During the American Bankers Association’s 2017 regulatory compliance conference, held last month in Orlando, a top industry expert discussed and elaborated upon the work she and her colleagues have engaged in to prepare their institution for the upcoming TRID 2.0 clarifying rulemaking, which remains inexplicably delayed at the CFPB. Elizabeth Fredrickson, a vice president at Wells Fargo Bank, told an audience at a breakout session that her compliance team began with a “keep or kill” exercise back in March for all of the CFPB rules. “We brought stakeholders together and talked about what we liked and what we did not like, what we need and what we could do,” she explained. “Really, our conversation about TRID revolved around the fact ...

Investors in nonprime MBS may be more vulnerable to fraudulent or defective mortgages compared to prime transactions because of deficiencies or inadequacies in the related representation-and-warranties frameworks, according to a new report from analysts at Moody’s Investors Service. “The collateral backing these transactions is riskier than the loans in post-crisis prime jumbo RMBS, which also generally use stronger frameworks,” the report said. For starters, “Transactions in the re-emerging non-prime RMBS sector are...

The Consumer Financial Protection Bureau’s integrated-disclosure rule has been in effect for more than 18 months now, and industry compliance professionals still have a number of questions in need of answers as they await the issuance of the so-called TRID 2.0 rule from the agency. The rule had been expected in the first quarter of 2017, but to date, not a peep has been uttered by the agency as to the cause of the delay or when lenders might expect the final rule. The Treasury Department recently issued...

The Treasury Department’s report on reforming financial regulation in the U.S. blames rules ushered in under the Dodd-Frank Act – and promulgated by the CFPB – for tight credit conditions in the mortgage market. “While Dodd-Frank and the ATR/QM [ability to repay/qualified mortgage] rule were not intended to eliminate markets for loans that did not meet the QM standards, the reality is that the vast majority of lenders remain unwilling to make loans that do not meet those standards, eliminating access to mortgages for many creditworthy borrowers,” Treasury wrote in the 142-page report. (At best, $3 billion to $4 billion in nonprime/non-QM mortgages might be originated this year out of total industrywide originations of $1.5 trillion.) The administration took aim at Appendix ...

More than 68 percent of mortgage defects reported in 2016 involved TRID-related and/or loan package documentation issues, according to the latest mortgage quality control industry trends report from ACES Risk Management (ARMCO). “In 2016, the entire lending industry was impacted by the enhanced regulatory oversight of the CFPB as the long-awaited implementation of TRID was fully realized,” the report noted. “Many lenders spent the better part of the first quarter addressing the multitude of mistakes associated with TRID.” In some instances, this produced loans that could not be sold on the secondary market. “A wave of corrective action followed, and soon the sheer amount of resources directed at solving these issues became overwhelming for many lenders,” ARMCO added. The top...

The Department of the Treasury this week issued a report calling for stripping the Consumer Financial Protection Bureau of its supervisory powers over federally insured banks and state-supervised nonbanks, clarifying and modifying the TILA-RESPA integrated disclosure rule, and freezing additional rulemaking in mortgage servicing. The report recommends actions and changes that can be immediately undertaken to reduce regulatory overlap, fragmentation and duplication. While some of the changes could be implemented administratively, many would require congressional action. Treasury called...

The American Bankers Association’s letter to Secretary Treasury Steve Mnuchin also detailed a handful of key changes it said the CFPB should make to its controversial Truth-in-Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule. First, the bureau ought to revise the TRID tolerances. Currently, the rule requires creditors to observe closing cost tolerances that prohibit fees from increasing beyond initial disclosures by specific amounts. “TRID’s cost tolerance system is extremely convoluted, operating under a three-prong tolerance system that contains uncertain exemptions and rules for corrections,” the trade group said. “ABA believes that the current tolerance system should be entirely eliminated and replaced with a single tolerance standard of 10 percent, with more focused applicability.”Under this proposal, a ...

The cost of complying with the plethora of mortgage regulations, including the high-profile rules promulgated by the CFPB, consume nearly a quarter of lenders’ operating revenue and hurt both sellers and buyers with extended closing delays. Those were some of the chief findings of a survey performed by mortgage market research expert Tom Lamalfa, president of TSL Consulting, Cleveland Heights, OH, at the Mortgage Bankers Association National Secondary Market Conference in May. The results were distributed to MBA members last week via email. Among the questions posed to survey participants was, “Compliance costs consume about what percentage of your total operating expenses?” Of the 31 executives who responded, the average was 21.4 percent of total operating expenses. “The ranges were ...

There wasn’t much mention of the interpretation and enforcement of the Real Estate Settlement Procedures Act during oral arguments this week before the U.S. Court of Appeals for the District of Columbia Circuit in PHH Corp. v. Consumer Financial Protection Bureau. Instead, nearly all of the discussion revolved around constitutional questions. The biggest issue was about just how much power to “faithfully execute” the laws of United States the president is left with if the only way to remove the head of a single-director agency is “for cause.” The other constitutional issues that garnered some attention were...

The Financial Services Roundtable advised the Trump administration that the structure of the CFPB needs to be changed, and that the agency should revise a handful of its key mortgage rulemakings, most notably the ability-to-repay/qualified mortgage rule, the Home Mortgage Disclosure Act rule and the Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule, or TRID. The FSR’s call came in a detailed response to President Trump’s Executive Order 13777, “Reducing Regulation and Controlling Regulatory Costs,” issued earlier this year, directing the Treasury Department to conduct an assessment of financial regulations to evaluate how they align with the White House’s core principles of financial regulation.In terms of the bureau itself, the industry organization said the governance structure ...