In an effort to spur better industry compliance with its 2013 mortgage servicing rules, the CFPB last week released an updated mortgage servicing exam manual, reflecting a greater emphasis on the handling of consumer complaints as well as fair lending. The bureau regularly publishes a mortgage servicing chapter of the CFPB Supervision and Examination Manual to reflect regulatory changes, to make technical corrections, and to update examination priorities. This new, third iteration of its exam procedures offers guidance to financial institutions and mortgage companies on what the bureau will be looking for in its exams. Among other things, mortgage servicers should note a greater emphasis in exams on the handling of consumer complaints. The CFPB has enhanced the section related ...

If you’re a mortgage lender waiting for your first examination from the CFPB, there are three important principles you should be aware of, according to Burton Embry, executive vice president and chief compliance officer of Primary Residential Mortgage, based in Salt Lake City, UT. Delivering a presentation during a webinar sponsored by the California Mortgage Bankers Association last week, Embry began with the obvious: Consumer protection. “One of the CFPB’s big focuses is on consumers. It’s all about consumer protection, we all know that,” he said. “So when they are looking at your policies and procedures, for example, that’s one of the things they are looking at: the risk to consumers.”In other words, “How have you written your policies ...

CFPB Moves to Defend its Supervisory Information in Ocwen Case. The CFPB recently asked a federal judge to let it intervene in a whistleblower case brought against Ocwen Loan Servicing in order to protect the confidentiality of its supervisory information. “The bureau seeks to intervene for the limited purpose of invoking the bank examination privilege and the bureau’s regulations to protect confidential and privileged bureau supervisory records and information related to the bureau’s supervision of Ocwen,” the CFPB said in its motion filed in U.S. District Court for the Eastern District of Texas, Sherman Division. Among its legal arguments provided to U.S. District Judge Amos Mazzant, the CFPB said its regulatory and supervisory interest could be impaired if it is ...

CFPB Firmly in CHOICE Act’s Crosshairs. Since Inside the CFPB went to press last, House Financial Services Committee Chairman Jeb Hensarling, R-TX, released more details about the Republican alternative to replace the Dodd-Frank Act. Dubbed the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act, the bill not only includes provisions to provide a qualified-mortgage safe harbor for any mortgage that has been held in portfolio by a depository institution since origination, but also a host of provisions targeting the structure of the CFPB itself. For instance, the bill could change the name of the CFPB to the “Consumer Financial Opportunity Commission (CFOC),” and task it with the dual mission of consumer protection and competitive markets, with ...

The Structured Finance Industry Group late last week published a final draft of the standards for due diligence firms to use when testing loans for compliance with the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule. “The underlying premise of this documentation is to establish a best practices approach to pre-securitization testing logic that will drive the due diligence conducted by third-party review firms,” SFIG said. The RMBS 3.0 TRID Compliance Review Scope documentation addresses...

Fannie Mae and Freddie Mac MBS guarantee fees are too high, given the strong credit profile of new business since the financial crisis, according to a diverse collection of real estate, banking and consumer interest groups. The groups called on the Federal Housing Finance Agency to lower MBS guarantee fees charged by the two government-sponsored enterprises, and to reduce or eliminate the loan-level pricing adjustments that are typically wrapped into the consumer’s note rate. The average g-fee has jumped from 22 basis points in 2009 to 58 bps in 2014, including the 10 bps surcharge that Congress mandated in 2011 to cover a payroll tax cut. Loan-level pricing adjustments can total...[Includes one data table]

The Federal Deposit Insurance Corp. this week revised its securitization safe-harbor rule to clarify loss mitigation standards for mortgage servicers to synchronize it with the similar requirements issued by the Consumer Financial Protection Bureau. The FDIC safe-harbor rule sets standards under which the agency will not attempt to capture assets of a failed bank that are transferred to qualifying securitizations. Under the previous rule, servicers of residential mortgages backing MBS that enjoy safe-harbor status were required to take loss mitigation action within 90 days after the loan becomes delinquent. In January 2013, the CFPB adopted...

Mortgage-finance reform doesn’t look to be anywhere on the horizon, but at some point government policymakers will have to figure out what to do with trillions of dollars of Fannie Mae and Freddie Mac MBS if the two government-sponsored enterprises are put out to pasture. In fact, the transition to a new GSE single security that’s scheduled to start in 2018 could become a test run of sorts for the even bigger changes ahead, according to a paper published by the Urban Institute. Crafted by five mortgage-industry veterans, “A More Promising Road to GSE Reform” is centered on the creation of a new government corporation that would replace Fannie and Freddie. The National Mortgage Reinsurance Corp. would issue...

Standard & Poor’s lost a little market share in the business of rating non-mortgage ABS during the first quarter of 2016, but the firm still was the most active player in the market, according to a new ranking by Inside MBS & ABS. S&P rated 58.4 percent of the $41.42 billion of non-mortgage ABS issued in early 2016, down from its 61.5 percent share for all of last year and its 64.1 percent share back in 2014. The company’s strong suit was in vehicle-finance ABS, where it rated 64.7 percent of the market, by dollar volume. While S&P’s share was up slightly in a few categories, its stake in the credit card ABS segment fell...[Includes two data tables]

Late last week, news broke of a conversation from a closed session at the American Bankers Association conference in San Diego that the “sensitive” approach by regulators to respect lenders’ good-faith efforts to comply with the Consumer Financial Protection Bureau’s integrated disclosure rule may have come to an end. According to one well-placed source, the CFPB and the other regulators – the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency – have decided that they will start examining banks for technical compliance with TRID, begin requiring restitution to affected borrowers, and start citing banks that are in non-compliance. “Apparently, the message is...