The redlining risk that lenders face these days is morphing to include not just a consideration of a bank’s internal behavior but also a comparison of the bank’s performance against its peers – a far more nebulous and uncertain standard of accountability. During a presentation at the American Bankers Association’s regulatory compliance conference last month in San Diego, Carl Pry, a managing director at Treliant Risk Advisors, told attendees, “Regulators are defining redlining risk a little bit differently these days. Traditionally, redlining involved looking at your own bank’s map: you plot out where your applications are, where the loans are, where the denials are – and you stand back and take a look and see, perhaps, that there are a lot of ...

Among a host of best practices and other tips lenders should consider for complying with the CFPB’s new Home Mortgage Disclosure Act rule is coordinated institutional planning, according to Ellen Costa, vice president of strategy and business capability development at Wells Fargo Home Lending. Speaking to attendees at the recent regulatory compliance conference sponsored by the American Bankers Association, Costa said, “All of the CFPB's regulatory changes – HMDA in particular – mean significant change management within your institution. It is a best practice to be very agile and proactive about coordinating a project plan that includes a strategy upfront, really understanding what the regulations are driving at.” A solid plan developed ahead of time and properly executed will allow a clear ...

Mortgage lenders looking to get ahead of the fair lending enforcement curve need to be aware that the industry will face greater scrutiny from the CFPB on two main fronts: access to credit and pricing issues, according to one top attorney. Speaking at the American Bankers Association’s recent regulatory compliance conference in San Diego, Andrew Sandler, chairman and executive partner at the BuckleySandler law firm in Washington, DC, said, “There are really two sets of issues that we’re seeing in fair lending, and that we’re increasingly going to see over time. The first is access to credit as an absolute concept.” As the U.S. came out of the financial crisis, as policymakers adopted all kinds of rules, regulations, philosophies and ...

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 ...

FHA lenders will face stiffer maximum monetary penalties later this year for various violations of agency rules and regulations. The higher monetary penalties are the result of legislation signed into law late last year requiring federal agencies to adjust the current maximum penalty amounts for inflation in order to maintain their deterrent effect. Specifically, the Federal Civil Penalties Inflation Adjustment Act of 2015 (2015 Act) requires federal agencies to adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule and subsequent annual adjustments for inflation. The interim final rules with the initial penalty adjustments must be published by July 1, 2016. The new penalty levels must take effect no later than Aug. 1, 2016. Additionally, agencies are required to make annual inflation adjustments, starting Jan. 15, 2017, and for each year going forward. The adjustments will ...

FHA Revises TOTAL Mortgage Scorecard. Effective on June 11, 2016, the FHA’s TOTAL Mortgage Scorecard no longer returns either upfront or annual mortgage insurance premium factors to an automated underwriting system. The FHA directs lenders to consult Appendix I of its Single Family Housing Policy handbook for applicable MIP factors. AUS vendors have been notified of the change and have adjusted their systems accordingly. HUD, First Citizens Bank Settle Fair Lending Complaint. A South Carolina bank has agreed to correct its lending practices and allocate funding to resolve allegations that it denied more loans to minorities compared to similarly-situated white loan applicants. The settlement agreement stemmed from a complaint filed by the Department of Housing and Urban Development against First Citizens Bank and Trust Co. in 2011 after an analysis of ...

Compass Point predicts that CFPB will lose its dispute with PHH. The CFPB is hosting an eRegulation webinar. HUD and First Citizens Bank (SC) resolve a fair lending complaint spurred by HMDA data. And CFPB staff exit for SunTrust and JH Capital Group.

The CFPB’s pending Home Mortgage Disclosure Act rule significantly expands the industry’s data-reporting requirements – and the risk of possible disclosure of a borrower’s personal information along with it – something the bureau still has not addressed to the industry’s satisfaction, according to one top attorney. “The implementation date of the rule is fast approaching and the mortgage industry still has not received any answers in regards to their data privacy concerns,” Craig Nazzaro, of counsel in the Atlanta office of the Baker Donelson law firm, said in a blog posting earlier this month. He noted that mortgage industry representatives have repeatedly raised their privacy concerns about the new rule with the bureau. However, “the CFPB has thus far avoided addressing these ...

HUD Sends Final Condominium Rule to OMB for Clearance. The Department of Housing and Urban Development has sent a final rule to the Office of Management and Budget that would make it easier for borrowers to obtain FHA financing for certified condominium units. Once issued, the final rule will replace temporary guidance which HUD issued in November last year to ease FHA’s condo approval process. The move is aimed at increasing affordable housing options for first-time and low-income homebuyers. The final rule is expected to reflect measures in the interim guidance, including modification of the requirements for condo project recertification, revised calculation of FHA’s required ownership-occupancy percentage, and expansion of eligible condo-project insurance coverages. IG Scrutinizes HUD Oversight of SFHAs’ Downpayment Assistance Programs. Residential lenders that rely on ...

Mortgage lending continues to be a key priority for the CFPB’s Office of Fair Lending for supervision and enforcement, particularly Home Mortgage Disclosure Act data integrity and potential fair lending risks in the areas of redlining, underwriting and pricing, the bureau said in a new report. Last year, the bureau brought to an end two important public enforcement actions that had to do with mortgage lending. The first was a redlining case against Hudson City Savings Bank, which was required to pay almost $33 million in direct loan subsidies, funding for community programs and outreach, and a civil penalty. In this case, the CFPB accused Hudson City of providing unequal access to credit by structuring its business to avoid providing ...