in the Federal Register resulted in “several unintended deletions of existing regulatory text from Reg. Z and the official interpretations (commentary) in the Code of Federal Regulations (CFR) and, in one case, the omission of regulatory language in the TRID from the CFR,” said the CFPB. To correct the CFR, the bureau republished the deleted and omitted text, consistent with the agency’s intent in ...


January 11, 2016 - Inside the CFPB

GAO Finds Little Data to Back Industry Claims of DFA Burden

The Government Accountability Office heard a lot of industry talk about the negative effects of CFPB regulations on mortgage lending during its review of the impact of the Dodd-Frank Act, but found little data from regulators to support such claims so far, according to a new report issued by the government watchdog. “The results of surveys conducted by regulators, industry associations, and academics on the impact of the Dodd-Frank Act on small banks suggest that there have been moderate to minimal initial reductions in the availability of credit among those responding to the various surveys, and regulatory data to date have not confirmed a negative impact on mortgage lending,” said the GAO. Some community bank, credit union, and industry association ...


January 11, 2016 - Inside the CFPB

Dodd-Frank Update: ATR Rule Had Little Impact in 2014, Economists at the Fed Conclude

The CFPB’s ability-to-repay (ATR) rule with its qualified mortgage standard did not materially affect the mortgage market in 2014, according to a recent analysis by two economists at the Federal Reserve based on industry data provided under the Home Mortgage Disclosure Act. Following up on an article published simultaneously with the 2014 HMDA data release in which they found little indication that the new rules had a significant effect on lending in 2014, Fed economists Neil Bhutta and Daniel Ringo extended that analysis by conducting sharper tests around the date of enactment, and around lender-size and loan-pricing thresholds, where treatment of loans under the new rules varies. They found that “lenders responded to the ATR and QM rules, particularly by ...


January 11, 2016 - Inside the CFPB

CFPB HMDA Rule Will Lead to Even More Regulatory Oversight: OFR

The CFPB’s new rulemaking related to the Home Mortgage Disclosure Act sets the stage for a more comprehensive regulatory environment in which a single mortgage could be monitored as it moves between lenders, is packaged into a security, or is handed off from one servicer to another, according to a new report from the Treasury Department’s Office of Financial Research. For those who may have missed it, in October 2015, the CFPB revised the reporting requirements under HMDA to include a universal loan identifier (ULI) and the postal address of the property securing each mortgage loan. The revisions also require a legal entity identifier (LEI) for the reporting entity and loan originator and the inclusion of data fields to monitor ...


January 11, 2016 - Inside the CFPB

HMDA Update: CFPB Wants Feedback on HMDA Mortgage Info Corrections

The CFPB last week announced it wants public feedback on the resubmission of corrected mortgage lending data reported under the Home Mortgage Disclosure Act. In October 2015, the CFPB finalized its HMDA rule that significantly expands the range of data will that be reported after becoming effective in 2018, with reporting beginning in 2019. “Given these changes, the current resubmission guidelines may need to be updated, and the bureau is seeking feedback on what modifications may be appropriate,” the agency said. Also, some industry stakeholders have asked whether the CFPB would adjust its mortgage lending data resubmission guidelines to reflect the expanded data that will be submitted under the new rules. The bureau’s request for information (RFI) lists a dozen ...


January 11, 2016 - Inside the CFPB

Investor Anxiety Over TRID Stems From Ambiguity Over Liability

Some private investors are skittish about purchasing loans in the new TRID environment because of the potentially huge, and largely unspecified, liability that purchasers face on the secondary market under the bureau’s new integrated disclosure rule, according to some top experts. “What we’re seeing now, unfortunately, is that private investors, securitizers and such, are being gun-shy,” said Richard Andreano, mortgage banking practice leader in the Washington, DC, office of the Ballard Spahr law firm, during a recent webinar sponsored by Inside Mortgage Finance, an affiliated publication. “Because what we have is the bureau made clear that there was some liability associated with the TRID rule, not only pre-existing Truth in Lending Act liability, but perhaps now some liability for Real ...


January 11, 2016 - Inside the CFPB

Lenders Run Smack Dab Into Investor Issues Under TRID

Initial mortgage lending industry anxieties that the CFPB’s integrated disclosure rule might cause problems on the secondary market are being borne out, at least on an anecdotal level, a number of industry officials and participants indicate. Mortgage Bankers Association President and CEO David Stevens last week rattled off a handful of such problems that have emerged since the TRID rule took effect Oct. 3, 2015. “For non-agency jumbo mortgages, there are some pretty significant kick-backs [of loans] from a couple of investors,” said Stevens. Part of it has to do with the due diligence firms that simply identify errors and some investors who have a zero tolerance for any error regardless of severity. “This does not apply to all,” Stevens ...


