The CFPB took an ominous administrative action against PHH Corp. earlier this month over its captive reinsurance activities. Industry critics cried foul and warned of a potentially ominous legal precedent that threatens long-standing legal interpretations that have shaped the mortgage lending landscape for years.“The CFPB is trying to rewrite the Real Estate Settlement Procedures Act retroactively. It is stunning,” said one long-time industry lobbyist. “If the CFPB can illegally rewrite RESPA, they can attempt to rewrite TILA and other laws they choose.” The crux of the dispute is the bureau’s assertion that PHH violated RESPA by illegally referring borrowers to mortgage insurance companies in exchange for kickbacks.Back in January 2014, the CFPB initiated an administrative proceeding against PHH ...
RPM Mortgage of Alamo, CA, recently agreed to pay the CFPB $19 million to settle allegations that it incentivized loan officers to steer borrowers into higher cost mortgages by “illegally” paying bonuses to them. Overall, RPM wound up paying “millions of dollars” in such bonuses, the CFPB said. (In 2011, the bureau banned such incentive payments under its loan originator compensation rule.) According to a civil complaint filed in Federal District Court for the Northern District of California, the privately held nonbank allowed LOs to use expense accounts to pay for pricing incentives to close the loans. “From April 2011 through December 2013, RPM allowed loan originators to use their expense accounts to finance thousands of pricing concessions that enabled ...
“When someone tells you that the ATR rule is working, keep in mind it’s working because it actually stands on exemptions," said Rod Alba, senior regulatory counsel at the American Bankers Association.
Wells Fargo and JPMorgan Chase posted strong gains in first-lien holdings during the first quarter, and they were the biggest jumbo mortgage originators during that period.
The CFPB earlier this month ordered Guarantee Mortgage Corp., an independently owned mortgage-brokerage firm and mortgage banker headquartered in San Rafael, CA, to pay a civil money penalty of $228,000 for allegedly violating the agency’s loan originator compensation rule. According to the notice of charges, the nonbank – which is in the process of liquidating – paid its LOs, in part, based on the interest rate of the loans they were bringing in. The payments took place between April 2011 and August 2012, the bureau said. The consumer regulator said the “compensation was funded by payments Guarantee made to marketing services entities owned in part by the company’s branch managers and other Guarantee loan originators.” During the relevant period, Guarantee Mortgage paid ...
Nearly a score of industry trade groups sent a letter last week to the leadership of the House Financial Services Committee, urging them to pass legislation to provide a reasonable hold-harmless period for enforcement of the CFPB’s TILA-RESPA Integrated Disclosures (TRID) regulation for lenders trying to do their best to comply. “We appreciate that the bureau indicated it will be sensitive to the progress made by those entities that make good-faith efforts to comply,” the 19 groups said in a letter to Committee Chairman Jeb Hensarling, R-TX, and Ranking Member Maxine Waters, D-CA. “At the same time, the industry needs more certainty that their good-faith efforts to comply while still meeting consumers’ expectations do not expose lenders and settlement service ...
Potential borrowers have misperceptions about requirements for credit scores, downpayments and income, according to results from a survey by Wells Fargo and Ipsos Public Affairs.
With the effective date of the CFPB’s TILA/RESPA Integrated Disclosures rule just weeks away, lender representatives continue appealing to Congress for formal enforcement relief, while vendors are scrambling to finish their work products and deliver them to clients in time for testing. But TRID may not be as bad as everyone seems to fear. “In conversation with industry participants, the actual impact of these rules is a key debatable point, with consensus believing that the rules may have a temporary drag on origination volumes in the second half of 2015,” said analysts at FBR Capital. But it will not be as drastic as the impact the qualified-mortgage rule had on origination volumes in the second half of 2014, they said. ...
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