House Financial Services Financial Institutions Subcommittee Chairwoman Shelley Moore Capito, R-WV, and ranking member Rep. Carolyn Maloney, D-NY, last week introduced H.R. 3461, the Financial Institutions Examination Fairness and Reform Act, to address widespread industry concerns with bank examinations. Some bankers say the reasons for certain decisions made by regulators during the examination process have not been clear. Bankers have also reported that some examiner decisions have effectively and unnecessarily reduced the amount of capital available for increased lending.

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 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 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.

A federal judge in Houston ruled that Allied Home Mortgage Corp. can continue to originate and underwrite FHA-insured loans, putting into question the validity of the Department of Housing and Urban Development’s suspension of the lender’s FHA privileges. U.S. District Court Judge Melinda Harmon, in a 22-page decision issued filed on Nov. 15, said the “potential destruction” of Allied’s business outweighs any harm the government would suffer before the issues can be litigated.

The FHA and the Internal Revenue Service are working on implementing electronic signatures in loan documents and certain federal tax forms in 2012. In a recent letter to members, David Stevens, president and chief executive officer of the Mortgage Bankers Association, said the trade group has been working with both agencies for the past 18 months to allow the use of e-signatures on FHA loan documents and to automate the IRS Form 4506-T process as early as next year. Form 4506-T is a request for a transcript of a filer’s tax return.

Legislation that would keep VA funding fees at their current levels through FY 2016 was sent this week to President Obama for signature. The House of Representatives passed the bill, H.R. 674, the 3 Percent Withholding Repeal and Job Creation Act of 2011, on Nov. 16, with amendments from the Senate. The Senate approved the bill on Nov. 10. The president is expected to sign the bill. However, if the bill is not signed by Nov. 18, funding fees will decrease as scheduled for a short period, according to the Department of Veterans Affairs in a published guidance to VA lenders. If funding fees do reset to the lower amounts ...

The Department of Housing and Urban Development will integrate risk management efforts as soon as the agency’s new Office of Risk Management (ORM) is up and running, according to a new report from the Government Accountability Office. Although the report provides no timeline, it said that HUD has indicated a willingness to adopt changes the GAO recommended to speed up the implementation of an overall risk management strategy. The FHA needs to reassure Congress that it has the proper controls in place to minimize financial risks arising from increased reliance on FHA mortgage insurance, the GAO said. Lawmakers are concerned that ...