The Federal Trade Commission issued a final rule to strengthen consumer protections by banning deceptive claims about consumer mortgages in advertising or other types of commercial communications. The new rule lists 19 examples of prohibited deceptive claims, including misrepresentations about the existence, nature, or amount of fees or costs to the consumer associated with the mortgage; the terms, amounts, payments, or other requirements relating to taxes or insurance associated with the mortgage; and the variability of interest, payments, or other terms of the mortgage. ...

The Senate Banking Committee plans a hearing on Thursday to consider President Barack Obama's nomination of Richard Cordray, the former Ohio attorney general and current chief of enforcement at the Consumer Financial Protection Bureau, to be the first official director of the CFPB. “With [this] hearing, I will begin the process of moving Mr. Cordray’s nomination forward to confirmation,” said Sen. Tim Johnson, D-SD, chairman of the committee. “The CFPB opened its doors as an independent agency on July 21st, and it is off to a strong start promoting an equitable and transparent consumer financial marketplace. However, until it has a director, the CFPB will not be able to use its full powers to protect consumers and level the playing field for community banks and credit unions.” ...

The Consumer Financial Protection Bureau officially began functioning as a banking regulator last week, and even though it doesn’t yet have a director confirmed by the Senate, it’s already one of the most powerful regulators in the federal government, having both complete regulatory authority over the entire industry and supervisory responsibility for large banks. Among the laws the CFPB will now be in charge of enforcing are the Alternative Mortgage Transaction Parity Act, the Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act (except sections 615(e), 624 and 628),and the Fair Debt Collection Practices Act. ...

The new Consumer Financial Protection Bureau is making substantial progress on its initiative to meld the mortgage disclosure forms under the Truth in Lending Act and the Real Estate Settlement Procedures Act into one, more simplified disclosure. Still, a number of questions are being raised in the process, not the least of which has to do with what kind of regulation will eventually accompany the forms. “The first issue is that these forms just don’t reflect the regulatory and statutory requirements in many ways,” said Steve Kaplan, a partner with law firm K&L Gates LLP in its Washington, DC, office during a webinar last week sponsored by Inside Mortgage Finance Publications. “So someone who is a practitioner and who’s been dealing with these issues for years will say, ‘What is this form? This is great and dandy but do I get a safe harbor? Do I still violate the statute by providing this form?’” ...

A California mortgage lender that recently reached a settlement agreement with the Department of Housing and Urban Development over branch issues could land before HUD’s Mortgagee Review Board for branch-related loan quality issues. HUD’s Office of the Inspector General said an audit of Prospect Mortgage’s branches uncovered high default rates due to numerous violations of HUD underwriting and quality control requirements. The OIG recommended requiring Prospect to reimburse HUD $344,326 for ...

Some federally supervised depository institutions with FHA businesses are in danger of missing the July 29 deadline for registering with the Nationwide Mortgage Licensing System and Registry and could be sanctioned. The delay in registration is apparently due to confusion and uncertainty as to whether certain employees meet the definition of a “mortgage loan originator” (MLO) and should be registered as required by the Secure and Fair Enforcement for Mortgage Licensing Act, said compliance experts. The mortgage-related activities of such employees do not clearly meet the MLO definition and they include ...

The Department of Housing and Urban Affairs’ Office of the Inspector General recommended that HUD obtain complete documentation to close Ginnie Mae contracts after an audit uncovered flawed procedures at the Office of the Chief Procurement Officer. The OIG called for tighter procedures after finding that the procurement office did not get documentation from Ginnie Mae to close out completed and expired Ginnie Mae contracts in a timely manner. That was a violation of HUD’s guidelines for contract closeout procedures, the internal watchdog unit said. In addition, Ginnie Mae did not follow department guidelines ...

As FHA tightens its underwriting further to give more room for private capital in the mortgage market, the federal single-family mortgage insurance program may no longer provide mortgage alternatives for as many “non-qualified residential mortgage” borrowers as it would have in the past, according to a new report issued by the Government Accountability Office. Analyzing the impact of the Dodd-Frank Act on homeowners and the mortgage market, the GAO report concludes that potential changes in the FHA’s role could influence ...

The impact of lower loan limits on the supply of Ginnie Mae mortgage-backed securities and other agency MBS would be very modest and that such loan limit changes should not affect Ginnie Mae prepayments, according to a recent analysis by Barclays Capital. With respect to agency MBS supply, the “permanent” lower loan limit established by the Housing and Economic Recovery Act of 2008 should cut the combined issuance of both conventional and Ginnie Mae pools by about 5 percent, the report said. The report, among other things ...