Fannie Mae and Freddie Mac reported a combined $1.485 billion in net income for the third quarter of 2015, a hefty 83.1 percent decline from the previous period. While Fannie reported its 15th consecutive profitable quarter ($1.96 billion in net income), Freddie posted its first loss ($475 million) in four years. Don Layton, Freddie’s CEO, said that earnings volatility “stems from our usage of derivatives to hedge interest rate risks and accounting mismatches associated with the activity. This quarter showed a continuation of that volatility as the accounting mismatch produced a negative $1.5 billion [generally accepted accounting principles] earnings, which was enough to tip us into the comprehensive income loss of about $500 million for the quarter. “Utilizing a derivatives hedging strategy can result...

In an apparent confirmation of the fears of some industry representatives, CFPB Director Richard Cordray seemed to blame technology vendors for some of the failures the mortgage industry might have in complying with the bureau’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule. “Quite frankly, I have been disturbed by reports I have been hearing about the vendors on whom so many of you rely,” Cordray said in a speech at the Mortgage Bankers Association’s annual convention in San Diego recently. “Some vendors performed poorly in getting their work done in a timely manner, and they unfairly put many of you on the spot with changes at the last minute or even past the due date,” ...

CFPB Director Richard Cordray pooh-pooh’ed mortgage lender concerns that the Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule will hurt their business because of the need to extend closings when revisions prompt another round of disclosures. “Now, just as we heard prophets of doom bemoaning the effects of the [ability-to-repay] qualified mortgage rule before it took effect, so too we are hearing some of the same voices bemoaning the effects that the ‘Know Before You Owe’ mortgage disclosure rule will have,” the director said at the recent Mortgage Bankers Association annual convention in San Diego. “They say that by requiring closing disclosures to be provided three days in advance, the rule will delay and disrupt closings,” ...

Most (86 percent) of U.S. banks and credit union respondents in a recent survey by Wolters Kluwer Financial Services ranked the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule as the top regulatory challenge facing their organizations. When asked about complying with the complex TRID rules, 32 percent of respondents cited “collaborating with stakeholders” as their top issue, while 24 percent identified “last-minute changes that trigger closing delays” as the top anticipated challenges. Another 17 percent cited “information technology preparedness” as the top challenge, while 18 percent were still unsure about the regulation’s greatest impact on their operations. Overall, concerns about regulatory compliance and risk management challenges rose 7 percent compared to WKFS’ survey from ...

CFPB Director Richard Cordray showed no sign of backing down when it comes to the bureau’s expanded scrutiny of and skepticism toward marketing services agreements as possible violations of the Real Estate Settlement Procedures Act. Speaking at the recent Mortgage Bankers Association’s annual convention in San Diego, the director noted that his agency concluded from its enforcement experience that MSAs necessarily involve substantial legal and compliance risk for the parties to the agreements – whether they are lenders, brokers, title companies or real estate professionals. “We believe those risks are greater and less capable of being controlled by careful monitoring than mortgage industry participants may have recognized in the past,” said the director. “MSAs appear to create opportunities for parties to ...

With the brouhaha over the CFPB’s interest in the industry use of marketing services agreements growing, it is the bureau itself that is the biggest threat under the Real Estate Settlement Procedures Act, a leading industry attorney charged last week. “The threat, in a few short words, is the CFPB,” said Donald Lampe, a partner with the Morrison & Foerster law firm, during a webinar last week sponsored by Inside Mortgage Finance, an affiliated publication. “The CFPB, before our eyes, is rewriting the law, rules and previous guidance on RESPA Section 8(c)(2), which is the exception to RESPA for bona fide payments for services actually rendered – not just for MSAs, but so far, MSAs have received the most attention,” he ...

The biggest challenge that banks, credit unions and other lenders anticipate with the CFPB’s new final rule under the Home Mortgage Disclosure Act is accurate data capture, according to a new survey from Wolters Kluwer Financial Services. “Overall, concerns about the new HMDA data-collection rules generated a 67 percent rating by respondents, reflecting a degree of impact ranking of a ‘7’ or higher on a 10-point scale,” WKFS said. “When asked to rank specific HMDA challenges, 64 percent of respondents cited the task of accurately capturing the new data fields as either their first or second biggest obstacle in complying with the new rules.” System upgrades, increased staffing and other costs also are driving industry anxiety, the survey found. Upgrading ...

Last week, the CFPB filed suit in U.S. District Court for the Southern District of California against Global Financial Support, Inc., and Armond Aria, owner and CEO, to stop what the bureau characterized as a nationwide student financial aid scam. The company, which has operated as Student Financial Resource Center and College Financial Advisory, allegedly ripped off tens of thousands of students and families by illegally charging millions of dollars in fees for sham financial services. The CFPB alleges that Aria and his businesses operate under the guise of a government- or university-affiliated operation, exploiting consumer uncertainty about how to use free federal financial aid resources provided by the Department of Education. The defendants allegedly “sent millions of deceptive letters ...

The CFPB filed a $3.3 million administrative order last week against Security National Automotive Acceptance Company, a Mason, OH-based auto lender that specializes in making loans to U.S. military personnel, accusing it of engaging in illegal debt collection practices. The order requires the company to refund or credit approximately $2.28 million to service members and other consumers who were allegedly harmed, and to pay a $1 million penalty. When the CFPB sued SNAAC in June, it alleged the company used aggressive collection tactics that took advantage of U.S. service members’ special obligations to remain current on debts. “Once service members defaulted, they became subject to repeated threats to contact their chain of command,” said the CFPB. “In many other instances, ...

Five months after Corinthian Colleges went belly up, the CFPB succeeded in convincing a federal court to enter a final default judgement against the company, bringing to an end the litigation the bureau filed back in September 2014. The bureau accused Corinthian of luring tens of thousands of students into taking out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. “Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school,” the CFPB stated. In its final judgment, the court ordered that Corinthian was liable for more than $530 million and prohibited the company from engaging in future misconduct. However, since the company’s assets are ...