The Department of Veterans Affairs said there may be a need for further clarification of its newly issued qualified mortgage (QM) rule to allay lender fear of potential liability if they originate VA streamlined refinances, also known as Interest Rate Reduction Refinance Loans (IRRRL), with a rebuttable presumption. Industry sources say VA lenders remain apprehensive despite assurances by agency officials that little has changed in the VA lending process as a result of the agency’s interim final rule. VA issued its QM document on May 9 in compliance with the Dodd-Frank Act, defining the types of VA loans that are “qualified mortgages” for purposes of the new ability-to-repay (ATR) provisions of the Truth in Lending Act. The Act also imposed similar requirements upon the FHA and the Department of Agriculture for the loans they insure or guarantee. The agency said it issued the rule on ...

In a noteworthy reversal of partisan roles, Democrats on the House Financial Services Subcommittee on Oversight and Investigations last week found themselves uncomfortably backing away from an opportunity to take up the cause of female, minority and older employees at the CFPB, out of fear they might undermine what is arguably their favorite regulatory agency. Ranking Member Al Green, D-TX, succinctly summed up the anxiety felt by his side of the aisle when he said, “I am concerned that some people might use the information in this hearing that would weaken, emasculate or eviscerate the CFPB.” Meanwhile, the bureau-bashing Republicans, who have studiously tried to re-brand themselves as friends of “the little guy” ever since the CFPB opened for business...

In a pre-emptive strike against Republican critics on Capitol Hill, the CFPB announced last week that it was scrapping its performance-management system that produced some disparate-impact blowback, and was instituting a plan to compensate agency staff estimated to cost upwards of $5 million. The new report digs deeper than the bureau’s 2013 internal report that was released after allegations of discrimination and allegation at the bureau came to light back in March. “[W]e have determined that there were broad-based disparities in the way performance ratings were assigned across our employee base in both 2012 and 2013,” CFPB Director Richard Cordray said in an email to bureau staff. “These differences indicate a systemic disadvantage to various categories of employees that persisted...

The slowdown in VA activity in the last quarter of 2013 spilled over into the first quarter of this year as lenders reported a 13.0 percent decline in loan production during the period, according to an Inside FHA Lending analysis of agency data. The downward trend in volume began at the end of the first quarter last year although VA still considered 2013 a record year for VA originations. VA lenders reported $19.5 billion in total production for the quarter, down from $22.4 billion in the previous quarter. Production, likewise, dropped 47.9 percent this year compared to the same period last year. Despite the slowdown, lenders remain optimistic about the VA market. “We have spent a lot of time understanding the perils of lending to veterans and learning to deal with the losses, and we are all in with VA lending,” said one lender. “When you do VA loans you talk about having ... [1 chart]

Echoing an assessment that has become all too common across the housing and mortgage markets, CFPB Director Richard Cordray said excessive student loan debt is keeping many young people from buying a house and taking on a mortgage. “The consumers we hear from tell us how their debt burden has stopped them from buying a home, opening a small business, or starting a family,” Cordray said in a speech last week. With student-loan debt now having reached $1.2 trillion, the CFPB estimates that more than 7 million Americans are in default on a student loan. “For those who default early in their lives, the negative consequences for their credit report can make it more difficult to pass employment background checks...

The fourth edition of the CFPB’s Supervisory Highlights report, released last week, reveals that recent “nonpublic supervisory actions” and self-reported violations in a number of program areas have resulted in more than $70 million in remediation for approximately 775,000 consumers. The report also highlighted what the bureau characterized as illegal actions uncovered by the agency’s supervision of the payday, debt collection and consumer-reporting markets – which are now being supervised on a federal level for the first time due to the authority conferred upon the CFPB by the Dodd-Frank Wall Street Reform and Consumer Protection Act. “For the first time at the federal level, nonbank financial institutions are subject to supervisory oversight that holds them accountable for how they treat consumers,"...

The Department of Veterans Affairs is studying the impact of fees and may propose alternative regulations to amend the current structure, according to agency officials. In a briefing with the National Association of Realtors, VA staff attorney Erica Lewis said the agency has begun looking at the fees VA charges in response to complaints from some lenders. During the briefing, some NAR members expressed concerns that some of the VA loan requirements, such as pest inspections, disadvantage veterans because they may dissuade sellers from accepting offers that could potentially create additional fees, which cannot be paid by the homebuyer. Lewis also suggested that real estate agents request a waiver from the VA field office nearest to the location of the property being purchased to ...

Providers of consumer financial services products, be forewarned: If the CFPB has not gotten around to regulating you yet, don’t rest too easy. It definitely plans to do so. The latest edition of the CFPB’s Supervisory Highlights report indicated larger indirect nonbank auto lenders are next on its to-do list. But if past is prologue, the odds are strong that sector won’t be the last to feel the bureau’s expanding scrutiny.As per the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has authority to supervise certain nonbanks, including mortgage companies, private student lenders, and payday lenders, as well as nonbanks the bureau defines through rulemaking as “larger participants.” To date, the agency has issued rules to supervise...

The CFPB is once again reminding regulated entities of the importance of robust compliance-management systems to help stay up-to-snuff with all of the bureau’s rules, regulations and requirements and other federal consumer financial laws. For instance, in the three nonbank markets (payday lending, debt collection and credit reporting) highlighted in the bureau’s latest Supervisory Highlights report, CFPB examiners found that “many companies had systemic flaws in their compliance-management systems, such as consistently failing to have a system in place to track and resolve consumer complaints. “The CFPB expects companies to respond to customer complaints and identify major issues and trends that may pose broader risks to their customers,” the report added. The bureau does not require a particular CMS structure...

Ginnie Mae has issued a clarification as to when issuers can buy certain loans out of the pool and redefined certain familiar terms used by government agencies in insuring or guaranteeing mortgage loans. The agency’s mortgage-backed securities guide allows issuers to purchase loans out of pools when the borrower has missed three consecutive monthly mortgage payments or is 90 days past due. However, the guide is unclear whether the issuer must wait at least three months before buying a loan out of the pool if the borrower is making at least a partial payment while the loan is in default. Ginnie Mae made clear in a May 16 memo that issuers may purchase a loan from an MBS pool even though it is seriously delinquent. For example, if the last installment payment on a mortgage loan was Dec. 1 and the borrower missed payments in ...