CFPB Firmly in CHOICE Act’s Crosshairs. Since Inside the CFPB went to press last, House Financial Services Committee Chairman Jeb Hensarling, R-TX, released more details about the Republican alternative to replace the Dodd-Frank Act. Dubbed the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act, the bill not only includes provisions to provide a qualified-mortgage safe harbor for any mortgage that has been held in portfolio by a depository institution since origination, but also a host of provisions targeting the structure of the CFPB itself. For instance, the bill could change the name of the CFPB to the “Consumer Financial Opportunity Commission (CFOC),” and task it with the dual mission of consumer protection and competitive markets, with ...

The Securities and Exchange Commission will re-propose a rule addressing conflicts of interest regarding certain securitizations, according to SEC Chair Mary Jo White. The rule required by the Dodd-Frank Act was originally proposed by the SEC in 2011. “It’s proved to be much more complicated than our experts in the agency envisioned,” White said last week at a hearing by the Senate Committee on Banking, Housing and Urban Affairs. Section 621 of the DFA requires...

Subservicing vendors continued to increase their contract totals in the first quarter as owners of mortgage servicing rights moved more of their business to these specialists to counter regulatory burdens that show few signs of abating. According to exclusive survey figures compiled by Inside Mortgage Finance, $1.625 trillion of home mortgages were being handled by subservicers at March 31, a 5.5 percent sequential increase and a 19.5 percent gain year-over-year. Subservicing firms – a business mostly dominated by nonbanks with one key exception – now process...[Includes one data table]

With time ticking toward a Dec. 24 compliance date, issuers of commercial MBS continue to try to develop structures that will meet risk-retention requirements. Richard Jones, a partner at the Dechert law firm, warned that the industry is “in trouble.” In an analysis published this month, he wrote, “We as an industry don’t have a scalable solution to the problem. We … do not know what this will cost, who will pay for it, and to what extent this is an existential risk to commercial real estate capital formation as it has been conducted for the past 25 years.” He noted...

A proposed rule issued by the Federal Reserve in March could increase costs and reduce securitization activities, according to industry participants. The Fed’s proposed single-counterparty credit limits for large banking organizations were required by the Dodd-Frank Act. The Fed proposed single-counterparty credit limits for domestic and foreign bank holding companies with $50.0 billion or more in total consolidated assets. The Fed first issued...

FHA lenders will face stiffer maximum monetary penalties later this year for various violations of agency rules and regulations. The higher monetary penalties are the result of legislation signed into law late last year requiring federal agencies to adjust the current maximum penalty amounts for inflation in order to maintain their deterrent effect. Specifically, the Federal Civil Penalties Inflation Adjustment Act of 2015 (2015 Act) requires federal agencies to adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule and subsequent annual adjustments for inflation. The interim final rules with the initial penalty adjustments must be published by July 1, 2016. The new penalty levels must take effect no later than Aug. 1, 2016. Additionally, agencies are required to make annual inflation adjustments, starting Jan. 15, 2017, and for each year going forward. The adjustments will ...

FHA Revises TOTAL Mortgage Scorecard. Effective on June 11, 2016, the FHA’s TOTAL Mortgage Scorecard no longer returns either upfront or annual mortgage insurance premium factors to an automated underwriting system. The FHA directs lenders to consult Appendix I of its Single Family Housing Policy handbook for applicable MIP factors. AUS vendors have been notified of the change and have adjusted their systems accordingly. HUD, First Citizens Bank Settle Fair Lending Complaint. A South Carolina bank has agreed to correct its lending practices and allocate funding to resolve allegations that it denied more loans to minorities compared to similarly-situated white loan applicants. The settlement agreement stemmed from a complaint filed by the Department of Housing and Urban Development against First Citizens Bank and Trust Co. in 2011 after an analysis of ...

Mortgage lenders soon will be facing higher civil monetary penalties that may be imposed by federal agencies for violations of various lending, servicing and consumer financial protection laws and regulations, warned industry attorneys. As part of the budget bill signed into law last year, the Federal Civil Penalties Inflation Adjustment Act (FCPIAA) requires federal agencies to adjust the civil penalty amounts they charge for inflation by July 1, 2016. This will be followed be regular adjustments by January 15 of every year. The adjustments must be...

Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, rolled out some of the details of a Republican proposal to replace the Dodd-Frank Act, the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act. The proposal includes the text of a measure already passed by the House, which would provide a QM safe harbor for any mortgage that has been held in portfolio by a depository institution since origination.

The CFPB filed suit against Intercept Corp., a third-party payment processor located in Fargo, ND, and two of its executives for allegedly enabling unauthorized and other illegal withdrawals from consumer accounts by their clients. The CFPB alleges that Intercept and the executives violated the Dodd-Frank Act’s prohibition against unfair acts and practices by processing payments for clients without adequately investigating, monitoring or responding to red flags that indicated some clients were breaking the law or deceiving customers.