The CFPB and the Department of Justice late last month announced a $10.6 million enforcement action against BancorpSouth, a regional bank headquartered in Tupelo, MS, alleging the lender engaged in discriminatory mortgage lending practices that harmed African-Americans and other minorities. Of particular note, the bureau said, “This is the CFPB’s first use of testing, sometimes referred to as ‘mystery shopping,’ to support an allegation of discrimination.” The government’s complaint accuses BancorpSouth of illegally redlining in Memphis, TN, denying certain African-Americans mortgage loans more often than similarly situated non-Hispanic white applicants, and charging African-American customers more for certain mortgage loans than non-Hispanic white borrowers with similar loan qualifications. The agencies also alleged the lender implemented an explicitly discriminatory loan denial policy...
The redlining risk that lenders face these days is morphing to include not just a consideration of a bank’s internal behavior but also a comparison of the bank’s performance against its peers – a far more nebulous and uncertain standard of accountability. During a presentation at the American Bankers Association’s regulatory compliance conference last month in San Diego, Carl Pry, a managing director at Treliant Risk Advisors, told attendees, “Regulators are defining redlining risk a little bit differently these days. Traditionally, redlining involved looking at your own bank’s map: you plot out where your applications are, where the loans are, where the denials are – and you stand back and take a look and see, perhaps, that there are a lot of ...
Among a host of best practices and other tips lenders should consider for complying with the CFPB’s new Home Mortgage Disclosure Act rule is coordinated institutional planning, according to Ellen Costa, vice president of strategy and business capability development at Wells Fargo Home Lending. Speaking to attendees at the recent regulatory compliance conference sponsored by the American Bankers Association, Costa said, “All of the CFPB's regulatory changes – HMDA in particular – mean significant change management within your institution. It is a best practice to be very agile and proactive about coordinating a project plan that includes a strategy upfront, really understanding what the regulations are driving at.” A solid plan developed ahead of time and properly executed will allow a clear ...
During the first four months of the year, most mortgage originators seemed to do a good job complying with the CFPB’s regulations – including existing Truth in Lending Act and Real Estate Settlement Procedures Act disclosure provisions – but some appeared to be coming up short in terms of their overall compliance management systems. According to the CFPB’s latest supervisory highlights report, “Examiners found general compliance with the reviewed federal consumer financial laws, though many entities continue to have CMS deficiencies.” For example, at least one supervised institution had weak oversight of its automated systems, including inadequate testing of codes that calculate the finance charge and the amount financed when originating residential loans to consumers. In addition, at least one supervised entity ...
The Republicans in the U.S. House of Representatives are looking a little more serious about pushing legislation that would change the leadership structure of the CFPB from that of a single director to a five-member commission and subject the bureau to the congressional appropriations process. Last week, the full House passed appropriations legislation with provisions that would do just that. Other language would restrict the CFPB’s ability to limit payday lenders, halt the bureau’s efforts to end forced arbitration clauses in credit card contracts, and rescind the agency’s guidance on indirect automobile lending. One additional provision would defund the CFPB’s efforts to stop what it calls predatory lending to borrowers looking to purchase a manufactured home, and another would make ...
The CFPB’s TILA/RESPA Integrated Disclosure Rule – dubbed TRID – may have been causing mortgage lenders severe heartburn since it took effect in early October, but you wouldn’t know it by looking at consumer complaints about the mortgage application and origination process. They fell by 9.3 percent during the second quarter, according to a new analysis and ranking by Inside the CFPB – part of a larger drop off that found gripes down by 16.5 percent for the period, and off 4.5 percent year over year. The number of complaints that lenders responded to in a timely manner dropped 16.1 percent quarter over quarter, and 4.3 percent year over year. However, that could be because perhaps lenders/servicers were making more of an effort [With two exclusive charts]...
The TRID ‘Scratch & Dent’ Market is Still Humming Along, But…. The secondary market for mortgages with TRID errors is still alive and well with more product hitting the market in June than May, according to one active investor. Michael Lima, managing director of whole loan trades for Mid America Mortgage, reported his firm was involved in 82 TRID bids in June compared to 35 in May. Mid America has been one of the most active buyers of such product. But Mid America is quick to point out that even though there were more auctions, it won a smaller percentage of the bids: a 78 percent win rate in May compared to just 32 percent in June. “This could imply ...
Mortgage lenders delivered big increases in purchase mortgages and refinance loans to Fannie Mae, Freddie Mac and Ginnie Mae during the second quarter of 2016, according to a new analysis and ranking by Inside MBS & ABS. The agencies securitized $100.05 billion of purchase mortgages and $118.24 billion of refinance loans during the second quarter, up 37.3 percent and 31.1 percent, respectively, from the first three months of the year. That brought total agency issuance of single-family MBS to $612.38 billion for the first six months of 2016, putting the market on target to match last year’s $1.261 trillion in production. Although second-quarter volume was a strong rebound from the first quarter, momentum seemed...[Includes two data tables]
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