Last week’s $9 million settlement between wholesale lender Provident Funding and the Consumer Financial Protection Bureau and the Department of Justice to resolve allegations of excessive discriminatory fees on the part of independent mortgage brokers, has some key takeaways for the rest of the mortgage industry, top compliance attorneys say. “The first is that it obviously signals that mortgage lending is still on the radar at these agencies,” even though their attention has evolved into other types of lending products, “and they are still concerned with wholesale mortgage pricing,” said Melanie Brody, partner and co-lead of the fair lending practice at the K&L Gates law firm in Washington, DC. She also noted...

Democrats in the Senate and the House this week re-introduced a regulatory relief bill that 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 mortgage loans per year could make loans that exceed the 43 percent debt-to-income ratio under the QM standard and still receive the QM safe harbor so long as the loan is held in portfolio, according to a summary of the draft. Depository institutions with less than $10 billion in assets would get...

The CFPB and the Florida Attorney General’s office were granted a $27.7 million final judgment on Friday against the Hoffman Law Group and corporate affiliates, which allegedly used deceptive marketing practices and scammed distressed homeowners into paying illegal advance fees. The lawsuit named Hoffman Law Group (formerly Residential Litigation Group), its operators, Michael Harper, Benn Willcox and attorney Marc Hoffman, and its affiliated companies, Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions, and BM Marketing Group, all based in North Palm Beach, FL. The two government agencies accused the companies of tricking consumers into paying millions of dollars in illegal upfront fees to join frivolous lawsuits that the companies falsely claimed would pressure banks to modify their loans or ...

Provident Funding, one of the largest wholesale mortgage lenders in the nation, has agreed to pay $9 million in damages for funding loans with higher broker fees on mortgages made to African Americans and Hispanics over a five-year period ending in 2011. According to a statement and notice of charges put out late last week by the CFPB, the privately held lender charged roughly 14,000 minorities higher “total broker fees” than white borrowers. The $9 million will feed a settlement fund that will pay minorities harmed by the practice. “The higher fees were not based on the borrowers’ creditworthiness or other objective criteria related to borrower risk or loan characteristics, but on their race or national origin,” the CFPB said...

More than 250 members of the House of Representatives have signed onto a letter to Consumer Financial Protection Bureau Director Richard Cordray, urging he institute a “grace period” of enforcement with the bureau’s pending integrated disclosure rule that takes effect Aug. 1, 2015. The lawmakers have joined the mortgage lending industry in calling for an ease on tight enforcement of the TILA/RESPA Integrated Disclosure (TRID) rule from the Aug. 1 effective date through the end of the year. “[T]his complicated and extensive rule is likely to cause challenges during implementation, which is currently scheduled for Aug. 1, 2015, that could negatively impact consumers,” said the lawmakers. “As you know, the housing market is highly seasonal, with August, September and October ...

Yet another industry concern about the CFPB’s pending TILA/RESPA Integrated Disclosure (TRID) rule has emerged. Technology vendor eLynx, based in Cincinnati, has determined that many lenders will be relying at least in part on manually entered data to create the CFPB-mandated Closing Disclosure (CD) after the Aug. 1, 2015, implementation of the new rule. According to the vendor, lenders are concerned that manual data re-entry will be a major cause of disclosure mistakes when the agency’s TRID rule takes effect. eLynx conducted a survey of the hundreds of lenders and settlement professionals currently using its services. “The results are alarming,” the company said. “Only 6 percent have a fully automated process for collecting property-related data from settlement service providers (SSPs).” ...

The latest wave in the tsunami of rulemakings from the CFPB is the pending integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. And just the timing aspects related to providing the consumer the loan estimate and the closing disclosure could cause havoc, a top industry attorney warned recently. According to Phillip Schulman, a partner in the Washington, DC, office of the K&L Gates law firm, the biggest problem with the TILA/RESPA Integrated Disclosure (TRID) rule has to do with the timing requirements. “You have to give the loan estimate to the borrower within three business days of receiving the application, and no sooner than seven days before consummation or closing of the ...

The pending TILA/RESPA Integrated Disclosure (TRID) rule from the CFPB is going to raise the risk of losses for investors in U.S. residential mortgage-backed securities, according to a new report from Moody’s Investors Service. Currently, as Moody’s points out, RMBS trusts are liable for lender errors in calculating the finance charge, the annual percentage rate (APR) and certain other disclosures required by the Truth in Lending Act. However, they are not liable for errors on itemized settlement charges and other disclosures required by the Real Estate Settlement Procedures Act. Further, under the current regime, TILA and RESPA each require lenders to deliver both an initial and a final disclosure to consumers. “Whether an assignee can be liable for lender errors ...

A number of industry groups representing a broad array of financial services providers took advantage of the CFPB’s latest inquiry about consumer complaint information to express their concerns with the bureau’s possible expansions of its related database. Earlier this year, the bureau issued a formal request for information about the Consumer Complaint Database, asking for “input from the public on the potential collection and sharing of consumer compliments about providers of consumer financial products and services and more information about a company’s complaint handling.” The bureau specifically asked for input on two key points, the first of which was ranking or otherwise sorting service providers by certain metrics related to the complaints they receive, allowing complainants to rate service providers’ ...

Consumer complaints about credit reporting pretty much remained flat in the first quarter of 2015 from the fourth quarter of 2014 – up a scant 0.5 percent during that period – but dropped 11.0 percent overall from year-ago levels, a notable decline. An analysis of the CFPB’s consumer complaint database by Inside the CFPB found that each of the big three credit reporting firms – Experian, Equifax and TransUnion – saw declines year over year. Experian turned in the best performance of the three, however, seeing a drop of 18.4 percent. TransUnion was the only one of the big three to see a decline in both periods.Among specific complaints, “incorrect information” continues to represent the lion’s share of negative consumer feedback ... [with exclusive data chart]