Calls increased last week for Republicans in the Senate to drop their opposition to an up-or-down vote on President Obama’s nomination of Richard Cordray to be the first director of the controversial Consumer Financial Protection Bureau. What’s noteworthy is that one Republican in the Senate, Scott Brown from Massachusetts, broke ranks with the rest of his party in saying he supported the nomination. Brown may be feeling the political heat of his challenger for the Senate seat he holds, Harvard professor Elizabeth Warren, the architect of the CFPB and the first special advisor to the Treasury hired to get the new bureau up and running after its creation by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The National Community Reinvestment Coalition improperly accepted approximately $2.4 million in donations from 10 of 38 lender organizations it tested under its Fair Housing Initiatives Program grant agreement with the Department of Housing and Urban Development, thereby creating conflict-of-interest situations in violation of the agreement, according to a new report from HUD’s Office of Inspector General. The NCRC immediately challenged the report and maintained it was politically motivated. The OIG said NCRC generally completed administrative and program activities and tasks in accordance with its agreement, the OIG said. The audit also found nonprofit improperly accepted donations from organizations it tested, thereby creating conflict-of-interest situations involving $59,800 of $230,000 in the grant funds (26 percent).

The Consumer Financial Protection Bureau has released for public comment two alternative versions of a new mortgage disclosure form that would effectively combine the current disclosure requirements of the final federal Truth in Lending Act and HUD-1 Settlement Statement forms, the second phase of the CFPB’s “Know Before You Owe” program. “We are in the process of replacing these two different forms with one disclosure that is easier to use, consistent with our Congressional mandate in the Dodd‐Frank Act,” the bureau said. “We want to give consumers a clear understanding of the final loan terms and costs in one place. This will make it easier to ensure that you receive the loan product you applied for at the cost you agreed to. And we want to give lenders and settlement agents a well‐organized form to make compliance easier.” An “industry tool” asks industry representatives what their preferred format would be for their customers to use at closing to describe final loan terms and closing costs, while a “consumer tool” asks consumers which form they would prefer to be given at closing to describe those items.

The regulatory burden of the Dodd-Frank Act creates pressure on community banks to hire additional compliance staff instead of customer-facing staff, reducing resources that could be directly applied to serving a bank’s customers, resulting in fewer mortgages getting made, slower job growth and a weaker economy, according to Steve Wilson, the American Bankers Association’s immediate past chairman. The Dodd-Frank provisions he cited as particularly troubling for community banks include risk retention, higher capital requirements, narrower qualifications for capital, and doubling the size of the deposit insurance fund – taking as much as $50 billion out of the earnings and capital of the industry in the process. “The Dodd-Frank Act also requires 20 new Home Mortgage Disclosure Act reporting obligations,” Wilson said in a speech last week. “These and other reporting requirements will add considerable compliance costs to every bank’s bottom line.”

The mortgage banking industry has been lobbying the Consumer Financial Protection Bureau and Congressional staff recently, expressing its concerns in particular with the ability-to-repay/qualified mortgage proposed rule. Lenders of all sizes expressed their concerns about automated underwriting systems, widely accepted standards, implementation concerns, points and fees restrictions and the need for a legal safe harbor. But the legal safe harbor remains the most important of these issues to most lenders. “The QM ability-to-pay rule has enormous liability associated with it,” an industry lobbyist confided. “The issue there is, if we don’t have a really solid definition as to what a qualified mortgage is, and we don’t have a safe harbor and the guidelines are firm – the industry’s got enormous potential liability and is likely to be sued all the time.”

The industry robo-signing foreclosure scandal took an historic turn this past week, with the first filing of criminal charges ever brought. Nevada Attorney General Catherine Cortez Masto brought 606 criminal charges against two Lender Processing Services employees who allegedly directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County (NV) Recorder’s Office between 2005 and 2008. California resident Gary Trafford has been charged with 102 counts of offering false instruments for recording (a category C felony), false certification on certain...

The U.S. Supreme Court has granted certiorari in Magner v. Gallagher, thrusting itself into the debate over whether the Fair Housing Act allows plaintiffs to bring disparate impact claims, in a case that could have wide-ranging implications for the mortgage industry, potentially extending to fair lending litigation and even regulatory enforcement. In Magner, some rental property owners in St. Paul, MN, sued the city and a group of city officials, arguing that enforcing the city’s housing code raised their costs, thereby lowering the availability of affordable housing. They argued further that this had a disparate impact on...

The Department of Housing and Urban Development plans to conduct a comprehensive study on the impact of pre-purchase homeownership counseling based on results for low- and moderate-income first-time FHA homebuyers.

Home Equity Conversion Mortgage claims increased by a whopping 48.3 percent in FY 2011 from last year, while the number of loans originated under the program also fell on a year-over-year basis, according to Inside FHA Lending’s analysis of FHA data. HECM claims were up to 7,951 in 2011 compared to 5,361 claims filed under the program the year before.

Three new housing professionals have joined the Department of Housing and Urban Development’s Single Family, Risk Management and Multifamily offices. Sarah Garecke was named senior policy advisor in the Single Family Office and will help organize the new Office of Housing Counseling. She was previously with the Furman Center for Real Estate and Urban Policy at New York University’s School of Law, where she launched the Institute for Affordable Housing Policy. She also co-authored the Directory of Affordable Housing Programs.