The CFPB, the Department of Education, and the Department of the Treasury late last week issued a joint statement of principles “to improve student loan servicing practices, promote borrower success and minimize defaults.” The agencies said they are committed to working together so that all student loan borrowers have access to the information they need to repay their loans responsibly and avoid default, and to protections so that they will be treated fairly even if they are struggling to repay their loans.They also want student loan borrowers to have access to certain mechanisms so that “errors are resolved expeditiously, and assurances that student loan servicers, both in the marketplace and through federally-contracted companies, are held accountable for their conduct.” ...

Industry Anxiety at a Fever Pitch? Or Just Good Public Relations? The new TRID rule, which became active on Saturday, may only be the tip of the regulatory iceberg, according to sister publication IMFnews. Several lenders interviewed readily admitted that the new TILA/RESPA disclosures are definitely easier to understand. That’s the good news. “The bad news is that they feel the CFPB continues to miss their central message: that incorporating technology changes to their systems to make TRID happen on time has been an operational nightmare, and they feel that Director Richard Cordray has been hardly sympathetic to their plight,” the publication reported late last week. Although the TRID headache may be eased (for now) thanks to a letter that ...

Was Industry “Foaming at Mouth” Over ATR Liability Much Ado About Nothing? “All this foaming at the mouth about legal liability [on qualified mortgage standards] did not pan out. It was an over-reaction,” CFPB Director Richard Cordray said last week. During a hearing held by the House Financial Services Committee, the director noted that he recently met with the CEOs of the top 40 mortgage companies as part of an event hosted by the Mortgage Bankers Association. Cordray said the CEOs revealed that none of these lenders have faced lawsuits alleging violations of standards for qualified mortgages. One industry veteran later said that Cordray took “the disingenuous position that since no lawsuits have been filed, all the concerns about legal ...

Consumer Complaints Tick Slightly Upward From Year-Ago Levels. A small 3.9 percent drop in overall consumer complaints to the CFPB during the third quarter helped keep a lid on rising complaints at the nine-month mark versus a year ago, according to an analysis by Inside the CFPB. (See chart on previous page.) The data show a modest 4.3 percent uptick in consumer criticisms at the end of September 2015 compared with the same nine-month period in 2014. The biggest drops were seen in the payday lending space (down 18.7 percent quarter to quarter and 7.1 percent year over year) and in the residential mortgage space (down 10.9 percent and 7.5 percent, respectively)....

Add loan-originator compensation rules to the list of things hindering the origination of loans that fall outside the qualified-mortgage standard. Bob Magee, chief investment officer at Shellpoint Partners, said many loan officers and brokers are reluctant to work on non-QMs because the loans take more time to originate, often get rejected and yet tend to offer the same compensation as an agency mortgage. “If I have loan officers who are paid on a commission for ...

A quirk in the way the Consumer Financial Protection Bureau drafted standards for qualified mortgages has put non-agency lenders at a disadvantage, according to a former CFPB official that was heavily involved in drafting the ability-to-repay rule. At the recent ABS East conference, Peter Carroll, an executive vice president at Quicken Loans, reiterated calls for the CFPB to make adjustments to Appendix Q of the ATR rule. Appendix Q details documentation requirements ...

The majority of higher-priced first-lien loans in 2014 were FHA-insured, according to the latest Home Mortgage Disclosure Act data. Approximately 45 percent of FHA-insured, first-lien purchase mortgages had annual percentage rates in excess of the reporting threshold, similar to the percentage in the latter half of 2013, the Federal Financial Institutions Examination Council noted. Higher-priced loans are those with APRs that exceed the average prime offer rate by at least 1.5 percentage points for first-lien loans and at least 3.5 percentage points for subordinate-lien loans. The data on the incidence of higher-priced lending show that about 8 percent of first-lien purchase loans originated in 2014 have APRs that exceed the loan-price reporting thresholds, up from about 5 percent in 2013, the FFIEC said. The higher APRs for FHA loans were due to a slight increase in ... [ 1 chart ]

Loan origination data for 2014 that were released last week by federal regulators show that the conventional mortgage market was considerably bigger than previously estimated – and that production levels this year are rising. Home Mortgage Disclosure Act data show that lenders covered by the law’s reporting requirements originated $969 billion of conventional purchase and refinance loans last year. About $232 billion of that amount came in loans exceeding the county-level conforming loan limits in effect for Fannie Mae and Freddie Mac last year. The remainder, $737 billion, represents...[Includes two data tables]

The Consumer Financial Protection Bureau has yet to clarify what it doesn’t like about “marketing service agreements” between originators and Realtors, and the less the agency talks about the topic – publicly, at least – the more lenders fear that eventually the regulator will try to eliminate such agreements altogether. To date, at least two lenders – Wells Fargo and Prospect Mortgage – have announced they are ending their MSAs, but sources indicate that several firms have undergone CFPB audits (or soon will) with a special emphasis on how they manage business referrals with realty companies and how much money changes hands. Inside Mortgage Finance has learned...

It looks like the mortgage industry is on the verge of obtaining another concession from the Consumer Financial Protection Bureau regarding enforcement of its pending integrated disclosure rule. The rule will streamline the consumer disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act. This TILA/RESPA Integrated Disclosure rule is slated to take effect Oct. 3, 2015, and will create a new regulatory regime – and perhaps a good bit of havoc in the process, at least in the short term. The anxiety over the confusion and expected delays has prompted...