The mortgage industry does not appear to be making much headway when it comes to reducing the volume of complaints consumers lodge with the Consumer Financial Protection Bureau. In fact, according to the CFPB’s latest consumer complaint report, mortgage-related issues are becoming more prevalent. As of the end of the third quarter, the CFPB had received approximately 79,200 consumer complaints, including approximately 36,300 related to mortgages (46 percent), 23,400 for credit cards (30 percent), 12,900 related to bank accounts and services complaints (16 percent), and 2,900 having to do with private student loans (4 percent). Three months earlier, mortgages accounted...

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...

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...

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 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...

The Supreme Court of the United States has delayed a decision to review a case that rests on the disparate impact theory of discrimination in housing and mortgage lending. The case, Township of Mount Holly, NJ, et al., Petitioners v. Mt. Holly Gardens Citizens in Action, Inc., et al., was listed on the court’s conference schedule at the end of last week, but the justices took no action. Mount Holly is now scheduled to be considered at the court’s next conference on Oct. 26. If certiorari is granted...

The Federal Reserve Office of Inspector General recently revealed that the CFPB “plans to accept complaints about additional financial products and services” and “anticipates that referrals from state agencies will increase as the CFPB begins accepting complaints regarding nonbank products.” The disclosures were provided in the OIG’s evaluation report of the bureau’s Consumer Response Unit, which was released last week. “This news should be of concern to financial institutions because it is another clear indication that the CFPB is preparing to extend its enforcement functions...

Consumer complaints about mortgages and credit cards accounted for more than 70 percent of the roughly 79,200 complaints made to the CFPB from July 21, 2011, through Sept. 30, 2012, according to the latest data from the bureau. Mortgage-related complaints again led the way, with approximately 36,300 submitted during the period reviewed. Credit card complaints were next, with roughly 23,400, followed by 12,900 for bank accounts and services, and 2,900 for private student loans. The most common type of mortgage complaint is about problems consumers have when they can’t pay their...

Numerous industry representatives are calling upon the CFPB to significantly scale back its ambitious mortgage servicing rulemaking proposal ¨C with at least one trade group urging the bureau to withdraw it entirely. The proposed rules amend Regulation Z (which implements the Truth in Lending Act) and Regulation X (which implements the Real Estate Settlement Procedures Act). The CFPB¡¯s rules aim to bring greater transparency to the mortgage servicing market with: clear monthly mortgage statements, a warning before interest rate adjustments, options for avoiding costly...

The mortgage lending industry is now grappling with a number of potential compliance challenges with the loan originator compensation rule as currently proposed by the CFPB, with the treatment of proxies and the “zero-zero” alternative mortgage near the top of the short list. An earlier Federal Reserve rulemaking prohibited compensation based on the terms of a loan or proxies for loan terms. “The problem there is the existing rule does not define what exactly that is,” said Richard Andreano, practice group leader of the mortgage banking group at Ballard Spahr, during an...