The Consumer Financial Protection Bureau this week announced a Real Estate Settlement Procedures Act enforcement action against a nonbank lender that appears to reflect a traditional interpretation of the law’s anti-kickback provisions, while a flurry of new paperwork fell on its controversial legal battle with PHH Mortgage. The bureau this week brought a $3.5 million enforcement action against Prospect Mortgage, accusing the firm of illegal kickbacks for mortgage business referrals from real estate brokers, and in an unusual twist, a mortgage servicing operation. The CFPB said...

Late last week, PHH Corp. followed up on the opportunity afforded it by the U.S. Court of Appeals for the District of Columbia Circuit and filed its legal response to the arguments the Department of Justice made late last year in defense of the CFPB’s petition for an en banc rehearing in its dispute with the mortgage lender.The DOJ’s brief “asserts support for rehearing en banc, but not for any of the reasons advanced by the CFPB,” PHH said. “Indeed, the brief never actually defends the CFPB’s structure as consistent with the Constitution. Nor does the brief claim anywhere that the panel erred in its choice of remedy, its decision to reach the separation-of-powers issue, or its discussion of ...

Sen. Sherrod Brown, D-OH, and Rep. Maxine Waters, D-CA, late last week submitted a motion with the U.S. Court of Appeals for the District of Columbia Circuit seeking to intervene on behalf of the CFPB in its action against PHH Corp. “Movants now seek to intervene in this litigation because recent events have made it clear that their interests in preserving the leadership structure they voted for [in enacting the Dodd-Frank Act] may no longer be adequately represented by the new administration,” Brown and Waters argued. “Indeed, absent intervention, it is possible that the panel’s decision will be insulated from review, thus nullifying movants’ votes to establish the CFPB as an independent agency and their ability to establish similar independent ...

In a case of potential significance for any company that finds itself the recipient of a civil investigative demand from the CFPB, a finance company has filed suit to prevent the bureau from disclosing its investigation of the firm and from taking any action against it unless and until the agency is restructured in line with the U.S. Constitution. “Plaintiff moves for a temporary restraining order and preliminary injunction prohibiting the CFPB and its director from using the executive, legislative and judicial powers delegated to the bureau to impose any restriction on plaintiffs’ liberty or otherwise take any action adverse to plaintiff unless and until the bureau is constitutionally structured,” said the company. The corporate entity, chartered in California with ...

President Donald Trump recently imposed a moratorium on new and pending regulations, which is generally considered by industry experts and observers standard operating procedure for an incoming presidential administration. But the bad news for the mortgage industry is that most of the regulations from the CFPB have already been issued. Two possible exceptions are the bureau’s Home Mortgage Disclosure Act final rule, which has been issued in final form but is not yet effective, as well as its TRID 2.0 clarifying rulemaking, which is expected in final form sometime this spring. In a memo issued by White House Chief of Staff Reince Priebus, unspecified “executive departments and agencies” were generally directed to “send no regulation to the Office of the ...

The CFPB last week slapped CitiFinancial Servicing and CitiMortgage a relatively modest $28.8 million for allegedly keeping struggling borrowers in the dark about options available to save their homes. The bureau’s action had to do with the company’s origination and servicing of residential daily simple interest mortgages, especially as they relate to deferments. The CFPB accused CitiFinancial Servicing of misleading consumers about the effect of deferring payment due dates, charging consumers for credit insurance that should have been canceled, prematurely cancelling credit insurance for some borrowers, sending inaccurate consumer information to credit reporting companies, and failing to investigate consumer disputes. The bureau is requiring CitiMortgage to pay an estimated $17.0 million to compensate wronged consumers, and to pay a civil ...

The Consumer Financial Protection Bureau this week brought a relatively modest $28.8 million enforcement action against CitiFinancial Servicing and CitiMortgage to resolve allegations that struggling borrowers were kept in the dark about options available to save their homes. Under the terms of the consent order, CitiMortgage has to pay an estimated $17 million to compensate wronged consumers, along with a civil penalty of $3 million. The CFPB is also compelling CitiFinancial Services to refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million. The bureau’s action related...

Credit quality for the loans backing unique warehouse-funding securitizations from Jefferies Funding remains strong, according to Moody’s Investors Service. One of the risks was that weaker collateral could be included in the transactions as time passed. The $225.0 million Station Place Securitization Trust 2016-1 received Aaa ratings from Moody’s last February and a $210.0 million 2016-3 transaction issued in May garnered an with Aaa rating. The rating service evaluated the deals recently as the 2016-1 securitization is set to pay down next month. “To date, there has been...

The U.S. Court of Appeals for the District of Columbia Circuit last week gave PHH Corp. the green light to weigh in on the legal arguments the Justice Department made late last year in support of the Consumer Financial Protection Bureau’s petition for an en banc rehearing of its dispute with the lender. The appeals court did so over the objections of the CFPB, and with 11 of the 12 judges in agreement and one not participating. PHH had argued that it ought to be able to respond to the second of two government arguments in favor of the review. Privately, some industry insiders thought...

While many in the mortgage industry wait for the District of Columbia Circuit Court of Appeals to decide whether to rehear the arguments of the CFPB in its wrangling with PHH, the plaintiffs in State National Bank of Big Spring, Texas, et al. v. Lew, et al. have stepped back onto the legal stage at the district court level. Specifically, “Plaintiffs respectfully move [the U.S. District Court for the District of Columbia] to hold a status conference at its earliest convenience to determine how this case ... can be most efficiently adjudicated in light of the CFPB’s petition for en banc review of the panel decision in PHH Corp. v. CFPB,” State National Bank and its parties asked the appeals ...