The CFPB will implement a plan over the next year that focuses on the mortgage industry’s compliance with new consumer protections that are slated to take effect in January 2014, including the new qualified mortgage/ability‐to‐repay rule and the mortgage servicing rules, the bureau announced recently. “Our plan is to work with the mortgage industry to ensure that the CFPB’s new rules are implemented accurately and expeditiously,” said CFPB Director Richard Cordray. “Both consumers and the industry will win when the new rules are...
The CFPB recently issued guidance to mortgage servicers reminding them of their legal obligations to protect borrowers during the transfer of mortgage servicing between firms. “Consumers should not be collateral damage in the mortgage servicing transfer process,” said CFPB Director Richard Cordray. “This guidance directs all mortgage servicers, both banks and nonbanks, to follow the laws protecting borrowers from the risks of such transfers and makes clear that we will be monitoring them for compliance.” In CFPB...
The CFPB’s new mortgage servicing rule might bring clarity and consistency to the industry – but at a cost of increased litigation and enforcement actions, a top attorney said recently. “There has been and will continue to be a focus on the fact that the rule grants borrowers a private right of action associated specifically with loss mitigation and early intervention provisions,” said Michael Waldron, a practice leader in the mortgage banking group at Ballard Spahr. However, the reality is, the risk here is much broader. “The rules...
Some mortgage servicers face capacity issues when it comes to the plethora of new regulatory requirements and need outsource assistance, but the rest of the industry will need help with the process requirements and planning, according to a compliance service provider. “While all mortgage servicers are facing challenges in staying compliant with the industry’s many changing regulations, the nature of those challenges varies by the organization’s size and require varying solutions,” said Loren Morris, senior vice...
Federal regulators should consider aligning the pending risk retention rule’s “qualified residential mortgage” standard with the “qualified mortgage” standard under the ability‐to‐repay rule the CFPB finalized on Jan. 10, Federal Reserve Governor Daniel Tarullo said. Defining QRMs as QMs would eliminate the downpayment requirement initially proposed for QRMs and allow greater access to credit for borrowers than a more stringent QRM definition, he said at a Senate Banking, Housing and Urban Affairs Committee hearing on...
CFPB Remains on Radar of Hostile House GOP. The activities and influence of the CFPB will be a subject of keen interest to hostile Republicans on the House Financial Services Committee, according to the committee’s recently published agenda for the 113th Congress. The committee said it will scrutinize the CFPB’s regulatory, supervisory and enforcement initiatives to make sure they protect consumers against unfair and deceptive practices without stifling economic growth, job creation or reasonable access to credit. “In...
The Department of Justice and the Securities and Exchange Commission are likely to pursue more mortgage-related lawsuits due to pressure from Congress, according to former federal attorneys. “The fact that the attorney general now speaks of financial fraud enforcement as one of the top three priorities of the Department of Justice, just after terrorism and keeping people safe in their communities, trickles down to the lowest levels of the department and elsewhere in terms of the dedication of resources, the coordination, the training, the case referrals,” said Andrew Schilling, a partner at the law firm of BuckleySandler and a former chief of the civil division of the U.S. Attorney’s Office for the Southern District of New York. The latest pressure came...
Moody’s Investors Service and Fitch Ratings have downgraded the senior unsecured and issuer default ratings of The McGraw-Hill Companies, parent of Standard & Poor’s, to below A-level ratings with a negative outlook. The downgrades are largely due to the Department of Justice’s recent lawsuit regarding ratings of collateralized-debt obligations and rating models for non-agency MBS. “The Baa2 rating balances the company’s history of prevailing in its legal defenses against the potentially substantial negative credit effects that could result from adverse litigation or settlement outcomes,” Moody’s said after downgrading McGraw-Hill’s senior unsecured rating from A3 late last week. “In addition, the management focus and direct costs involved in defending litigation may be a persistent drag on the company’s operations over the intermediate term.” Moody’s said...
Banks are likely to pursue more bulk sales this year and the next to rid their books of nonperforming real estate assets, which could attract investors looking for better yield, according to Fitch Investors Service. Successful bulk sales will allow more banks to concentrate on their core banking services, while reducing their costs of holding nonperforming real estate loans on their balance sheets, said Fitch analysts. Sales at banks with high volumes of nonperforming commercial-related loans also are expected to pick up over the next 12 to 18 months, particularly as many commercial real estate (CRE) loans originated before the financial crisis near maturity, they added. Investors such as hedge funds, high-yield asset managers and other lightly regulated entities seeking higher returns in a low interest-rate environment have caused...
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