January 11, 2016 - Inside the CFPB

Anecdotal Evidence Mounts of Minor Closing Delays Due to TRID

The latest Campbell Surveys/Inside Mortgage Finance HousingPulse survey provides further anecdotal evidence to support the claim that the TRID rule is in fact contributing to delays in closing mortgages. “TRID rules caused delay of about 10 days,” thanks to “new processes for title and lender,” said one real estate agent in California. Another in North Carolina said, “Lenders do not communicate well with real estate agents. With TRID now in effect, I feel like I am flying blind trying to organize, coordinate and keep things on track.” A third in New Hampshire noted, “We had four more closings expected to close in November but are delayed due to TRID. Some had 60-day closing dates and have been extended up to ...


January 11, 2016 - Inside the CFPB

Life Under TRID: Cordray Issues ‘Clarifying’ Letter, Lenders Still Worry About Liability

CFPB Director Richard Cordray issued a letter to the mortgage industry over the holidays related to the TRID integrated disclosure rule, clarifying that the new rule includes a provision to “cure” certain mistakes, even after the fact. “The Know Before You Owe mortgage disclosure rule provides for the issuance of a corrected closing disclosure, even after closing,” Cordray said in a letter to Mortgage Bankers Association President and CEO David Stevens. “This can be used, for example, to correct non-numerical clerical errors or as a component of curing any violations of the monetary tolerance limits, if they exist. “As a general matter, consistent with existing Truth in Lending Act principles, liability for statutory and class action damages would be assessed ...


January 7, 2016 - Inside Mortgage Finance

Industry Continues to Appeal to CFPB for TRID Clarifications as Evidence Mounts of Closing Delays

Mortgage industry representatives are meeting this week with Consumer Financial Protection Bureau Director Richard Cordray in another attempt to squeeze out additional clarification to help lenders comply with the bureau’s integrated disclosure rule, which took effect Oct. 3, 2015. The ambiguity and confusion engendered by the rule continues to contribute to mortgage closing delays throughout the country, according to many top industry officials. Executives of the Independent Community Bankers of America were scheduled...


January 7, 2016 - Inside Mortgage Finance

TRID Phobia Causing Headaches in the Secondary Market? MBA Cites a 100 Percent Rejection Rate by One Investor

Although the Consumer Financial Protection Bureau recently issued a “clarifying” letter on errors tied to the so-called TRID integrated disclosure rule, deep concerns remain among originators that fund non-agency product for sale into the secondary market. Moreover, according to interviews conducted by Inside Mortgage Finance over the past week, some nonbank lenders are seeing noticeable increases in origination costs because loans are taking longer to close and therefore remain on warehouse lines for an extended period of time. Because nonbanks fund almost all of their production using warehouse credit, the implication boils down...


January 1, 2016 - Inside Nonconforming Markets

Little Impact Expected from DFA’s Risk-Retention

Risk-retention requirements established by the Dodd-Frank Act for certain non-agency mortgage-backed securities took effect at the end of 2015. Industry analysts suggest that the requirements will have minimal impact on industry participants’ current practices. “Risk-retention rules will not affect overall residential MBS issuance levels because qualified mortgage issuers will be exempt from risk-retention rules, and non-QM issuers already retain risk,” according to analysts at Moody’s Investors Service ...


January 1, 2016 - Inside FHA/VA Lending

Around the Industry

VA Servicer Reminders. The new maximum allowable foreclosure timeframes published in the Federal Register on Dec. 4, 2015, will be effective for all loan terminations completed on or after Jan. 3, 2016. In addition, the new Net Value percentage (15.95 percent) took effect on Dec. 23, 2015. All Notices of Value issued on or after Dec. 23, must be calculated using the new percentage. Meanwhile, pre-approval requests to deviate from a regulation must be submitted through VALERI (VA Loan Electronic Reporting Interface), the agency’s loan administration system. VA does not grant pre-approval on claim expenses or for additional time to foreclose. These items must be appealed ...


January 1, 2016 - Inside FHA/VA Lending

Joint Enforcement Actions Result In Huge Recoveries for FHA in 2015

Joint civil fraud initiatives have resulted in $558.5 million in recoveries and receivables to the Department of Housing and Urban Development in FY 2015, according to the HUD inspector general’s semiannual report to Congress. The amount includes civil settlements of $212.5 million from First Tennessee Bank, $29.6 million from Reverse Mortgage Solutions, and $1.8 million from three other settlements. The settlements resolved enforcement actions brought by the Department of Justice on behalf of HUD in pursuit of civil remedies under a variety of statutes, including the False Claims Act, Program Fraud Civil Remedies Act, and the Financial Institutions Reform, Recovery and Enforcement Act. Recoveries and receivables for other entities during the reporting period – April 1 to Sept. 30, 2015 – totaled $86.9 million and $268.2 million for the entire fiscal year. Some of the payments were made to the ...


Poll

A lot has been written lately regarding loan closing delays tied to the new TRID rule. What’s been the average delay at your lending shop, if at all? (Report in business days, not calendar.)

TRID has caused no delays whatsoever because we were prepared.

30%

1 to 4 days.

27%

5 to 10 days.

13%

11 to 15 days. It’s been a nightmare.

11%

We’re too embarrassed to tell you.

20%

Housing Pulse