The Consumer Financial Protection Bureau has been able to identify a number of improvements it can make in a rulemaking that will merge the consumer mortgage disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act, thanks to input from a small business review panel it convened earlier this year. “During the small business review panel [process] and our other outreach, industry identified several areas in which the current rules create uncertainty about how to comply,” CFPB Deputy Director Raj Date said during a hearing of the House Financial Services Subcommittee on...

The mortgage lending industry won a comprehensive and authoritative victory and a great deal of legal certainty from the Supreme Court on the issues of fee-splitting and markups under the Real Estate Settlement Procedures Act. Last week, in Freeman et al. v. Quicken Loans Inc., the nation’s highest court unanimously sided with the lender and ruled that a plaintiff has to show that a fee charged for a real estate settlement service was shared between two or more persons to prove a violation of Section 8(b) of RESPA has occurred. In this case, the plaintiffs were three couples, the Freemans, Bennetts...

The Supreme Court of the United States last week sided with Quicken Loans while unanimously rejecting the legal arguments of two federal agencies in affirming a lower court’s determination that a plaintiff must prove a settlement fee was split by two or more persons in order to successfully stake a claim under the Real Estate Settlement Procedures Act. The relevant portion of RESPA at issue in Freeman et al. v. Quicken Loans Inc. is the provision that “[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a...

Complying with all the requirements of the Real Estate Settlement Procedures Act under the new Consumer Financial Protection Bureau is going to be a much different ballgame than had been the case when the Department of Housing and Urban Development was calling the shots, a leading industry attorney indicated recently. “The bottom line on RESPA enforcement [at the Consumer Financial Protection Bureau] is that there are many enforcement powers and authorities at the bureau’s disposal,” Holly Spencer Bunting, a partner in the Washington, DC, office of K&L Gates LLP, told participants...

One of the trickiest challenges presented to the Consumer Financial Protection Bureau as part of its project to harmonize the mortgage disclosures consumers receive will be the settlement disclosure, a top official at the CFPB indicated recently. The settlement disclosure “is where we’re in a bit of a difficult situation, because Congress, al-though they directed us to combine the Truth in Lending Act and Real Estate Settlement Procedures Act disclosures, did not amend the underlying statutes,” said Benjamin Olson, managing counsel in the office of regulations at the CFPB, during a webinar sponsored last...

An ad hoc coalition of mortgage lender trade group representatives rattled off a host of concerns it has with the draft proposals from the Consumer Financial Protection Bureau for an integrated mortgage disclosure under the Real Estate Settlement Procedures Act and the Truth in Lending Act. The short list of concerns includes the need for careful synchronization with other rulemaking efforts, especially those involving the “qualified mortgage” and “qualified residential mortgage” designations; the negative and unfair results of lowering cost tolerances; the unintended consequences of expanding...

The forthcoming combined Truth in Lending Act and Good Faith Estimate disclosure form and related rule pending at the Consumer Financial Protection Bureau is at the top of the list of greatest compliance concerns of mortgage lenders, according to the fourth annual compliance survey by QuestSoft, a provider of compliance software and services to the mortgage industry. Of the 426 lenders that were surveyed on their level of anxiety for regulatory changes, a whopping 81 percent identified this CFPB project as at least a medium (33 percent) or a high (48 percent) concern...

The Consumer Financial Protection Bureau this week detailed servicing rules it will soon propose regarding disclosures to borrowers and servicing procedures. “The mortgage servicing rules we are considering reflect two basic, common sense standards – no surprises and no runarounds,” CFPB Director Richard Cordray said. “They would apply to all mortgage servicers regardless of how they are organized, including banks, thrifts, credit unions and nonbank servicers.” The rule, which will amend the Truth in Lending Act and Real Estate Settlement Procedures Act, is required by the Dodd-Frank Act. The CFPB said it will publish a proposal ...

Last week, the full House Financial Services Committee passed several pieces of legislation, including H.R. 2446, the RESPA Home Warranty Clarification Act of 2011, introduced by Rep. Judy Biggert, R-IL, which advanced with one amendment. The legislation amends the Real Estate Settlement Procedures Act of 1974 to state that no prohibited kickback or unearned fee incidental to a real estate settlement service involving a federally related mortgage loan shall be deemed to include, or be deemed to have included, homeowner warranties or similar residential service contracts for ...

The Consumer Financial Protection Bureau has provided some potentially significant insight into some of the positions it may end up taking on the rules that will govern the final integrated mortgage disclosure it’s developing. The disclosures were released as part of the CFPB’s announcement that it is putting together a Small Business Review Panel under the provisions of the Small Business Regulatory Enforcement Fairness Act. The panel is part of the broader initiative to integrate the mortgage disclosure forms that borrowers receive when applying for and closing on a loan...