The Government Accountability Office identified two significant deficiencies in the CFPB’s internal controls over financial reporting. Specifically, the GAO found that CFPB did not effectively design or implement internal controls over its year-end accrual process to ensure accounts payable amounts recorded were complete and accurate, nor did its controls ensure accurate and complete recording of its property and equipment transactions. “These deficiencies increase the risk that the CFPB may not detect and correct errors in time to prevent misstatement of the financial statements,” the GAO said. The GAO made four new recommendations it said are intended to improve management’s oversight and controls in these areas and reduce the risk of misstatements in the CFPB’s accounts and financial statements. First, the...

Now that the mortgage lending industry has a few months of experience dealing with the qualified mortgage standard under the CFPB’s ability-to-repay rule, some lenders are getting more confident about lending outside the parameters of the QM. Last week, during a webinar sponsored by Inside Mortgage Finance, an affiliated newsletter, industry experts highlighted some key considerations as to how to do so while minimizing the legal risk and otherwise overcoming certain compliance challenges. “A couple of points that I would make is that you want to document every step along the way – because what you’re really managing to is not necessarily the CFPB, not even necessarily a judge. You’re probably managing to the lawyer who is looking to take the...

The U.S. Supreme Court has agreed to resolve a split among the circuit courts over a provision in the Truth in Lending Act that allows a borrower to void a mortgage loan. In reviewing the case, Jesinoski v. Countrywide Home Loans, the SCOTUS will consider whether a borrower may file a lawsuit for rescission after TILA’s three-year repose period if the borrower sent a notice to the lender within that period. The U.S. Court of Appeals for the Eighth Circuit in September upheld a lower court ruling that a borrower seeking to rescind a mortgage loan under TILA must file suit within three years of consummating the loan. Contrary to the plaintiffs’ assertion, the lower court ruled that a borrower’s...

The members of one lender trade group support the CFPB’s proposed survey of consumer experiences with debt collection, but think the bureau is likely going to miss a good opportunity to obtain useful data that can be relied on for policymaking.“Considering the range of issues presented and the fact that the bureau’s policy choices will be felt across the U.S. economy, it is critical that the bureau develop a complete and robust factual record to inform its policy choices,” said Virginia O’Neill, assistant chief compliance counsel for the American Bankers Association, in a recent comment letter to the CFPB. As the ABA sees it, a carefully designed and executed consumer survey can be one valuable element of such a...

A new study from the Government Accountability Office has confirmed that the CFPB can monitor banks for their mortgage servicing compliance with the terms of settlements that were reached before the bureau received its full authorities with the appointment of a confirmed director. The degree to which the CFPB has actively done so, however, appears to be limited. The GAO study at issue concerned the consent orders the Office of the Comptroller of the Currency and the Federal Reserve reached with 16 mortgage servicers back in 2011 and 2012. Those agreements required the servicers to hire consultants to review foreclosure files for errors and to remediate harm to borrowers. The CFPB was established on July 21, 2011, and the first...

FSOC Suggests State Regulators Work With CFPB on Nonbank Servicer Issues. The Financial Stability Oversight Council – of which the CFPB is a member – recommended last week that state regulators collaborate on prudential and corporate governance standards to strengthen nonbank servicers. The FSOC said state regulators should work on the standards with the CFPB and the Federal Housing Finance Agency when appropriate. The CFPB and state regulators have some authority over these companies, FSOC noted, but many of them are not currently subject to prudential standards such as capital, liquidity or risk management oversight. Additionally, in a number of cases, mortgage investors’ ability to collect on mortgages is dependent on a single mortgage servicing company, where failure could have significant negative...

Among the changes, the two GSEs will no longer require that a lender automatically repurchase a residential loan when a mortgage insurance company rescinds coverage.

Overall, refi loans accounted for 45.7 percent of agency MBS production in the first four months of 2014, compared to 77.2 percent during the same period last year.

Non-QM mortgages will exist throughout the credit spectrum, according to Mitch Hochberg, a partner at Fenway Summer and general counsel at Ethos Lending, a start-up wholesale mortgage originator.

How much have their balance sheets shriveled over the years? In September 2008, the month in which Treasury placed the GSEs into conservatorship, Fannie alone had a gross mortgage portfolio of $761 billion