The number of major fair lending settlements brought by federal regulators over the last year highlights the increasing importance of mortgage lenders properly evaluating their risk of being out of compliance and responding appropriately and preemptively, according to top banking agency officials. Since November 2011, the Department of Justice has settled seven fair lending cases – against Bank of America, Countrywide Financial, GFI Mortgage Bankers, Luther Burbank Savings, Mortgage Guaranty Insurance Corp., SunTrust Mortgage, and Wells Fargo – mostly related to steering, pricing and underwriting. In the aggregate, these settlements have produced more than $550 million in monetary relief in compensation for more than 250,000 victims, according to Jon Seward, head of housing and civil enforcement for the Justice Department. “All seven cases resulted from referrals” as the regulators are...

PNC Bank has sued Republic Mortgage Insurance Co. for refusing to pay claims and attempting to rescind coverage on thousands of legacy mortgage loans that came with the bank’s acquisition of National City Corp. in 2008. In a complaint filed in federal district court in Pittsburgh last week, PNC Bank alleged that the North Carolina mortgage insurer refused to honor coverage it sold to National City under a “flow” policy and “pooling” policy between 1989 and 2005 by increasing its rescissions and cancellations. The flow policy provided...

The mortgage lending industry is universally opposed to a Consumer Financial Protection Bureau proposal to establish a new, more comprehensive “all in” annual percentage rate formula that would include various additional fees and charges. The APR provision is one part of the CFPB’s extensive proposed rule intended to simplify and integrate the mortgage disclosures consumers are entitled to under the Truth in Lending Act and Real Estate Settlement Procedures Act. The overhaul was mandated by the Dodd-Frank Act. In the proposed rule, which came out in July, the bureau would replace...

Four borrowers from Alabama with adjustable-rate mortgages filed a class-action lawsuit this month against 12 banks that establish the London Interbank Offered Rate. The lawsuit suggests that more than 10,000 borrowers meet the class specifications, which cover loans originated from 2000 through 2009, and that the banks made millions of dollars or even billions due to alleged collusion. “This matter arises from a global conspiracy to fix or set LIBOR – the reference point for setting interest rates on ARMs and other loans – by a cabal of prominent financial institutions,” according to the lawsuit filed in the U.S. District Court for the Southern District of New York. The lawsuit is believed to be the first from borrowers regarding LIBOR manipulation. The plaintiffs claim...

GOP Candidate Opines on the Qualified Mortgage. Republican presidential candidate Mitt Romney briefly delved into one of the mortgage industry’s hottest issues during the first debate he had with President Obama, citing the CFPB’s pending ability-to-repay rule, asserting that banks have become reluctant to originate new mortgage loans because of delays and uncertainty surrounding the qualified mortgage definition. “You say we were giving mortgages to people who weren’t qualified. That’s exactly right. That’s one of the big reason for the great financial calamity we had,”...

The CFPB has made another call for public input on its Request for Information on Effective Financial Education initiative, which was first published in the Aug. 2, 2012, issue of the Federal Register.Specifically, the bureau’s Office of Financial Education “seeks public comment on effective financial education approaches that create opportunities for consumers to improve their financial decision-making capabilities,” the notice stated. The request “reflects the CFPB’s acceptance of a behavioral economics approach,” according to Barbara Mishkin, of counsel...

The bureau recently put out a safe]harbor list of countries that qualify for an exception to one of the requirements of the bureaufs remittance rule, which was published in February. The remittance rule generally requires remittance transfer providers to give specified disclosures to consumers sending remittance transfers. Among other requirements, a provider generally must disclose to a sender the total amount the recipient will receive, as well as the applicable exchange rate, fees and taxes. In certain circumstances, the rule permits providers to estimate these amounts...

A recently revised work plan from the Federal Reserve Office of Inspector General indicates it has additional audits of the bureau in its pipeline with 2013 projected completion dates. The OIG has begun an evaluation of the CFPB’s policies, procedures and practices associated with agency-sponsored conferences, the report states. The objectives of this evaluation include determining the bureau’s management controls, policies, procedures, and practices associated with agency-sponsored conferences. The OIG also intends to determine whether the CFPB’s conference-related expenses and...

Earlier this month, a company named Digital Firefly Marketing, a provider of online marketing services, announced that it had been hired by the bureau to “support the online recruitment efforts for the Consumer Financial Protection Bureau.” What’s significant about the announcement is that the company said it was chosen to help the bureau “ramp up” its hiring. To attract qualified candidates to CFPB employment opportunities, Digital Firefly will lead a “high profile” marketing campaign utilizing LinkedIn’s networking tools. To further market the bureau, Digital Firefly will place advertisements...

The CFPB recently announced it plans to hold a field hearing on debt collection in Seattle on Wednesday, Oct. 24, 2012. Since Director Richard Cordray is scheduled to deliver remarks at the event, there is “considerable speculation” that release of the bureau’s final larger participant rule for the debt collection market is imminent and could be announced by Cordray at the hearing, according to Alan Kaplinsky, a Ballard Spahr practice leader. “It is expected that the release of the final debt collection rule will quickly be followed by the release of the CFPB’s debt collection examination...