It’s Time to Scale Back Dodd-Frank, Industry Says. With a new Republican majority now in power and calling the shots on Capitol Hill, the industry consultants at The Collingwood Group recently asked mortgage industry officials what they thought the new Congress could do to bolster the housing market. Their answer? Rein in Dodd-Frank. “Although just fewer than 50 percent of respondents selected ‘repeal Dodd-Frank’ or ‘abolish the CFPB,’ the comments submitted clearly indicate that these industry insiders prefer a tempered approach with reasonable modifications to these two reactionary reform measures stemming from the crisis,” Collingwood said. “Many respondents stated that the Dodd-Frank Act should be revised to remove barriers to innovation and to reduce the cost of manufacturing a mortgage.” ...

The mortgage industry isn’t achieving any more success than lawmakers on Capitol Hill in convincing the Consumer Financial Protection Bureau to take it easy on lenders when it’s time to start enforcing its integrated disclosure rule. Speaking at the American Bankers Association’s government relations event in Washington, DC, earlier this week, Virginia O’Neill, head of regulatory compliance for the trade group, recounted for attendees the experience of one community bank ...

The CFPB’s ability-to-repay rule will likely be revised if Congress fails to enact legislation to reform the government-sponsored enterprises by the time the rule’s Fannie Mae/Freddie Mac “patch” expires in six years. Appearing before the House Financial Services Committee last week, CFPB Director Richard Cordray and committee chairman Jeb Hensarling, R-TX, went back and forth over the accuracy of a study the Federal Reserve did a few years ago about the potential impact the ATR rule could have on the market, specifically in terms of limiting borrower access to credit. Cordray said he disagreed with the findings of the report, asserting that the Fed’s study was based on provisions that were substantially different than what were ultimately adopted. Hensarling then ...

The head of the Consumer Financial Protection Bureau held his ground this week against pressure from Republican and Democrat lawmakers to take it easy on mortgage lenders in enforcing the bureau’s integrated disclosure rule. During a hearing before the House Financial Services Committee, Reps. Randy Neugebauer, R-TX, and Brad Sherman, D-CA, pressed CFPB Director Richard Cordray to consider a 60-day enforcement delay or a “soft enforcement” period when the new mortgage disclosures take effect Aug. 1. The new rule creates an integrated disclosure framework under the Truth in Lending Act and Real Estate Settlement Procedures Act, commonly known as TRID. Cordray did not come right out...

As Republican leaders in Congress stake out hard-line positions on structural changes to the Consumer Financial Protection Bureau, Democrats are responding by digging in their heels, raising the prospects of more gridlock. Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee, recently stated his desire to pull the CFPB within the orbit of the congressional appropriations process. He is also interested in changing the leadership structure of the bureau from a single director to a governing board. Ranking Member Jeff Merkley, D-OR, and other Democrats are opposed...

Rep. Waters Wants Clarity on Corinthian Student Loan Refunds. House Financial Services Committee Ranking Member Maxine Waters, D-CA, wants more clarity about the recent agreement to provide $480 million in financial relief to students wrestling with predatory loans from now-defunct Corinthian Colleges. In letters to CFPB Director Richard Cordray and David Hawn, president and CEO of Education Credit Management Group, the company that acquired a majority of the college’s campuses, Waters said, “[A]s you both well know, the student loan servicing industry, much like the mortgage servicing industry, has often worked as a disservice to its customers. “Furthermore, students who are to receive private debt relief were intentionally misled when the debt was incurred, and there is undoubtedly confusion among ...

FHA lenders should spend the next couple of months familiarizing their staff with the requirements in the FHA’s new Single Family Housing Policy Handbook to ensure proper implementation of the changes on June 15, 2015, according to compliance experts. The impending changes in the Single Family Handbook are complex and significant. Lenders will need proper legal guidance to navigate and understand hundreds of pages of consolidated housing policies and guidance, as well as substantive changes to FHA requirements, said K&L Gates experts in a recent analysis. The handbook is a consolidated, authoritative source of single-family housing policy and is meant as a one-stop resource for FHA lenders. It gathers and streamlines all FHA requirements, which are currently spread throughout various handbooks, mortgagee letters and other documents, making it easier for lenders to ...

The Consumer Financial Protection Bureau recently sued a reverse mortgage lender and issued consent decrees against two other mortgage companies for misleading consumers with false advertising about FHA-insured mortgage products. The CFPB filed suit against All Financial Services (AFS), a Maryland-based reverse mortgage lender, in the federal district court in Baltimore alleging that the lender disseminated misleading ads for Home Equity Conversion Mortgage loans between November 2011 and December 2012. In addition, AFS allegedly failed to maintain copies of the ads as required by the CFPB under its reverse mortgage regulations. According to court filings, the CFPB alleges that the lender/broker mailed out ads using materials and language that seemed to indicate that it was a federal entity or an affiliate of a government entity. All AFS ads appeared as if they were ...

The Department of Veterans Affairs expects to have a finalized Qualified Mortgage (QM) rule by May to help clear up some issues that have arisen since the agency issued an interim final rule last spring. The VA issued the interim QM rule for comment on May 9, 2014, to define which VA loans will have QM status under the ability-to-repay (ATR) rule. Issued by the Consumer Financial Protection Bureau, the ATR rule provided temporary QM status to loans eligible for FHA insurance and guaranties by the VA and the Department of Agriculture’s Rural Housing Service. Eligible government-backed loans must be 30-year fixed-rate with no interest-only, negative amortization or balloon features. Total points and fees must not exceed 3 percent of the total loan amount for loans of $100,000 or more. Loans that meet the definition of a temporary VA-eligible QM are considered as in compliance with the ATR rule. They are designated as “safe harbor QMs,” provided they are not ...

A letter addressed to the Consumer Financial Protection Bureau regarding a “definitional error” in the drafting of the qualified mortgage provisions in the Dodd-Frank Act that was supposedly penned by Sen. Tim Johnson, D-SD, has turned out to be a fake. According to an email from Drey Samuelson, who served as the former senator’s chief of staff until his recent retirement, “the letter in question was not authorized nor sent by Sen. Johnson, and he has communicated that fact to director [Richard] Cordray.” A CFPB staffer confirmed...