The House Financial Services Committee last week spent three days marking up the Republican majority’s alternative to the Dodd-Frank Act. H.R. 10, the Financial CHOICE Act, introduced late last month by committee Chairman Jeb Hensarling, R-TX, would make a number of changes to the mortgage regulatory landscape. One provision would provide a safe harbor against litigation for residential mortgages held on the lender’s balance sheet since the origination of the loan if the mortgage fails to comply with ability-to-repay requirements. The measure also would revise the definition of “points and fees” under the Truth in Lending Act to exclude fees paid for affiliated business arrangements. Other language in the bill would exempt smaller creditors from TILA’s escrow requirements. Another provision ...

Ocwen Financial Corp. recently filed two related motions that seek an early court ruling that the CFPB is unconstitutional, and therefore its enforcement action against the lender/servicer should be thrown out.Echoing an argument made earlier by PHH Corp. in its own dispute with the bureau, Ocwen told the U.S. District Court for the Southern District of Florida, West Palm Beach Division, that the CFPB is unconstitutionally structured because it vests “too much unfettered power” in the hands of the agency’s director and in the bureau itself. The company informed the court and the Department of Justice that it intends to directly challenge the CFPB’s constitutionality at the earliest possible opportunity and to seek dismissal of the case on this ...

Ocwen Financial Corp. is facing more trouble than just its struggle with the CFPB and a number of state regulators. The mortgage lender/servicer also faces the increasing likelihood of some ratings downgrades as well as pending class-action lawsuits. Fitch Ratings recently revised Ocwen’s U.S. residential mortgage-backed securities servicer ratings outlook to negative. “The revision of the rating outlook for the servicer ratings is based on uncertainty surrounding the financial and operational impact of new regulatory actions taken by the CFPB and the multi-state actions following the findings of the Multi-State Mortgage Committee,” Fitch said. The negative rating outlook also takes into consideration Ocwen’s financial condition. Fitch placed the company’s and its corporate parent’s long-term issuer default rating on “rating watch ...

The House Financial Services Committee passed the updated version of the Financial CHOICE Act, which includes a new provision that lets the president fire the director of the Federal Housing Finance Agency at will and makes Congress responsible for setting the agency’s budget. The CHOICE Act 2.0 removed the original text, which recommended restructuring the agency to a five-member board. So while the current single-directorship structure would be maintained, the FHFA director can be asked to vacate the position by the president at any time. FHFA Director Mel Watt’s five-year term ends in early 2019. The provisions in this Republican bill would make widespread changes to the Dodd-Frank Act, but...

The Mortgage Bankers Association, this week, released more details in conjunction with its GSE reform proposal published earlier this year. Expanding on some of the concepts presented in January, the MBA paper includes more detailed end-state reform recommendations including elaborating on the transition plan. The trade group’s approach for reforming Fannie Mae and Freddie Mac calls...

The CFPB is not letting any grass grow under its feet on the examination and supervision front, the bureau’s latest semi-annual report to Congress shows. Under its previous Examiner Commissioning Program (ECP), which became effective Oct. 27, 2014, the agency had issued 173 commissions to examiners, field managers, and headquarters staff. Under the new ECP, an additional 20 examiners have achieved commissioned examiner status, bringing the total number of commissioned examiners to 187, which accounts for attrition through retirement and departures from the CFPB. On the technology front, the bureau is upgrading its existing examination management software. “The new system will aid the CFPB in supervising and enforcing federal consumer financial law by utilizing current technology to support monitoring of ...

In remarks recently at an event of the U.S. Chamber of Commerce, CFPB Director Richard Cordray spelled out how the bureau is trying to aid the mortgage industry’s compliance efforts by promoting greater understanding of its rules, as well as regulatory review, streamlining and modernization. “Our efforts with the mortgage rules went much further than simply reacting passively to industry inquiries (though we have fielded thousands of them),” the director said. “We also took affirmative steps to help the industry understand our rules through publications, videos, webinars, and phone calls with individual institutions.” The bureau adopted a diagnostic and corrective approach to supervision in the early months to ease anxieties about the difficulties of complying with certain components of the ...

The Federal Housing Finance Agency Office of Inspector General published several reports on issues related to examiners in late March, including an update on the Housing Finance Examiner Commission Program, which it found to be lagging. The FHFA has acknowledged the need for a commissioned examiner program to provide classroom and on-the-job training to examiners. But, while progress has been made, the IG said more needs to be done to produce commissioned examiners. Of the FHFA examiners that were commissioned, the IG said they were commissioned by other federal or state regulators prior to their work for the FHFA. In 2013, the agency established the...

The Federal Housing Finance Agency announced this week that it moved back the anticipated date of “release 2” of the common securitization platform in which both GSEs will use the security, to the second quarter of 2019, instead of 2018. In a progress report update, the FHFA said it decided to delay the project after an “extensive review” of lessons learned from the first release and progress on release 2. The agency said it needs more time for the development, testing, validation of controls, and governance necessary “to have the highest level of confidence that the implementation will be both smooth and successful.”

For the 2017 examination cycle, the Federal Housing Finance Agency recently issued an advisory bulletin for new classifications of adverse findings for the GSEs and the Federal Home Loan Banks. Three designated classifications were established to help examiners define the issues more effectively with hopes of a faster remediation plan. When communicating adverse examination finds to the regulated entities and Office of Finance, the FHFA said the examiners will classify them as either “matters requiring attention, recommendations or violations.” MRAs are broken down into two separate categories: critical supervisory matters and deficiencies. The difference boils down to the nature and severity of the issues requiring corrective action, according to the bulletin.