The new cop on the financial services beat is strongly encouraging lenders and other financial services providers to make sure they have a robust compliance management system in place to closely monitor their fair lending activities in light of the letter and spirit of various consumer protection laws. Anna-Marie Tabor, the acting head of the CFPB’s Office of Fair Lending and Equal Opportunity, told participants in a recent fair lending webinar sponsored by the Federal Reserve that an adequate compliance...

The mortgage lending industry told the CFPB that limiting the upfront points and origination fees borrowers pay to the providers of mortgage credit could inadvertently harm the market and the borrowers who are the intended beneficiaries. The American Bankers Association said in a comment letter to the bureau that “the overly stringent Dodd-Frank Act prohibitions that ban borrowers’ options to pay upfront points and origination fees to creditors will greatly damage the availability of financing alternatives for consumers.”...

The CFPB has released its proposed credit card ability-to-pay rule, an effort by which the bureau intends to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. The Credit Card Accountability Responsibility and Disclosure Act (CARD Act), enacted in 2009, requires that card issuers evaluate a consumer’s ability to make the necessary payments before opening a new credit card account. Under current CARD Act regulations issued by the Federal Reserve, a card issuer...

Last week, the Department of Justice raised eyebrows in a $1 billion legal action against Bank of America as successor to Countrywide Financial by filing the first civil fraud suit alleging violations of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in the sale of mortgages to Fannie Mae and Freddie Mac. The federal government asserts that since the Treasury Department has had to bail out Fannie and Freddie, approximately $1 billion in losses suffered by the companies...

Smaller mortgage lending institutions remain apprehensive about their legal liability when it comes to originating qualified mortgages under the CFPB’s pending QM/ability-to-repay rule, and hope they’ll get a full safe harbor. Recent talk has mounted that the bureau is considering a two-tier approach to its QM rule: a safe harbor for mortgages that will be defined as “prime,” and the lesser rebuttable presumption for subprime or nonprime. Elizabeth Eurgubian, vice president and regulatory counsel for the...

VA Home Loan Program Celebrates 20-Millionth Loan Beneficiary. The Department of Veterans Affairs this week commemorated the 20-millionth recipient of a VA loan under the agency’s Home Loan Guaranty Program. Agency officials held a ceremony at the Woodbridge, VA, home of the loan’s recipient, Mrs. Elizabeth Carpenter, whose husband, Capt. Matthew Carpenter, passed away in 2010. Since 1944 as part of the original GI Bill of Rights, the VA has been providing guarantees to 30-year mortgage loans with low interest rates and has guaranteed ...

A nonsupervised Arizona FHA lender whose high default and claims rate triggered a supervisory audit earlier found itself in a deeper mess for improper underwriting on a number of FHA streamline refinanced loans that resulted in losses to the FHA insurance fund. The Department of Housing and Urban Development’s Inspector General found that Allen Mortgage of Centennial Park, AZ, violated HUD’s regulations , procedures, and instructions in the underwriting of FHA-insured loans. Specifically, of the 73 streamlined refinance mortgage loans reviewed by the IG, 23 were ...

A weakened mortgage revenue bond market and the unreliability of its primary and pool credit enhancement structure has prompted the Wisconsin Housing and Economic Development Agency to turn to FHA and Ginnie Mae to finance its affordable housing program. Launched in December last year, WHEDA’s $100 million FHA Advantage program is still in its infancy, generating less than $1 million a month. Although marketing has not been aggressive as it should be, Geoff Cooper, WHEDA director of single-family operations, said the housing finance agency will soon announce ...

Legislation that would delay foreclosures on mortgages of certain military servicemembers, retirees and surviving spouses of soldiers and sailors who died on active duty would cost taxpayers more to enact and implement rather than as a revenue raiser, according to Congressional Budget Office. The CBO estimates that enacting S. 3322, the Servicemembers’ Protection Act of 2012, would increase direct spending by $16 million over the 2013-2022 period. Implementing it would hike discretionary costs by ...

The Department of Housing and Urban Development is mulling a recommendation by its Inspector General to consider indemnifications, civil fines or remedies under the False Claims Act against an approved California lender for allowing the recording of restrictive covenants that put the FHA insurance fund at risk for losses. The IG audit report also recommended that HUD require the lender, Shea Mortgage of Aliso Viejo, CA, to reimburse the FHA for $1.47 million in claims paid on 11 FHA-insured loans that contained prohibited restrictive covenants. Under HUD rules, any recorded agreement between the ...