Of all the compliance problems uncovered during quality-control audits and reviews of mortgage loans, three are recurring with consistency during the origination phase and originators should pay close attention, said a quality-control specialist. Tommy Duncan, chief executive officer of Quality Mortgage Services and a certified mortgage technologist, said errors continue to happen even though lender compliance has improved from previous years. Overall, regulatory compliance on the ...
The complexities of the three percent points-and-fees calculation for the Consumer Financial Protection Bureau “qualified mortgage” standard under its ability-to-repay rule pretty much means that technology is going to be critical in order to be compliant. According to Michael Chan, vice president of ComplianceEase and an expert on compliance technology, the bureau’s QM standard will usher in a whole new paradigm. “Come Jan. 10, 2014, our industry again will be re-defined,” Chan told participants of a webinar ...
The Consumer Financial Protection Bureau’s new criteria for error notices and information requests present considerable challenges to mortgage servicers, according to a new PricewaterhouseCooper analysis. Implementing the changes will require careful review and updates to systems, processes and responsibilities to ensure servicers’ compliance with the new standards, said PwC. The new procedures for error notices and information requests are based on existing rules for responding to qualified written requests ...
The Senate Committee on Banking, Housing and Urban Affairs this week approved bipartisan legislation to strengthen FHA solvency and oversight authority over lenders, paving the way toward dealing with the larger issue of housing finance reform. Introduced by Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Mike Crapo, R-ID, the FHA Solvency Act (S. 1376) passed by a vote of 21-1. The approved bill included...
The Consumer Financial Protection Bureau took its first legal action over alleged violation of the new loan originator compensation rule last week, bringing suit against Castle & Cooke Mortgage, a Utah-based nonbank, and two top executives. The CFPB claims that the defendants had an unwritten policy of paying quarterly bonuses to loan officers based on a formula that rewarded the origination of mortgages with high interest rates, “thus incentivizing loan officers to steer consumers into mortgages with less favorable terms, the very practice the compensation rule sought to prohibit,” said the CFPB’s complaint. Overall, the firm paid...
When Wells Fargo recently pulled the plug on its remaining loan-production joint ventures, it downplayed the significance of the move, explaining that in the scheme of things these unique partnerships – mostly with real estate companies – account for just 3 percent of its total production. But for some of the eight JVs that were shoved aside, it could be a big deal because it means they may now have to find either a new partner or raise additional capital. Still, not all of the JVs are fretting...
Fannie Mae, Freddie Mac and their government conservator are all calling on the Consumer Financial Protection Bureau to amend proposed changes to its mortgage servicing rule because certain provisions would inhibit similar servicing goals put forth by the Federal Housing Finance Agency. In a comment letter, the FHFA said its servicing alignment initiative has pushed for improved practices that are similar to the goals of the CFPB rule, but “several provisions in the recently proposed amendments would actually make those goals more difficult to achieve.” The four areas of the CFPB proposal that are especially important cover...
The Special Inspector General for the Troubled Asset Relief Program is pressing the Treasury Department to focus on servicer actions as part of efforts to reduce re-default rates in the Home Affordable Modification Program. The Treasury has pushed back against the suggestions, stating that it is “always looking to improve the program.” In a report published last week, the SIGTARP said HAMP mods have re-defaulted at an “alarming” rate. As of the end of April, the re-default rate on HAMP mods completed in 2009 was 46 percent and the re-default rate for HAMP mods completed in 2010 was 38 percent. “While HAMP has helped...
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