The Office of Inspector General for the CFPB, the Federal Deposit Insurance Corp., the National Credit Union Administration, and the Treasury Department are evaluating the coordination between the CFPB and other regulatory agencies in conducting supervisory activities, according to the CFPB OIG’s latest work plan. In June 2012, the CFPB and the prudential regulatory agencies issued a memorandum of understanding to clarify how the agencies will coordinate their supervisory activities. “The objective of the evaluation is to confirm that the required coordination is occurring and has been effective in avoiding conflicts or duplication of efforts,” the bureau’s OIG said. The evaluation is currently expected to be completed sometime during the third quarter of 2014. There are a handful of other ...

The Federal Home Loan Bank of Des Moines and the Federal Home Loan Bank of Seattle jointly announced that they have entered into merger discussions, but don’t expect a rash of FHLBank consolidations regardless of the outcome, says an expert. The two institutions “entered into an exclusivity arrangement regarding a potential merger,” the two FHLBanks announced last week. The proposed merger of the FHLBank of Des Moines and the smaller, troubled FHLBank of Seattle would create an institution with more than 1,500 member financial institutions in 13 states and three U.S. territories in the Pacific Ocean.

As a way to keep a tight grip on counterparty risk, Freddie Mac will start conducting bimonthly “operational reviews of certain specialty servicers” later this year. Not to be outdone, Fannie Mae will also perform such reviews, but only when a seller/servicer reaches a “certain mortgage loan delivery threshold.” The news – contained in a recent report from the Inspector General of the Federal Housing Finance Agency – isn’t likely to warm the hearts of fast growing nonbanks. Both Nationstar Mortgage and Walter Investment Management are mentioned by name in the report, which voices concerns thatsome nonbanks pose a risk to the government-sponsored enterprises because they have “limited financial capacity” to make good on representation and warranty contracts. Nationstar and Walter are...

Few federal regulatory agencies are the objects of such scorn – and simultaneously such devotion – as the CFPB, reflecting the bitter partisan environment in which the bureau was created in the wake of the financial crisis. To its opponents, July 21, 2011, may as well be another “date which will live in infamy,” whereas to its supporters, the modern financial era might as well be divided into pre-CFPB time and post-CFPB time. Sen. Elizabeth Warren, D-MA, the author of the concept that evolved into what is now the CFPB and the person tasked with getting the agency up and running, urged supporters of the bureau to keep up the fight. “It feels like yesterday that we were fighting for a strong ...

When it comes to the CFPB, beauty is in the eye of the beholder. While supporters remain ardently behind the mission of the primary agency dedicated to consumer protection, as far as critics are concerned, it’s the bureau itself that poses too much risk and is in need of reform. “The CFPB is exactly what everybody knew it would be: a very expansive, heavy-handed, imperially-minded bureaucracy, building their own luxurious palace,” said Alex Pollock, a resident fellow at the American Enterprise Institute and former president and CEO of the Federal Home Loan Bank of Chicago, during a Dodd-Frank Act-related conference call with the news media last week. “One of the important effects of the CFPB has been to ensure the ...

One deficiency commonly noted in cases heard by the Department of Housing and Urban Development’s Mortgagee Review Board is failure by FHA lenders and servicers to implement and maintain a quality control (QC) plan. FHA’s focus on quality control has increased over the last couple of years as the agency strives to correct underwriting flaws that have contributed to the massive losses and severe depletion of the Mutual Mortgage Insurance Fund. After years of guiding and helping clients comply and cope with FHA regulations, requirements and enforcement actions, the Collingwood Group reports that a common QC-related mistake among FHA lenders is failure to document steps taken to correct deficiencies – or to take any corrective action at all. Tied to this issue is ...

The Federal Housing Finance Agency late this week finally unveiled new eligibility standards for the mortgage insurance industry, introducing for the first time risk-based capital rules that are tied to a measurement called “available assets.” Immediately after the rule hit the market, several MI firms said they support the idea that Fannie Mae and Freddie Mac must have strong financial counterparties, while hinting they will have more to say on the topic in the near future.

Last week, new GSE repurchase requirements announced this spring took effect as a potential alternative to repurchase for certain mortgage loans for which the mortgage insurance has been rescinded. Among the requirements are an “MI stand-in,” which Fannie Mae defines as “the full mortgage insurance benefit that would have been payable under the original mortgage insurance policy if the mortgage loan liquidates.” In May, both Fannie and Freddie Mac announced that repurchase requests will no longer be an automatic response in the event that MI is rescinded.

An industry that is used to reading about MERS’ court victories was stunned last week after a federal court judge in Pennsylvania found Merscorp Inc. and its electronic mortgage registry system in violation of state recording laws for real estate properties. While the ruling by U.S. District Court Judge J. Curtis Joyner may be appealed, MERS could be held liable for its role as an “agent” for member-lenders involved in property transfers and for alleged unjust enrichment, according to legal experts. The case was brought...

The FHA is seeking comment on two new sections of a proposed single-family handbook for mortgage lenders. The handbook is in development. Once completed, it will serve as the centralized source of current and future FHA policies. Agency staff is collating policies from several handbooks, rules, mortgagee letters, notices and other sources to incorporate into the handbook. The FHA is publishing two new sections, “Doing Business with FHA – FHA Lenders and Mortgagees” and “Quality Control, Oversight and Compliance,” for comment. The “Doing Business” section lays out the requirements for FHA lender approval, including eligibility requirements, application processes, operating requirements and post-approval changes. The section also contains the recertification process as well as processes for applying for ...