The National Association of Mortgage Brokers is doing another survey of its membership to determine the amount of closing cost credits given back to consumers at closing during 2013 – part of a broader effort on the part of the trade group to persuade the CFPB to loosen aspects of its ability-to-repay rule. Last year, NAMB submitted a letter to the CFPB to detail the mandatory credits a broker is required to provide consumers when rate sheet pricing exceeds the broker’s contractually obligated Lender Paid Compensation agreement. NAMB contends that the mortgage broker community provides mortgage credits back to the consumer that range in the billions annually, thus stimulating the nation’s economy. In order to demonstrate this, NAMB polled a number ...

The Conference of State Bank Supervisors told the CFPB it is concerned that certain bad actors within the mortgage lending industry could take advantage of the bureau’s proposed “right to cure” an otherwise qualified mortgage loan that inadvertently falls outside the ability-to-repay rule’s 3 percent cap on points and fees. The CSBS concern revolves largely around bona fide discount points. “State banking regulators support measures that would increase access to credit for consumers who are at the margins of the points-and-fees limits,” the CSBS said in public comment letter to the bureau. “However, there is concern that the proposed ‘cure’ mechanism for inadvertent points and fee miscalculations could disguise or promote the misuse of discount points by unscrupulous lenders seeking ...

A diverse group of mortgage lending industry representatives including Realtors, credit unions and behemoth Bank of America is more or less supportive of a possible “right to cure” a qualified mortgage loan that would inadvertently slip beyond the QM 43 percent debt-to-income ratio threshold. “We support a DTI cure that would allow creditors to take corrective action where there is an inadvertent error in calculating a consumer’s debt or income or where a creditor has stopped documenting income in the mistaken belief that sufficient validated documentation supporting the 43 percent test has been obtained,” BofA said in a public comment letter to the CFPB. According to the lender, both of these instances could easily be fixed, either by correcting a ...

Credit union industry representatives want the CFPB to expand some exemptions in some of its recent rulemakings so their CU members could reach larger portions of their targeted markets. One of the recent amendments the bureau proposed to its mortgage rules issued in 2013 would provide an alternative definition of “small provider” applicable to Internal Revenue Code Section 501(c)(3) nonprofit entities that service loans for a fee and on behalf of other nonprofit entities within the same overall organization.This is the so-called “small servicer exemption.” Also for 501(c)(3) nonprofit entities, the proposed rule would exempt certain interest-free, contingent subordinate liens from the credit extension limit under the ability-to-repay rule. This is what’s known as the “small creditor exemption.” As ...

Compliance management systems are a “fundamental focus of supervision” for the CFPB, regardless of whether a given entity is a bank or nonbank, a top official told members of the industry recently. During a recent webinar sponsored by Inside Mortgage Finance, an affiliated newsletter, Ann Thompson, a senior analyst in the CFPB’s Office of Supervision Policy, discussed the critical relevance of a sound and solid CMS. “We think that a fully developed compliance management system is important because it should lessen risks to consumer and reduce the potential for violations of federal consumer financial laws,” Thompson said. “Even though the CFPB does not require a particular CMS structure, our supervisory experience has found that an effective CMS commonly has four ...

Bankers Keep up the Push for CFPB-Related Legislation. The American Bankers Association is making a member push to drum up on Capitol Hill for three pieces of legislation designed to ease the regulatory burden for bankers, H.R. 2673, H.R. 4521 and H.R. 4466. H.R. 2673, the Portfolio Lending and Mortgage Access Act, would treat as a qualified mortgage any residential mortgage loan made by a creditor so long as it is held in portfolio. H.R. 4521, the Community Institution Mortgage Relief Act of 2014, would expand the CFPB’s small servicers exception to include servicers of 20,000 mortgage loans or less, and would revise the small creditor exemption to include loans that are held by creditors with assets of $10 billion ...

The Federal Housing Finance Agency will soon unveil capital rules for private mortgage insurers, introducing a risk-based standard based on loan-to-value ratios and other factors, while requiring parent companies to pledge assets to their MI subsidiaries if necessary, according to officials close to the matter. “Financial strength will be measured by comparing insured risk, on a risk-adjusted basis, against available assets,” said one official commenting under the condition he not be identified. The phrase “available assets” is key because it portends that liquidity must reside at the MI level and not at an affiliate of a parent company. It’s...

Officials with the Conference of State Bank Supervisors suggest that state regulators are likely to set capital requirements for nonbank servicers due to concerns about how a failure of a nonbank would impact borrowers. “People have to feel confident that their mortgage check is going where it’s supposed to go, when it’s supposed to get there,” Chuck Cross, a senior vice president for consumer protection at the CSBS, said last week during a webinar hosted by Inside Mortgage Finance Publications ...

Among the myriad of servicing concerns raised by the New York Department of Financial Services in recent months are the relationships between nonbank special servicers and their affiliates. Industry lawyers suggest that few laws specifically address the issue, though the area could see increased regulation and enforcement. In April, Ben Lawsky, superintendent of the NYDFS, expanded his probe of Ocwen Financial to include sales of real estate owned properties ...

The anxiously-awaited Spring surge in purchase-mortgage lending finally arrived at Fannie Mae and Freddie Mac during recent months, according to a new Inside Mortgage Finance ranking and analysis of loan-level data from the two government-sponsored enterprises. The two GSEs issued $141.83 billion of single-family mortgage-backed securities during the second quarter, an encouraging 9.8 percent increase from the dreary levels recorded in the first three months of 2014. During the first quarter of this year, Fannie/Freddie MBS production set a 14-year low of just $129.21 billion. Clearly, the market isn’t...[Includes three data charts]