In response to the recent enactment of federal legislation, the CFPB recently issued an interim final rule that broadens the availability of certain “qualified mortgage” special provisions under the ability-to-repay rule for small lenders that operate in rural or underserved areas. The new rule, which kicked in March 31, 2016, implements the Helping Expand Lending Practices in Rural Communities (HELP) Act, legislation that allows more small creditors operating in rural or underserved areas to offer balloon-payment QM loans and balloon-payment high-cost mortgages, and makes them eligible for the escrow exemption. Prior to the HELP Act, a small lender was only eligible for these provisions if it operated predominantly in rural or underserved areas. The bureau’s prior rules had interpreted that ...
Although much of the oxygen in the room is being taken up these days with concerns about the CFPB’s integrated disclosure rule, industry participants need to mind their Ps and Qs when it comes to the bureau’s loan originator compensation rule. During a recent webinar sponsored by Inside Mortgage Finance, an affiliated publication, top legal experts discussed how the industry can navigate a safe passage, compliance-wise. “We know that they’re going to really be looking at loan originator compensation plans this year,” said Kristie Kully, a partner with the Mayer Brown law firm in Washington, DC. “We know that they expect to find some problems in the LO comp area, and often when they expect to find them, they will ...
Mortgage banking industry representatives told the CFPB it should not be in a rush to make any changes to its resubmission guidelines for data that will be submitted under the bureau’s new Home Mortgage Disclosure Act rule. Because of continuing problems in implementing the integrated disclosure rule, “companies have not yet had available sufficient resources to begin HMDA implementation in earnest,” the Mortgage Bankers Association told the bureau in a recent comment letter. “Also, considering the unprecedented expansion of data elements required under the new HMDA rule, it can be anticipated that when implementation begins, there will be a far better understanding of myriad issues including appropriate resubmission guidelines.” Consequently, MBA said that while some changes may now be warranted, ...
Congress should consider whether additional changes to the federal financial regulatory structure are needed to reduce or better manage fragmentation and overlap in the oversight of financial institutions and activities to improve the consistency of consumer protections, according to a new report from the Government Accountability Office. “For example, Congress could consider ... transferring the remaining prudential regulators’ consumer protection authorities over large depository institutions to the CFPB ... among other considerations,” the report stated. One of the concerns GAO raised is that a federal financial regulatory system with multiple regulators can result in inefficient and inconsistent safety and soundness and consumer protection oversight, with negative consequences for industry players. “While Congress addressed some of our concerns through consolidating rulemaking ...
Overall consumer complaints to the CFPB reached their lowest level in at least a year and a half, according to a new analysis and ranking by Inside the CFPB. Total gripes to the bureau slid 5.0 percent in the first quarter and were off 3.0 percent on an annual basis, data from the CFPB consumer complaint database show. Kvetching about residential mortgages was down slightly more, falling 6.7 percent and 4.1 percent, respectively, for those two time periods. In fact, mortgage-related belly-aching hasn’t been this low since the fourth quarter of 2013. The most dramatic change was seen in the prepaid card space, where criticisms plunged 73.3 percent in 1Q16. ... [with exclusive data chart] ...
U.S. Military Personnel Continue to Report Problems With Their Mortgages. Complaints to the CFPB from American military personnel about their mortgages rose 10 percent from 2014 to 2015, according to a recent report from the bureau. The good news for mortgage lenders is that total complaints about their operations – roughly 9,900 – were less than half of the total generated by debt collection practices, which came to about 20,500. ... FHFA Wants Public Input on National Mortgage Borrower Survey. The Federal Housing Finance Agency is seeking public comments about the American Survey of Mortgage Borrowers, an information collection effort otherwise known as the National Survey of Existing Mortgage Borrowers. ...
Fannie Mae and Freddie Mac purchased $127.7 billion of single-family loans last year that failed to meet the baseline qualified-mortgage standard set by the Consumer Financial Protection Bureau, according to a new analysis by Inside The GSEs. Under the agency’s ability to repay rule, the GSEs can ignore the restriction that qualified mortgages must have a debt-to-income ratio of 43 percent or less. This so-called agency “patch” was set up to last for seven years, or until 2021, as long as Fannie and Freddie remain in conservatorship or receivership. In other regards, such as the 30-year limit on maximum loan term and the prohibition on interest-only payments, the GSEs...
The Federal Housing Finance Agency announced last week that it’s mulling over the idea of allowing principal reductions for underwater homeowners and it expects to make a decision, one way or the other, within the next couple of weeks But some say if implemented, the overall impact will be fairly muted. Back in 2012, the agency decided that limited principal reduction could save Fannie Mae and Freddie Mac money, but the plan didn’t have the support of former Acting Director Ed DeMarco, who said it could encourage voluntary loan defaults. Since that time, FHFA Director Mel Watt revealed in a recent speech last week that he’s been...
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