CFPB Raises TILA Reg Z Exemption Threshold. The CFPB raised the asset size for banks exempt from the requirement to establish an escrow account for higher-priced mortgages under Regulation Z (Truth in Lending Act) from $2.028 billion to $2.060 billion, as of Jan. 1, 2015. The adjustment is based on the 1.1 percent increase in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in November 2014. The adjustment to the escrow exemption asset-size threshold will also increase a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. CFPB Increases HMDA Reg C Exemption Threshold. The bureau slightly ratcheted up the asset- size exemption threshold for financial institutions reporting ...

FHA borrowers who refinance through the agency’s Home Affordable Modification Program will also be eligible to earn $5,000 in the sixth year of their performing, modified loan, subject to the Department of the Treasury’s guidelines, the FHA has announced. The incentive to FHA-HAMP borrowers is one of several enhancements to the Making Home Affordable program that the Department of Housing and Urban Development and the Treasury Department unveiled in December last year. The enhancements were designed to motivate homeowners in MHA to continue making timely mortgage payments, strengthen the safety net for those still facing financial hardships, and help them build equity in their homes. Under the revised HAMP guidelines, all homeowners in the program become eligible to earn $5,000 in the sixth year of their loan modification. This means a borrower’s outstanding principal balance could ...

Conversations with Capitol Hill insiders, industry lobbyists and trade group representatives suggest the CFPB is going to face a double-barreled threat from a Republican-controlled U.S. Senate and House of Representatives in the 114th Congress that convenes in January. On the one hand, the GOP is expected to be aggressive in holding numerous oversight hearings on a number of issues having to do with the CFPB. On the other hand, Republicans also are likely to push multiple pieces of legislation relating to the bureau and its rulemaking. A number of tweaks, revisions and technical corrections to the Dodd-Frank Wall Street Reform and Consumer Protection Act are expected as well. Elaborating on the legislative front, Joe Pigg, vice president and senior counsel ...

Many mortgage lenders are going to feel they are “damned if they do, damned if they don’t,” when they learn about the fair lending pitfalls inadvertently lurking in the weeds of compliance with the CFPB’s Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosure rule and the forthcoming Home Mortgage Disclosure Act rule. “Looking ahead to next year and beyond, the TILA-RESPA integrated disclosure rule could bring additional new risk,” said Colgate Selden, counsel with the Alston & Bird law firm, during a recent webinar on fair lending risk sponsored by Inside Mortgage Finance, an affiliated newsletter. “Some of these are old risks that may have gone away, but are back in some ways,” Selden told attendees. ...

Complying with all of the Consumer Financial Protection Bureau’s mortgage rules that took effect this year could actually boost a lender’s fair lending liability under certain circumstances, according to one top attorney. “There are several possibilities where a person could be in complete compliance or even engage in behaviors incentivized by these rules, while also possibly increasing fair lending risk,” said Colgate Selden, counsel at the Alston & Bird law firm, during a webinar last week sponsored by InsideMortgage Finance. “The ability-to-repay, loan originator compensation, mortgage servicing, and Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure rules all contain provisions where persons could indirectly increase their fair lending risk through compliance with those rules.” Among the ATR-related fair lending issues discussed by Selden, a former CFPB official, are...

One key point that much of the mortgage lending industry is contesting in the Consumer Financial Protection Bureau’s proposed amendments to its integrated disclosure final rule is the timing requirement for re-disclosing the loan estimate. The proposal would amend a final rule to integrate disclosures required by the Truth in Lending Act and the Real Estate Settlement Procedures Act that itself won’t be implemented until August 2015. The CFPB tried to make the so-called TRID more workable by giving lenders more time to revise loan estimate disclosures. Revisions based only on changes in rates would have to be made by the next business day after the rate locks, instead of on the same day, which is the current requirement. A number of lender representatives told...

Castle & Cooke Mortgage late last month filed a motion to dismiss a putative class-action brought by one of the aggrieved parties who had already been compensated under the terms of the settlement the lender reached late last year with the CFPB. In Luis Cabrales v. Castle & Cooke Mortgage LLC, plaintiff Luis Cabrales contends that the lender improperly compensated its loan officers by giving them bonuses for putting customers in more expensive loans than what they qualified for. The plaintiff sued for violation of the Truth in Lending Act – a claim that Castle & Cooke is not challenging at this point. However, Cabrales also brought other causes of action: violation of Section 8 of the Real Estate Settlement Practices ...

Disparate Impact Theory of Legal Liability Struck Down. Last week, the U.S. District Court for the District of Columbia dealt a heavy blow to the position of the Department of Housing and Urban Development – as well as the CFPB – that disparate impact claims are cognizable under the Fair Housing Act. In American Insurance Association v. U.S. Department of Housing and Urban Development, the judge struck down HUD’s disparate impact rule, determining that the Fair Housing Act prohibits “disparate treatment only.” In promulgating its disparate impact rule, the court said HUD exceeded its authority under the Administrative Procedures Act. “The ruling is in line with what we have long believed the law to be and consistent with what we argued in ...

The $13 million settlement reached between the CFPB and Castle & Cooke Mortgage Co. back in November 2013 was not the end of the dispute for the mortgage lender. It now faces a possible class-action lawsuit brought by one of the aggrieved parties who had already been compensated under the terms of the settlement with the bureau. Homeowner Luis Cabrales, on behalf of himself and perhaps in excess of 9,500 similarly situated individuals, recently filed his complaint in the U.S. District Court for the Eastern District of California, Fresno Division. The class, so far, has not been certified. The legal argument is that the applicable statutes of limitation of the claims alleged in the new complaint were “tolled” (suspended or ...

In what may be a first, an individual borrower who received compensation under the terms of the consent order the Consumer Financial Protection Bureau brought against Castle & Cooke Mortgage late last year has since filed a class-action lawsuit. The litigation was brought on the basis of the same alleged violations of the Truth in Lending Act, the Real Estate Settlement Procedures Act and state law as were documented in the bureau’s enforcement action. Homeowner Luis Cabrales, on behalf of himself and “all others similarly situated,” recently filed...