In case you were unaware, Joe Garrett has never been a big fan of the CFPB, but unlike some advisors, he is willing to state his feelings on-the-record…
There is limited good news to report for lenders in terms of industry efforts to secure regulatory relief from a variety of rules from the CFPB. Among the good news is that the transportation funding legislation that President Obama is expected to sign shortly includes language that will grant the CFPB greater flexibility to treat a balloon loan as a “qualified mortgage” if it was extended by a community bank or creditor operating in rural or underserved areas. Other language will institute a process for banks and other stakeholders to petition the bureau to designate an area as “rural” or “underserved” for the purposes of the CFPB’s ability-to-repay rule. Another provision will expand the bureau’s ability to exempt creditors serving ...
New information provided to Moody’s Investors Service suggests nearly every lender reviewed in a limited sample has violated the CFPB’s so-called TRID, the Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule, at the start of the implementation period, which began Oct. 3, 2015. “Several third-party review (TPR) firms have revealed to us that their reviews of more than 90 percent of the first pipeline of residential mortgage loans subject to the CFPB’s recently enacted TRID had TRID compliance violations, although many of them were only technical in nature,” said Moody’s in a new credit outlook. “These results suggest that some lenders are having difficulty complying with the rules, a credit negative because it increases the likelihood that ...
The CFPB’s new Home Mortgage Disclosure Act (Regulation C) final rule is likely to increase costs for the mortgage industry – and by extension, homebuyers – while raising the stakes for lenders on the compliance front, according to a recent analysis by attorneys with the Morrison & Foerster law firm.“Among the largest costs of the new Regulation C will be necessary updates to data-collection systems, including integration of those systems with application, underwriting, disclosure, origination, and purchased-loan intake platforms, as applicable,” said the attorneys. In addition, HMDA compliance management will take on a whole new significance. “The need for monitoring and controls tied to new HMDA protocols is a few years off, but the preparation curve promises to be steep,” they ...
Sage Bank, a Lowell, MA-based financial institution with less than $200 million in assets, will pay $1.18 million to settle allegations brought by the U.S. Department of Justice that it violated the Fair Housing Act and the Equal Credit Opportunity Act by discriminating in the pricing of its mortgage loans to African-American and Hispanic borrowers. The government accused Sage Bank of charging African-American and Hispanic borrowers higher prices for residential mortgages than similarly situated white borrowers for reasons that had nothing to do with their creditworthiness. “Specifically, under Sage Bank’s pricing policy, each of its loan officers was assigned a target price, which was the price a loan officer was required to achieve on each home loan, regardless of a ...
The more consumers complain to the CFPB about their financial services providers, the more likely those providers are to be fined, and the higher those fines are likely to be, new research suggests. For instance, lenders and other financial services providers face a 58 percent chance of being fined when complaints to the CFPB breach the 2,000 threshold for a company, according to an analysis by PerformLine, a “software-as-a-service” marketing compliance company based in Morristown, NJ. Among the other key findings were a 34 percent increase in the number of consumer complaints year-over-year since 2012, and average fines ranging from $134 million (for companies that received 2,000-10,000 complaints) to $758 million (for companies with 10,000+ complaints). Sliced another way, the ...
Do TRID-Related Loan Delays Bolster Warehouse Profits? It Looks That Way. Thanks to loan closing delays caused by the new “TRID” integrated disclosure rule, mortgages are staying on warehouse lines longer, increasing profits for banks that play in that space. David Frase, president of warehouse lending for Southwest Bank, Dallas, told IMFnews, an affiliated email newsletter, that “loans are staying on lines longer so we make more money.” Frase, however, said he expects that, in time, the TRID kinks will be worked out and that loan closing times will become more normalized. Southwest’s specialty entails mini-correspondent or “broker to banker” lines of credit. “Turn times are slower and processing times are longer,” said Frase. According to figures compiled by Inside ...
Originating nonprime mortgages can be done without repeating the mistakes that contributed to the financial crisis, according to officials at Angel Oak Mortgage Solutions. The firm, one of the most prominent lenders in a severely constrained market, launched in early 2014 and offers nonprime mortgages via wholesale and correspondent channels. Tom Hutchens, a senior vice president of sales and marketing at Angel Oak, said the lender is comfortable extending ...
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