A number of mortgage trade groups this week called upon the Consumer Financial Protection Bureau to extend its current “diagnostic” approach to enforcing the agency’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule. The groups were responding to the CFPB’s request for public comments on its proposed TRID clarifying rulemaking, which was issued at the end of July. It’s...

Last week’s closely-watched appeals court ruling in the wrangling between PHH Mortgage and the Consumer Financial Protection Bureau over Section 8 of the Real Estate Settlement Procedures Act is being widely viewed by many as a clipping of the agency’s wings. But expectations about just how restrained the CFPB will be in enforcement actions going forward vary from compliance attorney to compliance attorney. Lawyers with the Stinson Leonard Street law firm pointed out that the director still holds all of the same enforcement power as before, despite the court’s conclusion that the bureau’s leadership structure, with a sole, independent director who can only be removed for cause, is unconstitutional. “For example, the CFPB administrative appeals process is...

A federal court ruling that the Consumer Financial Protection Bureau’s structure is unconstitutional raises questions that similarly-structured agencies such as the Federal Housing Finance Agency could also be challenged. A DC Circuit Court judge in the PHH Corp. v. Consumer Financial Protection Bureau case ruled that the CFPB’s single-director structure was not constitutional because it lacked a multi-member board of directors and its sole director cannot be fired without cause. In court, lawyers from the CFPB called...

The CFPB took a whipping last week in the long-awaited court ruling in its dispute with PHH Mortgage – so much so, in fact, that not only are its future enforcement actions likely to be curtailed, but even past actions might be challenged by the affected industry participants. “The ramifications of this case go far beyond restricting the CFPB’s reach, clarifying the interpretation of the Real Estate Settlement Procedures Act, and resolving the question of how statutes of limitation apply to the CFPB’s enforcement actions,” said Craig Nazzaro, of counsel with the Baker Donelson law firm in Atlanta, in a review of the case. As he sees it, this case makes clear that the bureau has exceeded its bounds and that ...

Last week, the U.S. Court of Appeals for the District of Columbia Circuit brought the powerful CFPB down to earth in its legal wrangling with PHH Mortgage, ruling that two aspects of the bureau’s structure – the dismissal of the director of the agency only for cause, and the single directorship as opposed to a multi-member bipartisan commission – were unconstitutional. “As an independent agency with just a single director, the CFPB represents a sharp break from historical practice, lacks the critical internal check on arbitrary decision-making, and poses a far greater threat to individual liberty than does a multi-member independent agency,” wrote Circuit Judge Brett Kavanaugh on behalf of the court. “All of that raises grave constitutional doubts about the CFPB’s ...

PHH Mortgage – and the rest of the mortgage industry, for that matter – came out with a clear and decisive win against the CFPB last week when the U.S. Court of Appeals for the District of Columbia Circuit vacated the $109 million disgorgement order imposed on the lender by the director of the bureau, Richard Cordray. PHH argued that the CFPB incorrectly interpreted RESPA Section 8 to bar so-called captive reinsurance arrangements involving mortgage lenders such as PHH, their affiliated reinsurers and private mortgage insurers. The lender also asserted that, in any event, the CFPB departed from the consistent prior interpretations issued by the Department of Housing and Urban Development, and that the bureau then retroactively applied its new interpretation of ...

With the public comment period about to close on the CFPB’s TRID clarifying proposed rule, a few industry voices of support have emerged among the comment letters submitted so far by rank-and-file industry representatives. For instance, Debbie Ingle, executive director of mortgage and real estate lending for Alaska USA Federal Credit Union, commended the bureau for issuing the proposed amendments to clarify the federal mortgage disclosure requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act. “The proposed amendments are beneficial and will provide mortgage lenders with clarification and improved guidance,” said Ingle. “The amendments serve as a good first step to help mortgage lenders resolve the complex implications of the TILA/RESPA Integrated Disclosure Rule (TRID) ...

Earlier this month, the CFPB’s controversial TILA/RESPA Integrated Disclosure rule – TRID – turned one year old. In an email exchange with Inside the CFPB, former bureau official and TRID architect Richard Horn, who now heads his own law firm in Washington, DC, addressed the progress the industry has made in adopting the rule, and the challenges that remain. Horn began by saying he thinks the industry has generally done a great job with the extremely difficult task of implementing TRID. Also, “I am very pleased that some of the recent industry surveys of consumers after TRID have shown that consumers are experiencing the intended benefits,” he said. “There are challenges still, but it’s a good sign that the CFPB issued the ...

One year into the TRID rule, the mortgage industry has gotten used to the new disclosure landscape. But until consistent legal precedents are established by the courts, true certainty will be elusive, and that likely means years will have to transpire before the rule’s full impact will be known. “I think the industry as a whole has met the challenge and settled into the TRID process, which everyone knows was radically different than what it replaced,” said Donald Lampe, a partner in the financial services group in the Washington, DC, office of the Morrison & Foerster law firm. “And so I see the industry settling in to the use of these new forms and the changes that these disclosures imposed ...

Now that mortgage lenders have had a year to digest the CFPB’s controversial TILA/RESPA Integrated Disclosure Rule, smaller financial institutions have learned to cope to a certain degree, but there are still challenges and costs. That’s the perspective of Ron Haynie, senior vice president of mortgage finance policy and executive vice president of mortgage services for the Independent Community Bankers of America. “I guess the good news is the market didn’t seize up and mortgage closings didn’t come to a screeching halt or average turn times didn’t get out to 60 days plus,” he told Inside the CFPB recently. “While things slowed down in the beginning, average turn times seemed to have settled around 46 days. And while that’s still ...