With finalized amendments to the CFPB’s mortgage servicing rules due to be released within the next several weeks, one of the big issues for servicers will be just how much time the bureau grants them to implement all the necessary changes to their loan administration systems. “We have a pretty good idea of what the bureau is going to do in substance,” Donald Lampe, a partner in the financial services group in the Washington, DC, office of the Morrison & Foerster law firm, told Inside the CFPB. “And so the question is going to be, what is the implementation time period going to be so that these changes can be fully implemented?”

A proposal from House Republicans to treat mortgage loans held in a bank’s portfolio as qualified mortgages received divergent reviews at a recent hearing by the House Financial Services Committee.The proposal was included in the Financial CHOICE Act sponsored by Committee Chairman Jeb Hensarling, R-TX. Treating mortgages in bank portfolios as QMs would provide QM status to loans that would otherwise fail to meet those standards, including interest-only products and mortgages not eligible for sale to the government-sponsored enterprises Fannie Mae and Freddie Mac because the debt-to-income ratios are above 43.0 percent. Adam Levitin, a professor of law at Georgetown University Law Center, said the Financial CHOICE Act would “eviscerate” consumer protections in mortgage lending.

In May, the Supreme Court of the United States ruled in Robins v. Spokeo, Inc. that a plaintiff has to demonstrate that he or she suffered “concrete” and “real” harm in order to have standing under Article III of the U.S. Constitution to successfully sue for statutory damages under the Fair Credit Reporting Act.The CFPB has previously argued that is not necessarily so, and with the SCOTUS remanding the case back to the U.S. Court of Appeals for the Ninth Circuit, the bureau has recently reiterated its argument in an amicus brief with the lower court. The specific question in this case is whether the plaintiff (Robins) identified an injury-in-fact under Article III of...

In State National Bank of Big Spring, Texas, et al. v. Lew, et al., the U.S. District Court for the District of Columbia has shot down the latest attempt to void the actions taken by CFPB Director Richard Cordray while he was still a recess appointee. At issue are several CFPB rulemakings, such as those having to do with electronic fund transfers, integrated mortgage disclosures, escrow requirements, ability to repay/qualified mortgages, and mortgage servicing. On July 18, 2011, President Obama first nominated Cordray to serve as director of the bureau. When the Senate took no action on that nomination, Obama appointed him to the position on Jan. 4, 2012, invoking his...

GOP Legislation Would Exempt Small Nonbank Lenders from CFPB Examination, Enforcement. Rep. Roger Williams, R-TX, recently introduced H.R. 5907, the Community Mortgage Lenders Regulatory Act of 2016, which would exempt qualifying smaller, “responsible” nonbank lenders from CFPB examinations and primary enforcement authority. To qualify, a nonbank mortgage lender must have net worth of less than $50 million; have originated fewer than 25,000 loans or $5 billion in loans the preceding year; and have originated at least 95 percent of their mortgage loans as qualified mortgages the last three years. As currently applies to most banks, a qualifying “responsible community lender” would not be subject...

CFPB Makes Some Senior Staff Changes. Last week, the CFPB announced some senior-level staffing changes. Among them, Chris D’Angelo, currently the bureau’s chief of staff, will serve as the associate director for supervision, enforcement and fair lending. He joined the CFPB in June 2011 and previously served as senior advisor to the director and as an attorney in the Office of Enforcement. D’Angelo came to the bureau from the U.S. Treasury Department, where he was senior advisor to the undersecretary for domestic finance and worked on financial regulation. Richard Lepley, currently the deputy general counsel for general law, ethics and oversight, will assume the position of principal deputy general counsel in the office of the general counsel in the legal division.

CFPB Debt Collection Field Hearing This Week. The CFPB plans to convene a public field hearing July 28 on debt collection issues, at a location in Sacramento, CA, that has yet to be announced. The field event is to feature remarks by CFPB Director Richard Cordray, followed by a panel discussion with consumer advocates and industry representatives, and concluding with testimony from members of the public. The hearing, which is scheduled to begin at 11 a.m. PDT, is expected to be livestreamed at consumerfinance.gov. Congress is Now in Recess. The U.S. Senate and House of Representatives have recessed for the summer and are scheduled to return...

State regulators had removed a clause from previous forms which said information from the submitting lender was “to the best of my knowledge, information and belief.”

New issuance of non-mortgage ABS faltered in the second quarter of 2016, but the market has rebounded strongly in recent weeks, according to a new Inside MBS & ABS analysis. New ABS issuance totaled $43.07 billion in the second quarter, a modest decline from the first three months of 2016. That put year-to-date production at just $86.42 billion, off 18.0 percent from the first six months of 2015. Activity picked up...[Includes two data tables]

Industry experts agree that the commercial MBS market is not going to live up to expectations of $100 billion of issuance this year, but they are hopeful the market will rebound after the industry fully implements the Dodd-Frank Act risk-retention rules that take effect Dec. 24, 2016. According to Kenneth Cheng, managing director of CMBS ratings services for Morningstar Credit Ratings, there is much uncertainty in the CMBS market about the actual impact of the risk-retention requirements. “I think everybody has agreed that it will be a negative impact – it’s just the magnitude of that impact that is uncertain,” he told Inside MBS & ABS this week. “It’s going to drive up the cost of CMBS – how much is anybody’s guess.” Also, as the cost of issuing CMBS increases, profit margins will...