The CFPB took an ominous administrative action against PHH Corp. earlier this month over its captive reinsurance activities. Industry critics cried foul and warned of a potentially ominous legal precedent that threatens long-standing legal interpretations that have shaped the mortgage lending landscape for years.“The CFPB is trying to rewrite the Real Estate Settlement Procedures Act retroactively. It is stunning,” said one long-time industry lobbyist. “If the CFPB can illegally rewrite RESPA, they can attempt to rewrite TILA and other laws they choose.” The crux of the dispute is the bureau’s assertion that PHH violated RESPA by illegally referring borrowers to mortgage insurance companies in exchange for kickbacks.Back in January 2014, the CFPB initiated an administrative proceeding against PHH ...

RPM Mortgage of Alamo, CA, recently agreed to pay the CFPB $19 million to settle allegations that it incentivized loan officers to steer borrowers into higher cost mortgages by “illegally” paying bonuses to them. Overall, RPM wound up paying “millions of dollars” in such bonuses, the CFPB said. (In 2011, the bureau banned such incentive payments under its loan originator compensation rule.) According to a civil complaint filed in Federal District Court for the Northern District of California, the privately held nonbank allowed LOs to use expense accounts to pay for pricing incentives to close the loans. “From April 2011 through December 2013, RPM allowed loan originators to use their expense accounts to finance thousands of pricing concessions that enabled ...

The CFPB earlier this month ordered Guarantee Mortgage Corp., an independently owned mortgage-brokerage firm and mortgage banker headquartered in San Rafael, CA, to pay a civil money penalty of $228,000 for allegedly violating the agency’s loan originator compensation rule. According to the notice of charges, the nonbank – which is in the process of liquidating – paid its LOs, in part, based on the interest rate of the loans they were bringing in. The payments took place between April 2011 and August 2012, the bureau said. The consumer regulator said the “compensation was funded by payments Guarantee made to marketing services entities owned in part by the company’s branch managers and other Guarantee loan originators.” During the relevant period, Guarantee Mortgage paid ...

Nearly a score of industry trade groups sent a letter last week to the leadership of the House Financial Services Committee, urging them to pass legislation to provide a reasonable hold-harmless period for enforcement of the CFPB’s TILA-RESPA Integrated Disclosures (TRID) regulation for lenders trying to do their best to comply. “We appreciate that the bureau indicated it will be sensitive to the progress made by those entities that make good-faith efforts to comply,” the 19 groups said in a letter to Committee Chairman Jeb Hensarling, R-TX, and Ranking Member Maxine Waters, D-CA. “At the same time, the industry needs more certainty that their good-faith efforts to comply while still meeting consumers’ expectations do not expose lenders and settlement service ...

With the effective date of the CFPB’s TILA/RESPA Integrated Disclosures rule just weeks away, lender representatives continue appealing to Congress for formal enforcement relief, while vendors are scrambling to finish their work products and deliver them to clients in time for testing. But TRID may not be as bad as everyone seems to fear. “In conversation with industry participants, the actual impact of these rules is a key debatable point, with consensus believing that the rules may have a temporary drag on origination volumes in the second half of 2015,” said analysts at FBR Capital. But it will not be as drastic as the impact the qualified-mortgage rule had on origination volumes in the second half of 2014, they said. ...

Democratic leadership in the Senate and the House have introduced the Community Lender Regulatory Relief and Consumer Protection Act of 2015 as an alternative to the GOP-sponsored regulatory relief bill approved by the Senate Banking, Housing and Urban Affairs Committee. Most of the provisions in the Democrat legislation were proposed as amendments to the Senate bill and rejected by the Republican majority. The Democrat bill would grant qualified-mortgage status for loans held in portfolio, but only for smaller financial institutions. Banks and credit unions with less than $2 billion in consolidated assets which originate fewer than 2,000 mortgages per year could make loans that exceed the 43 percent debt-to-income ratio under the QM standard and still receive safe harbor status ...

The CFPB last week promulgated its long-awaited final rule allowing it to supervise larger nonbank auto-finance companies for the first time. Currently, the bureau supervises auto financing at the largest banks and credit unions. The new rule extends that supervision to any nonbank auto-finance company that makes, acquires or refinances 10,000 or more loans or leases in a year. Under the rule, those companies will be considered “larger participants,” and the bureau may oversee their activity to ensure they are complying with federal consumer financial laws. Those laws include the Equal Credit Opportunity Act, the Truth in Lending Act, the Consumer Leasing Act, and the Dodd-Frank Act’s prohibition on unfair, deceptive or abusive acts or practices. The new rule is ...

Industry Groups Urge Restructuring of CFPB. Wading into risky political territory, a number of industry groups last week urged Congress to support H.R. 1266, legislation that would revamp the governing structure of the CFPB. Submitting a statement for the record to the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, the industry groups said consumers and the industry would be better served by changing the CFPB governance structure from a single director to a bipartisan five-person commission as used by other federal agencies. “The CFPB has tremendous authority to supervise a multi-trillion dollar industry, which as we have learned, can have incredible ramifications on our economy,” the statement said. “As such, it is imperative the CFPB remain stable ...

The average bid on the benchmark Fannie Mae 30-year 3.50 percent MBS fell to 102.2 this week compared to 104.5 earlier in the month, leaving some market watchers feeling sick to their stomachs. The general fear is that MBS prices may fall further over the short term as interest rates rise. The question for many boils down to the basics: Where will mortgages settle? As Inside MBS & ABS went to press this week, the yield on the 10-year Treasury reached...

There is good news for investors in private student-loan ABS these days, according to the latest market intelligence from industry analysts. Student loan performance was healthy in the first quarter, and more growth is expected going forward. Continued strong performance trends were seen in repayment, delinquencies and charge-offs for private student loans through March 31, 2015, according to the semi-annual private student-loan performance report from MeasureOne, which was released earlier this week. Among the key findings, year-over-year delinquencies continued...