Earlier this month, the U.S. District Court for the Western District of Kentucky ruled against the CFPB and in favor of a Kentucky law firm over allegations it paid kickbacks in violation of the Real Estate Settlement Procedures Act. The bureau accused the Borders & Borders law firm of Louisville, KY, and its principals, Harry Borders, John Borders Jr. and J. David Borders, of illegally paying kickbacks for real estate settlement referrals through a network of shell companies. The case began back in February 2011 when the Department of Housing and Urban Development notified the law firm it was being investigated for potential violations of RESPA’s anti-kickback provision. In April 2012, the CFPB advised Borders & Borders that it, rather ...

While policymakers in Washington, DC, are paying renewed attention to housing-finance reform, some industry representatives took advantage of the opportunity provided by a related hearing on Capitol Hill to also urge changes be made to a number of the mortgage-related rules promulgated in recent years by the Consumer Financial Protection Bureau. Bond giant PIMCO issued a report that called for a handful of key revisions to the mortgage regulatory landscape before any reform of Fannie Mae and Freddie Mac is undertaken. “To bring capital back to the private mortgage market and ensure credit is extended...

Pacific Investment Management Company published an opinion piece this week calling for changes in the non-agency market before policymakers enact reforms that affect the government-sponsored enterprises. PIMCO was also critical of other GSE reform proposals. “Without a functioning private mortgage market, it will be nearly impossible for the GSEs to shrink their footprint without significant disruption to the housing market and to the underlying homeownership rate,” PIMCO said. PIMCO was...

Affiliated business arrangements may not be dead after all. Late last week, the U.S. District Court for the Western District of Kentucky ruled that such a network at the heart of a lawsuit brought by the Consumer Financial Protection Bureau was in fact legitimate as constituted under the Real Estate Settlement Procedures Act. In this case, which the bureau brought four years ago, the agency accused the Borders & Borders law firm of Louisville, KY, and its principals, Harry Borders, John Borders Jr. and J. David Borders, of illegally paying kickbacks for real estate settlement referrals through a network of shell companies. According to the CFPB’s complaint, the law firm operated...

The CFPB recently published long-awaited updates to its “Know Before You Owe” integrated disclosure mortgage rule, finalizing, among other things, amendments on finance charge disclosures, disclosures tied to housing assistance that a borrower receives, and when information can be shared with third parties, including real estate agents. The KBYO rule took effect in early October 2015 as part of an effort to simplify disclosures under two laws: the Truth in Lending Act and the Real Estate Settlement Procedures Act. The lending industry commonly refers to the combined disclosures as TRID, short for TILA/RESPA Integrated Disclosure rule. In a statement on the amendments, the CFPB noted that TRID “changed the total of payments calculation so that it did not make specific...

In addition to the so-called TRID 2.0 final rule, the CFPB recently issued a notice of proposed rulemaking related to what’s known in the mortgage industry as TRID’s “black hole,” which refers to situations in which a lender is not permitted to use a closing disclosure to reset fee tolerances. More specifically, the proposal addresses when a creditor may use a Closing Disclosure (CD), instead of a Loan Estimate (LE), to determine if an estimated closing cost was disclosed in good faith and within tolerance. Currently, lenders are permitted, under certain limited circumstances, to use revised estimates, instead of the estimate originally disclosed to the borrower, to compare to the charges actually paid by or imposed on the borrower in...

Trade organizations representing the mortgage banking industry provided a number of important suggestions for the CFPB as it proceeds with a Dodd-Frank Act requirement to assess its mortgage servicing rules at the five-year mark. The first issue the American Bankers Association raised in this regard in its comment letter to the bureau was the scope of the assessment. “The CFPB should incorporate all of the servicing rules into its review, including the rules that implement the Truth and Lending Act and the amendments that the CFPB adopted to the servicing rules in 2016,” the ABA said – not just the rules promulgated under the Real Estate Settlement Procedures Act. The bureau also should take into account the rules’ effects upon consumers...

JPMorgan Chase told the CFPB it supports the bureau’s mission of protecting consumers and recognizes that regulatory guardrails are necessary to make sure mortgage servicers adequately address consumers’ needs. “However, certain provisions of Regulation X [which implements the Real Estate Settlement Procedures Act] impose burdens on servicers that increase servicing costs and impact access to consumer credit without providing proportional benefits to consumers,” the servicer said. JPMorgan was one of the industry participants commenting on the CFPB’s proposal to start assessing the effectiveness of its mortgage servicing rules under RESPA. The financial institution went on to some of the problem areas in Reg X that still need to be addressed, one of which has to do with rules for loss...

After a few months of delay, the Consumer Financial Protection Bureau last week issued its long-awaited final rule clarifying a number of aspects of its integrated disclosure rulemaking under the Truth in Lending Act and the Real Estate Settlement Procedures Act, otherwise known as TRID 2.0. The most noteworthy revisions relate to good faith and revised disclosures, calculating cash to close, construction-to-permanent loans, and the sharing of disclosures during the origination process. In terms of good faith and revised disclosures, the 2017 TRID rule provides...

Mortgage lenders will not be subject to supervisory or enforcement actions for violations of the early implementation guidance for the revised 2016 mortgage servicing rule, according to the Consumer Financial Protection Bureau. The CFPB issued “non-binding” policy guidance last week to allay lenders’ fear of being penalized if they fail to implement the 2016 servicing amendments up to three days early, said industry attorneys. Issued in August last year, parts of the rules take effect on Oct. 16, 2017, and April 16, 2018. Technically, the “relief” applies...