The CFPB issued a final rule last week that finalizes the April clarifications made to its ability-to-repay and mortgage servicing rules. Among other things, the final rule clarifies and amends how several factors can be used to calculate a consumer’s debt-to-income ratio. Such factors include a consumer’s employment record and income, business credit reports and other documents relating to self-employed consumers, Social Security income, and non-employment related income such as from a trust or rental property. The final...
Debt collection practices are now fully and firmly on the CFPB’s radar. Last week, the bureau warned all companies under its jurisdiction that they will be held accountable for unlawful conduct in collecting a consumer’s debts. In the first of two bulletins, the CFPB makes clear that any entity subject to the Consumer Financial Protection Act of 2010, whether a third-party collector or a creditor collecting its own debts, can be held accountable for any unfair, deceptive or abusive practices in collecting a consumer’s debts...
The Securities Industry and Financial Market Association cautioned drafters of a proposed model law on mortgage foreclosures against adopting a provision that would eliminate or repeal the holder-in-due-course rule in the case of home loan foreclosures. Commenting on the Uniform Law Commission’s discussion draft on the “Residential Real Estate Mortgage Foreclosure Process and Protections,” SIFMA urged the commission not to repeal or limit the holder rule. The trade group warned that the rescission of the rule in the context of home loan foreclosures could convert a secured loan into an unsecured loan. “This is...
Some 231 non-agency mortgage-backed securities serviced by Nationstar Mortgage took nearly $1.0 billion in losses recently due to accounting for principal forbearance that occurred in previous years. Nationstar acquired the mortgages from Aurora Bank and said the revisions were made to remove inconsistencies in the reporting of previously forborne amounts. The revised losses follow a similar action by Ocwen Financial. Fitch Ratings said the servicers don’t anticipate similar significant ... [Includes two briefs]
The Republican leadership of the House Financial Services Committee this week unveiled a comprehensive housing finance reform bill, including a series of proposals to “right size” the FHA, redefine its mission and reestablish it as a stand-alone agency. At the same time, Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, announced they have reached a bipartisan agreement on legislation that would ensure the solvency of the FHA. Both lawmakers expect to introduce a bill next week. The House FHA reform measures were introduced in tandem with reform proposals for ...
The FHA has proposed measures to strengthen its oversight of FHA lenders and each measure could potentially increase lenders’ liability and compliance risk, compliance experts warned. Published for comment in the July 9 Federal Register, the proposals are part of a new enforcement regime that the FHA is considering to monitor and sanction lenders. They cover statistical sampling, origination quality standards, annual reviews, compare ratios, and indemnification and other remedies for loan defects. The proposed enforcement measures, however, raise a ...
A post-endorsement review of FHA loans during the first quarter of 2013 has revealed a high percentage of materially defective loans.The defects apparently went undetected during the underwriting process and were uncovered only during a loan-level review that the FHA routinely conducts to ensure that newly originated, higher-risk loans comply with agency requirements. The Department of Housing and Urban Development’s Office of Lender Activities and Program Compliance reported that 44 percent of 6,251 single-family mortgage loans that were reviewed in the first ...
The Department of Veterans Affairs has urged holders and servicers of home loans with a VA guaranty to consider principal reduction when evaluating a distressed loan for possible modification. In a recent circular, the VA noted that it is not able to reimburse any principal reduction because a VA claim is payable only upon termination of a loan, and any forgiven amount is no longer part of the borrower’s mortgage debt. However, principal reduction in a loan modification may produce a higher expected return for a servicer than termination of the loan, the VA said. This is especially true when the sum of the ...
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