Many in the mortgage finance industry were unsettled with the recent Canning v. National Labor Relations Board ruling, fearing compliance chaos could ensue right as the industry is about to be confronted with implementing a handful of critical new regulations that will transform the landscape of mortgage lending for decades to come, such as the new ability-to-repay final rule. However, some top industry compliance attorneys urged the industry to press on full-speed ahead with their compliance efforts, regardless of the uncertainty...

CFPB Director Richard Cordray told an assemblage of financial industry representatives last week that it would be a mistake for prudential regulators to examine institutions in such a way as to steer them toward providing only mortgages that can be defined as “qualified” under the bureau’s ability-to-repay rule, according to one industry source in attendance. Cordray said the CFPB wants other types of mortgages to flourish as well, the source continued. Bureau staff added that they would expect the percentage of QMs in the...

Providers of financial products to college students are going under the CFPB’s magnifying glass. The bureau has begun an inquiry into the effect of financial products marketed to students through colleges and universities in an attempt to determine if such arrangements are in the best interest of students. Products being scrutinized include bundled or co-branded student identification cards that double as debit cards, cards used to access scholarships and student loans, and school-affiliated bank accounts. In its notice and request for...

In light of the proposed guidance issued by the CFPB and the rest of the Federal Financial Institutions Examination Council on social media contacts by banks, savings associations, credit unions and nonbank entities, Lenders Compliance Group highlighted a number of important issues market participants should take into consideration, including key policies and procedures. “When you think of advertising, do you include social media? These days, most of you do,” LCG said in a recent analysis. “However, social media...

CFPB Warns Servicers to Protect Borrowers When Transferring Servicing. As Inside the CFPB went to press, the bureau issued a bulletin reminding mortgage servicers about their legal obligations to protect borrowers during transfers of mortgage servicing between firms. Through public feedback and its supervision activities, the CFPB said it has noted a significant number of servicing complications stemming from the large amount of servicing transfers that have taken place in the last year. In a number of instances...

CFPB Director to Testify Before Senate Panel. CFPB Director Richard Cordray is among a number of federal financial regulators scheduled to testify the morning of Thursday, Feb. 14, 2013, before the Senate Banking, Housing and Urban Affairs Committee on the subject, “Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections.” This will be Cordray’s first appearance before Congress since the Canning v. National Labor Relations Board decision was issued by the D.C. Circuit Court of Appeals. FHA Chief to...

Officials at the federal agency that proposed a significant overhaul of securitization disclosures three years ago are concerned about uncertainty caused by the pending rule and it’s unclear when, or even if, a final rule will be issued. Troy Paredes, a commissioner at the Securities and Exchange Commission, would not comment on when the so-called Reg AB2 rule would be finalized. “It may or may not get done,” he said last week at the American Securitization Forum’s ASF 2013 conference in Las Vegas. The SEC initially proposed...

Federal regulators suggest that a number of changes are under consideration for risk-retention requirements initially proposed in 2011. Two changes under consideration include a revision of the qualified residential mortgage definition and a possible alternative to the controversial proposed premium capture cash reserve account. Katherine Hsu, chief of the office of structured finance in the division of corporation finance at the Securities and Exchange Commission, said federal regulators are considering changing the proposed definition for QRMs due to the recent ability-to-repay rule from the Consumer Financial Protection Bureau that set requirements for “qualified mortgages.” The QRM standards cannot be any more broad than the QM standards. Speaking at the American Securitization Forum’s ASF 2013 conference last week in Las Vegas, Hsu also stressed...

New issuance of agency single-family MBS jumped 25 percent from December to January, according to a new Inside MBS & ABS ranking and analysis. The most likely explanation for the sudden jump in agency MBS issuance may be that new, more seller-friendly repurchase policies at Fannie Mae and Freddie Mac went into effect for loans sold after Jan. 1, 2013. The revamped policies generally provide that the government-sponsored enterprises will not seek repurchase or indemnification for loans that perform for the first three years after origination. In the case of Home Affordable Refinance Program loans, repurchases will be waived...[Includes one data chart]

The Department of Justice filed a civil action in Los Angeles this week against Standard & Poor’s Rating Services and its parent the McGraw-Hill companies for $5 billion, accusing S&P of defrauding investors by falsely representing that its ratings on certain collateralized debt obligations were “objective, independent and unencumbered by any conflicts of interest.” The Justice Department’s complaint alleges that S&P “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors” in its ratings of “trillions of dollars” of residential MBS and CDOs between 2004 and 2007. DOJ contends...