Last week’s launch of the RMBS Working Group’s website demonstrated that government investigators see Wall Street insiders as a valuable source of information to detect and prove fraud and other misconduct in the packaging of mortgage securities. “Fraud can be hard to uncover without help from whistleblowers who were corporate insiders,” the task force said on the website. Whistleblowers can get rewards of up to 30 percent of the government’s monetary recovery based on the specific information, as well as protection from retaliation. The inclusion of a whistleblower provision in the Dodd-Frank Act has...

The Consumer Financial Protection Bureau has proposed procedures it plans to use in exercising its supervisory and enforcement authority over how nonbank consumer financial service companies (like mortgage lenders and mortgage servicers) control their third-party vendors, such as subservicers, foreclosure trustees and law firms, and force-placed insurers. It’s all about controlling the potential risk to consumers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has authority to supervise any nonbank that it has “reasonable cause” to determine is posing a risk...

The Consumer Financial Protection Bureau wants to hear from the industry about the costs companies anticipate incurring in order to comply with a variety of rules and requirements pending at the agency. In proposing new rules for providers in the mortgage markets, the CFPB said it will consider the potential implementation and ongoing compliance activities and associated costs of the proposed rules. “Accordingly, the bureau seeks to collect qualitative information on the potential costs of complying with potential new regulations and other effects the rules may...

Complying with all the requirements of the Real Estate Settlement Procedures Act under the new Consumer Financial Protection Bureau is going to be a much different ballgame than had been the case when the Department of Housing and Urban Development was calling the shots, a leading industry attorney indicated recently. “The bottom line on RESPA enforcement [at the Consumer Financial Protection Bureau] is that there are many enforcement powers and authorities at the bureau’s disposal,” Holly Spencer Bunting, a partner in the Washington, DC, office of K&L Gates LLP, told participants...

Wall Street is trying to cope with the considerable ambiguity that officials see in emerging rules on conflicts of interest in securitization and a potentially troublesome federal program that changes how issuers arrange credit ratings for their deals. The conflict-of-interest rule was included in the Dodd-Frank Act as an attempt to prevent participants in the securitization process from structuring deals that allow them to profit at the expense of investors. “When this rule first came out, it was not bad; you could probably live with this in most cases,” said Kenneth Morrison, a...

Mortgage lending industry representatives are apprehensive about how the underlying economics of originating a mortgage are going to be affected by a proposal expected sometime this summer from the Consumer Financial Protection Bureau. Among the issues the CFPB indicated it will be considering is a requirement that consumers get a lower interest rate when they pay discount points. The bureau is also thinking about requiring lenders to offer consumers a no-discount-point loan option, as well as banning origination charges that vary with the size of the mortgage. The CFPB is also going to look...

Mortgage bankers and brokers are making a fresh push to support H.R. 4323, the Consumer Mortgage Choice Act, legislation that would change the way points and fees are calculated under the Qualified Mortgage definition in the Dodd-Frank Act. Trade groups representing these segments of the industry have made new appeals to their members recently to reach out to their respective lawmakers and garner their support for the legislation. The Consumer Mortgage Choice Act would spell out that affiliate title fees, certain loan originator compensation, and escrow payments are not included...

Three Republicans on the House Committee on Financial Services again pressed Consumer Financial Protection Bureau Director Richard Cordray for additional information regarding the agency’s budget, even though Congress does not control the bureau’s purse strings. The Republicans’ justification in pressing the issue is that the bureau’s budget affects the national debt while that of the other non-appropriated federal banking regulators do not. Noting the rising of the federal government’s budget deficit and the fact that the CFPB is funded by the Federal Reserve, the lawmakers...

Mortgage servicers could find themselves in a quandary as they implement the national servicing standards outlined in the March foreclosure settlement agreement, especially if they run into conflicting FHA requirements. Compliance experts say that while many of the settlement standards could be carried out within the FHA program without being at odds with existing FHA requirements, conflicts do exist with the guidelines that cannot be resolved. Even when it is technically possible to comply with both FHA guidelines and the settlement standards, it is still going to ...

Mortgage industry officials are urging the Consumer Financial Protection Bureau to give the industry plenty of time to implement the extensive – and inter-related – changes that are required under the Dodd-Frank Act. Two of the biggest anxieties these days are the rules on “qualified mortgages” and “qualified residential mortgages” being developed by federal regulators. Another is the CFPB project to integrate Truth in Lending Act/Real Estate Settlement Procedures Act mortgage disclosures. In addition to the fact that none of these rules have been made final, there’s a good deal of angst over how they...