Lender and financial services industry representatives, commenting on the CFPB’s recently released five-year strategic plan, called for clear, comprehensive guidance to the industry along with enough time to ensure full compliance, given the sheer volume of all the other rulemakings being promulgated in the wake of the financial crisis. The American Financial Services Association, the Consumer Mortgage Coalition and the Mortgage Bankers Association said they were pleased that the first goal in the strategic plan is to prevent...

Representatives of the mortgage lending and financial services industries jointly told federal regulators they strongly support efforts to prevent property “flipping,” but they are also concerned that the regulators’ proposed rule to implement requirements for property appraisals in connection with “higher-risk mortgage” loans might be far too complicated. “[T]he main complexity of the proposed rule relates to the fact that Congress defined higher-risk mortgages based on the spread of the annual percentage rate (APR) over...

The new cop on the financial services beat is strongly encouraging lenders and other financial services providers to make sure they have a robust compliance management system in place to closely monitor their fair lending activities in light of the letter and spirit of various consumer protection laws. Anna-Marie Tabor, the acting head of the CFPB’s Office of Fair Lending and Equal Opportunity, told participants in a recent fair lending webinar sponsored by the Federal Reserve that an adequate compliance...

The CFPB has released its proposed credit card ability-to-pay rule, an effort by which the bureau intends to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. The Credit Card Accountability Responsibility and Disclosure Act (CARD Act), enacted in 2009, requires that card issuers evaluate a consumer’s ability to make the necessary payments before opening a new credit card account. Under current CARD Act regulations issued by the Federal Reserve, a card issuer...

Last week, the Department of Justice raised eyebrows in a $1 billion legal action against Bank of America as successor to Countrywide Financial by filing the first civil fraud suit alleging violations of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in the sale of mortgages to Fannie Mae and Freddie Mac. The federal government asserts that since the Treasury Department has had to bail out Fannie and Freddie, approximately $1 billion in losses suffered by the companies...

Smaller mortgage lending institutions remain apprehensive about their legal liability when it comes to originating qualified mortgages under the CFPB’s pending QM/ability-to-repay rule, and hope they’ll get a full safe harbor. Recent talk has mounted that the bureau is considering a two-tier approach to its QM rule: a safe harbor for mortgages that will be defined as “prime,” and the lesser rebuttable presumption for subprime or nonprime. Elizabeth Eurgubian, vice president and regulatory counsel for the...

VA Home Loan Program Celebrates 20-Millionth Loan Beneficiary. The Department of Veterans Affairs this week commemorated the 20-millionth recipient of a VA loan under the agency’s Home Loan Guaranty Program. Agency officials held a ceremony at the Woodbridge, VA, home of the loan’s recipient, Mrs. Elizabeth Carpenter, whose husband, Capt. Matthew Carpenter, passed away in 2010. Since 1944 as part of the original GI Bill of Rights, the VA has been providing guarantees to 30-year mortgage loans with low interest rates and has guaranteed ...

A nonsupervised Arizona FHA lender whose high default and claims rate triggered a supervisory audit earlier found itself in a deeper mess for improper underwriting on a number of FHA streamline refinanced loans that resulted in losses to the FHA insurance fund. The Department of Housing and Urban Development’s Inspector General found that Allen Mortgage of Centennial Park, AZ, violated HUD’s regulations , procedures, and instructions in the underwriting of FHA-insured loans. Specifically, of the 73 streamlined refinance mortgage loans reviewed by the IG, 23 were ...

The Department of Housing and Urban Development is mulling a recommendation by its Inspector General to consider indemnifications, civil fines or remedies under the False Claims Act against an approved California lender for allowing the recording of restrictive covenants that put the FHA insurance fund at risk for losses. The IG audit report also recommended that HUD require the lender, Shea Mortgage of Aliso Viejo, CA, to reimburse the FHA for $1.47 million in claims paid on 11 FHA-insured loans that contained prohibited restrictive covenants. Under HUD rules, any recorded agreement between the ...

Morgan Keegan and Regions Financial reached a $68.0 million settlement this month with mutual fund investors relating to a lawsuit alleging breaches of fiduciary duty in connection with their alleged mismanagement of the funds and their assets. The companies were accused of fraudulently overstating the values of non-agency mortgage-backed security investments and reporting false net asset values per share, resulting in significant losses to investors in four closed-end mutual funds ... [Includes three briefs]