The CFPB put out a bulletin last week advising lenders not to create illegal hurdles for recipients of Social Security Disability Income who apply for mortgages, warning that requiring unnecessary documentation from such consumers could raise fair lending risk. The new bulletin discusses standards and guidelines on verification of SSDI, including those under the CFPB’s ability-to-repay rule, the Department of Housing and Urban Development’s standards for FHA loans, the Department of Veterans Affairs’ standards for VA-guaranteed loans, and guidelines from Fannie Mae and Freddie Mac. The bureau begins by noting that to verify income for qualified mortgage debt-to-income ratios under the ability-to-repay rule, lenders are required to look at whether the Social Security Administration benefit verification letter or equivalent document ...
A new study commissioned by the American Financial Services Association found significant bias and high error rates in the proxy methodology used by the CFPB to determine discrimination in the indirect auto finance market. Central to the study was an examination of the Bayesian Improved Surname Geocoding (BISG) proxy methodology used by the CFPB to determine a disparate impact to legally protected groups. BISG estimates race and ethnicity based on an applicant’s name and census data. AFSA’s study calculated BISG probabilities against a test population of mortgage data, where race and ethnicity are known. One of the primary findings was that when the proxy uses an 80 percent probability that a person belongs to an African American group, the proxy ...
The mortgage servicing settlements the CFPB obtained with Ocwen, SunTrust Bank and Flagstar Bank have much to teach the rest of the industry about landmines to avoid. During a webinar sponsored last week by Inside Mortgage Finance, an affiliated newsletter, Allyson Baker, a former CFPB attorney and partner at the Venable law firm in Washington, DC, highlighted the importance of trends seen in the three enforcement cases. “Number one is the bureau’s and other law enforcement agencies’ ongoing joint monitoring of the space,” which suggests the industry is likely to see more joint enforcement actions in the future, Baker told event participants. The second important trend is the very large civil money penalties and restitution that are resulting in tens ...
Consumer complaints to the CFPB about their money transfer transactions fell a sharp 28.4 percent industry-wide during the third quarter of 2014, according to a new analysis by Inside the CFPB. From a short-term perspective, that’s a fairly good performance. The longer-term results are more iffy. The CFPB only started collecting complaints from this sector in the second quarter of 2013, so there are just a handful of reporting periods that can be reviewed. That being said, comparing two six-month periods – the second and third quarters of 2013 versus the same periods this year – the data show an industry-wide jump of 93.7 percent. On the other hand, there are only 1,409 total complaints that have been received [with exclusive chart] ...
An unspecified number of counties would have been assigned lower loan limits, based on house price trends, but the FHFA weighed “other factors” and left them unchanged.
The CFPB’s internal control over financial reporting was not effective as of September 30, 2014, because of a material weakness related to the reporting of accounts payable, according to a new study by the U.S. Government Accountability Office. The material weakness is a result of serious control deficiencies that affected CFPB’s determination and reporting of accounts payable. “Specifically, GAO found that CFPB did not have effective procedures in place to determine and record an appropriate amount for goods and services received but not yet paid for as of Sept. 30, 2014,” said the congressional watchdog agency.Additionally, CFPB did not have effective review procedures to timely detect and correct inaccuracies in the accrual amounts. “Despite the material weakness, CFPB made ...
The CFPB’s Office of Inspector General found the bureau’s information security program was generally in compliance with the Federal Information Security Management Act, but that further improvements are needed in security training and contingency planning. Nine other areas that received a passing grade from the OIG were information security continuous monitoring (ISCM), configuration management, identity and access management, incident response and reporting, risk management, plan of action and milestones, remote access, contractor systems, and security capital planning. “While we found that the CFPB’s information security program was generally consistent with the requirements for ISCM, configuration management, and incident response, we identified opportunities to strengthen these areas through automation and centralization,” the report stated. This year, the OIG found that the ...
CFPB eClosing Program Will be a Plus, Eventually. The eClosing initiative launched earlier this year by the CFPB will ultimately be beneficial to the mortgage industry, once all the big wrinkles are ironed out, according to analysts at DBRS, formerly Dominion Bond Rating Service. “Many of the elements that make up eClosings are already being used in other consumer and commercial loans (such as auto loans and equipment lending), so much of the process should be easy to replicate,” the analysts said in a client note last week. “However, it is the uniqueness of the mortgage industry that will present some challenges.” For instance, there are real estate statutes for real property, compared with the Uniform Commercial Code for personal ...
Two years ago, Ross’ WL Ross & Co. sold its mortgage banking operation, Homeward Residential, to Ocwen for $750 million in cash and convertible preferred stock.
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