The CFPB late last week issued a rule to clarify partial HMDA exemptions for small financial institutions ushered in under the Dodd-Frank reform act. The Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law in May, exempts depositories – including credit unions – that originated fewer than 500 closed-end mortgages or 500 open-end lines of credit in each of the two preceding calendar years from certain expanded reporting ...
A top CFPB official in charge of protecting student borrowers stepped down from the agency in late August, blaming the leadership of Acting Director Mick Mulvaney. Seth Frotman, who was the student loan ombudsman at the agency, said in his letter of resignation the current leadership of the bureau has “turned its back on young people and their financial futures.” He added: “The bureau is now content doing the bare minimum for [consumers] while simultaneously ...
The CFPB in the Trump era is likely to abandon or limit the use of the disparate-impact theory in enforcing fair lending laws, said attorneys. “Given the lack of ‘effects’ language in [the Equal Credit Opportunity Act] and the [CFPB’s] stated focus on enforcing statutes as they are written, we expect that they will determine that ECOA does not support a disparate-impact theory,” said Jeffrey Naimon, a partner at Buckley Sandler. Under the disparate-impact theory ...
Fannie Mae and Freddie Mac should focus on things like cash flow projections, diversified funding and identifying potentially adverse events to manage their liquidity risk, according to a new advisory bulletin issued late this month by the Federal Housing Finance Agency. The regulator said it expects the GSEs to use liquidity metrics that coincide with their funds management strategies and provide a comprehensive view of their liquidity risk to make sure enough funds are available, at reasonable cost, to meet potential demands. “Strong liquidity risk management enables an enterprise to be financially sound to perform its public mission and to limit and control shortfalls in cash,” said the FHFA.
The fast-growing multifamily loan programs of Fannie Mae and Freddie Mac are garnering a bit of attention these days – but not necessarily for good reasons. The Federal Housing Finance Agency wants the two mortgage giants to take more precautions when selecting and monitoring their multifamily seller/servicers. Also, the FHFA’s Office of Inspector General and the FBI are investigating a multi-million-dollar mortgage fraud scheme in the multifamily sector that impacted Fannie Mae and Freddie Mac MBS. The FHFA recently issued an advisory bulletin detailing its expectations for Fannie and Freddie to institute proper controls and perform monitoring to identify and manage multifamily counterparty risks.
The examinations of the Federal Home Loan Banks’ community investment programs were not up to par, according to a recent report by the Federal Housing Finance Agency’s Office of Inspector General, which faulted the program for having examiners review their own work. The report noted that the quality control reviews of community investment examinations didn’t meet FHFA’s standard for independence. In other words, the examination specialists who performed the quality control reviews for community investment examinations didn’t follow FHFA’s guidelines because the specialist was not independent of the examination process. In fact, the IG noted, “All 11 quality control reviews of community investment examinations conducted during the 2017...
Fannie Mae and Freddie Mac shareholders faced another hurdle last week when the Eighth Circuit Court ruled that the Treasury sweep of GSE profits was legal. In fact, in the 14-page ruling, filed on Aug. 23, the judge said, “This shareholder lawsuit crashes into a roadblock before it can get started,” and stated that the Federal Housing Finance Agency did not exceed its conservatorship powers, as the plaintiffs argued. “Congress, intentionally or otherwise, may have created a monster by handing an agency breathtakingly broad powers and insulating the exercise of those powers from judicial review. Even so, clear statutory text dictates the outcome,” said Judge David Stras in Saxton vs. the FHFA.
A dozen or so mortgage, housing and consumer groups are putting the final touches on a new letter to Treasury Secretary Steven Mnuchin, asking that the department not make any radical administrative changes to the operations of Fannie Mae and Freddie Mac, according to industry stakeholders familiar with the matter. The immediate and chief concern is that Federal Housing Finance Agency Director Mel Watt could depart prematurely, throwing the balance of power over to the White House, which would then move to pick a new FHFA director. The industry fears the administration’s pick, working in tandem with Treasury, would then move to cut GSE loan limits as a test to see if the private...
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