State Mortgage Regulators Bring $10.2 Million Enforcement Action Against Prospect Mortgage. The Multi-State Mortgage Committee recently announced a $10.2 million settlement agreement and consent order between 50 state mortgage regulators and Prospect Mortgage over allegedly inappropriately assessed third-party settlement fees charged by an affiliate. According to the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, a multi-state examination performed by eight states revealed a pattern of charging improperly disclosed and unsupported fees paid to the company’s affiliate, C2C Appraisal Services. Under the terms of the agreement, Prospect is to pay restitution to every borrower in all participating states that was assessed a C2C Settlement Service Fee in the amount of $40 with interest of 10 ...
Industry Groups Call for Restructuring Bureau With Commission Leadership Structure. Two dozen industry trade groups sent a letter to the House and Senate chairmen and ranking members of the appropriations committees recently in support of legislation restructuring the CFPB with a five-member board leadership mechanism, instead of its current sole directorship structure. Their focal point is H.R. 1266, the Financial Product Safety Commission Act, bipartisan legislation approved on a bipartisan basis by the House Financial Services Committee. Similar legislation was included in Section 505 of S. 1910, the Fiscal Year 2016 Financial Services and General Government appropriations bill. “Looking ahead, the current sole director structure at the CFPB jeopardizes the foundation of the bureau as an objective, neutral consumer protection ...
CFPB, Fed, OCC Announce Threshold for Smaller Loan Exemption from Appraisal Requirements for Higher-Priced Mortgage Loans. Last week, the CFPB, the Federal Reserve and the Office of the Comptroller of the Currency announced that the threshold for exempting loans from special appraisal requirements under the Dodd-Frank Act for higher-priced mortgage loans during 2016 will remain $25,500.The threshold amount will be effective January 1, 2016, and is the same threshold that applied in 2015 – based on the annual percentage decrease in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as of June 1, 2015. ...
CFPB Attorney James Kim Joins DC Law Firm. James Kim, formerly a senior enforcement attorney with the CFPB, recently joined the Ballard Spahr law firm in its Washington, DC, office. “While at the CFPB, James led nationwide investigations involving consumer credit, mobile financial services, emerging payment systems, mortgage origination, and debt collection,” said new colleague Alan Kaplinsky, a partner at the law firm. “He was lead counsel in the CFPB’s first enforcement actions involving mobile payments and was a member of the credit card/prepaid card/emerging payments issue team that helped coordinate enforcement activity with other offices at the CFPB.” ...
Commercial banks and savings institutions continued to pull back from the non-mortgage ABS market during the third quarter of 2015, according to a new Inside MBS & ABS analysis of call-report data. Banks and thrifts reported a combined $140.93 billion of non-mortgage ABS on their books at the end of September, down 5.3 percent from midyear. The decline marked the seventh consecutive decline in bank ABS holdings since they peaked at $175.54 billion at the end of 2013. Bank ABS investment tumbled 15.0 percent in the year since September 2014, hitting its lowest level since the end of 2011. The industry’s holdings were down in all ABS categories. In percentage terms, the sharpest downturn was in home-equity ABS, although this ...
Some investors won’t return to the non-agency MBS market until the federal government establishes minimum standards for issuers, according to Chris Katopis, executive director of the Association of Mortgage Investors. Speaking at the RMBS 3.0 symposium produced by Information Management Network and the Structured Finance Industry Group this month in New York, Katopis said investors are frustrated with the lack of action from the government to help the non-agency MBS market. “We know there’s a lot of work going on, but at some point the government has to set minimum standards,” he said.Katopis said investors are happy that SFIG is working on a new representation-and-warranty framework for non-agency MBS. However, the AMI is skeptical of voluntary industry standards. “Having ...
Two former officials at Standard & Poor’s called on the Securities and Exchange Commission to look for violations of new rules involving rating shopping. The SEC published a final rule with new requirements for rating services in August 2014. In a recent paper, Mark Adelson and David Jacob pushed the SEC to use the new rule to go after rating services that make adjustments to rating criteria in an effort to gain business, with a focus on the structured-finance market. Adelson and Jacob said such rating shopping by issuers has been “widespread” since the mid-1990s. Adelson was S&P’s chief credit officer from May 2008 until December 2011. He is currently the chief strategy officer of The BondFactor Company, which focuses ...
A handful of publicly traded real estate investment trusts have been quietly making inquiries about buying residential loans that do not meet the qualified mortgage standard, including subprime credits and even unsecured consumer loans, according to players on both sides of the equation. One executive who manages a REIT that plays in the jumbo market admitted as much in an interview with Inside MBS & ABS, but pointed to one major deterrent: the Consumer Financial Protection Bureau. “We’ve tried to get clarifications from them on such things as the ability-to-pay rule, but they haven’t been very helpful,” he said. The source noted that his REIT has so far avoided buying any nonprime, non-QM loans, saying he fears the regulator will ...
Residential mortgages serviced by banks in top foreclosure states are getting hit with higher loss severities than those serviced by nonbanks, largely because banks have so far dealt with more repercussions from regulatory settlements, according to Moody’s Investors Services. Moody’s compared major servicers’ subprime loss severities for loans in the top three foreclo-sure states of Florida, New York and New Jersey, which collectively make up about 42 percent of all subprime mortgages in foreclosure in non-agency RMBS. The rating service found that loss severities on bank-serviced mortgages in Florida averaged 95 percent, versus 81 percent for nonbank-serviced mortgages. Drilling down in the data a bit to review the extremes, on one end of the continuum for banks was CitiMortgage, which ...
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