A large-scale refinance program proposed by Sen. Jeff Merkley, D-OR, would rely on a “risk transfer fee” for lenders and require participating lenders to consider all potential borrowers for the program. The “Rebuilding American Homeownership” program has support from the Obama administration, though analysts suggest approval from Congress is unlikely. Merkley recently proposed the RAH program to help “virtually all” non-delinquent borrowers with negative equity to refinance into a mortgage with a lower interest rate. The program could be based on a one-time federally-backed structure, similar to the Home Owners’ Loan Corp. established by the federal government during the Great Depression. The RAH trust would sell...

One of the many concerns mortgage lenders have with the powerful and still largely untested Consumer Financial Protection Bureau is the expanded standard of “unfair, deceptive and abusive acts and practices” created by the Dodd-Frank Act – and how the CFPB is going to enforce it. Unfortunately, they’re more likely to learn about it on the fly during the examination process than they are in advance through careful, formal rulemaking or supervisory guidance, according to one of the presenters during an Inside Mortgage Finance webinar last week on the CFPB’s regulatory and supervisory landscape. “What I think you’re seeing develop here is examination beyond regulation, and the CFPB’s examination authority and supervision authority goes beyond...

Consumer Financial Protection Bureau Director Richard Cordray this week sought to allay the concerns of some members of Congress that small businesses in the mortgage industry and other sectors are about to be overwhelmed by regulatory overload. One of the main issues in this regard being considered by the House Small Business Committee is the CFPB’s recent proposal to integrate and simplify the consumer disclosures mandated by the Truth in Lending Act and the Real Estate Settlement Procedures Act. “Our committee is interested in how the regulations will affect...

California’s San Bernardino County Board of Supervisors has yet to decide if it wants to go ahead with a controversial proposal to seize performing underwater non-agency mortgages via eminent domain, repackage them and sell them to new investors. But just the fact they’re considering it has compelled some secondary mortgage market representatives to call in the big guns of the federal government to squash the notion. Late last week, Securities Industry and Financial Markets Association President and CEO Tim Ryan wrote to Treasury Secretary Tim Geithner, Federal Reserve Chairman Ben Bernanke, and Department of Housing and Urban Development Secretary Shaun Donovan to raise his membership’s concerns about the proposal and called on them to oppose it. “We believe that efforts by municipalities to employ the power of eminent domain to seize mortgage loans are...

Compliance management, consumer complaints, fair lending and unfair, deceptive business practices will receive the most scrutiny during supervisory exams of large banks and nonbank financial institutions, according to the Consumer Financial Protection Bureau. Lenders should reevaluate their current policies and procedures for consumer protection even before they are selected for a comprehensive audit by the CFPB, suggested Allison Brown, program manager for mortgage supervision within the bureau’s Office of Nonbank Supervision. Penalties for noncompliance are unclear but noncompliant institutions will be required...

The semiannual regulatory agenda released last week by the Consumer Financial Protection Bureau indicates the regulators have a very full plate and a tight January 2013 deadline. That means mortgage lenders will be just as busy trying to figure out what the new rules mean and how to comply with them. The most recent high-profile mortgage-related projects at the bureau include a detailed proposed rule to harmonize and streamline the mortgage disclosures that homebuyers must be given under the Real Estate Settlement Procedures Act and the Truth in Lending Act. In draft form, this one proposal ran more than 1,000 pages in length and has already raised industry hackles. Comments on the rule are due Nov. 6, 2012. The bureau also released...

The Treasury Department announced harsh penalties this month for fraudulent activity uncovered in the Home Affordable Modification Program. In an unprecedented move for HAMP, the Treasury said that in certain circumstances it will recapture servicer, borrower or investor incentives previously paid. The Treasury said it hired a contractor to look for borrower fraud regarding identity, occupancy requirements, and certain criminal activity that the Dodd-Frank Act determined would make a borrower ineligible for HAMP. If the servicer cannot clear the borrower of the potential HAMP violation, the borrower’s HAMP mod will be rescinded along with any associated incentive payments. Beginning in October, the contractor will review...

In the proposed rule the Consumer Financial Protection Bureau released two weeks ago addressing various issues associated with high-cost mortgages, the bureau revealed the most detail yet regarding a National Mortgage Database that’s been in development for the past two years. A 2010 report by the Government Accountability Office indicated officials from the Federal Reserve and representatives of Freddie Mac were working on such a database on a pilot basis. “The officials are exploring the feasibility...

The regulatory workload required of the Consumer Financial Protection Bureau and other federal banking regulators is moving forward sporadically, with a number of proposals yet to be released before the January 2013 deadline imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The industry concern is that regulators will find themselves forced into a massive document dump at the end of the year, with mortgage lenders then having to scramble in dozens of directions at the same time in an attempt...

The Federal Reserve is pondering the potential of another round of MBS purchases if Fed officials collectively decide that more bond buying is required to spur growth, but industry observers say that the central bank’s repeat of such a course of action will have a marginally helpful effect at best. The Fed has been sending out signals that it is considering taking further action to encourage the sputtering recovery, including Chairman Ben Bernanke’s testimony before both chambers of Congress this week in which he said the central bank is “prepared to take further action as appropriate,” although he wouldn’t commit to a specific action. “There are a range of possibilities. A logical range includes...