Mortgage lenders of all sizes and stripes got some breathing room late last week when the Consumer Financial Protection Bureau announced it was delaying the effective date of some new requirements under its integrated mortgage disclosure project to provide a more seamless integration with other mortgage disclosures the agency has proposed. The delay applies to more than a dozen disclosures, including those on the cancellation of escrow accounts, consumersf liability for debt payment after foreclosure, and the creditor acceptance of partial payment. Under the Dodd-Frank Act, the new disclosures were scheduled to take effect Jan. 21, 2013. gTo avoid potential consumer confusion and reduce compliance burden for industry, the bureau plans...

Four associations representing state financial regulators told the CFPB they generally support most of what the bureau is proposing in integrating the disclosures consumers receive when they shop for a mortgage. However, they emphasized the importance of proceeding cautiously as the bureau moves ahead with the proposed rules that would amend the mortgage disclosures under Regulation Z, which implements the Truth in Lending Act, and Regulation X, which implements the Real Estate Settlement Procedures Act...

The Consumer Financial Protection Bureau has found “significant non-compliance” during its examinations of mortgage lenders, compelling them to take a variety of steps deemed necessary to be brought into compliance, according to the CFPB’s first report on its examination findings. Violations under the Real Estate Settlement Procedures Act included failures to make proper and complete disclosures to consumers of costs and other terms because of errors in the good faith estimate and HUD-1 settlement statement, the CFPB stated. Truth in Lending Act violations included...

The mortgage lending industry is universally opposed to a Consumer Financial Protection Bureau proposal to establish a new, more comprehensive “all in” annual percentage rate formula that would include various additional fees and charges. The APR provision is one part of the CFPB’s extensive proposed rule intended to simplify and integrate the mortgage disclosures consumers are entitled to under the Truth in Lending Act and Real Estate Settlement Procedures Act. The overhaul was mandated by the Dodd-Frank Act. In the proposed rule, which came out in July, the bureau would replace...

The “zero-zero” requirement in the loan originator compensation proposed rule pending at the Consumer Financial Protection Bureau could inadvertently steer borrowers into more expensive mortgage loans, according to a top industry official. “There is absolutely no doubt that forcing a zero-zero option is going to result in higher-priced loans,” said David Stevens, president and CEO of the Mortgage Bankers Association, during an Inside Mortgage Finance webinar this week. “Premium [loans] don’t get the same kind of multiple as a current coupon. So as the yield curve shifts and we see rates move, we’re going to see action that is going to make these numbers move around a lot.” To give a more extreme example, “if we have an interest-rate rally, you can drop...

The Consumer Financial Protection Bureau has been discreetly broadening its influence on statutory and regulatory interpretations through its largely unannounced filing of amicus curiae briefs in a handful of important cases brought by private litigants, according to an analysis of the CFPB’s legal activity by two leading industry attorneys.Since December 2011, the bureau has filed six such “friend-of-the-court” briefs in federal appellate cases, always assuming the role of steadfast consumer advocate, according to a review of the briefs by Arthur Axelson and Jeffrey Jamison, senior counsel and associate, respectively, with the Dykema law firm. In fact, “in several of its amicus curiae briefs, the CFPB has even sought to reverse a general consensus among the federal appellate courts,” the pair noted. In Birster v. American Home Mortgage Services, Inc., filed Dec. 21, 2011, in the 11th Circuit Court of Appeals, the question of interest to the bureau was whether activity surrounding foreclosure is immune from the Fair Debt Collection Practices Act. The CFPB argued that it is not. In Marx v. General Revenue Corp., filed Jan. 26, 2012, in the 10th Circuit Court of Appeals, there were...

Fannie Mae and Freddie Mac support the Consumer Financial Protection Bureau’s proposal to institute a higher “all in” annual percentage rate calculation that would incorporate additional fees and charges – one aspect of the larger proposed rule to combine and simplify the consumer mortgage disclosure under the Truth in Lending Act and the Real Estate Settlement Procedures Act. “Fannie Mae and Freddie Mac support the bureau’s proposal to expand the finance charge for several reasons,” the two government-sponsored enterprises said. “First, it will make comparison shopping easier for consumers by eliminating the lack of clarity that now leads creditors to treat identical fees differently.” Second, a more inclusive finance charge will eliminate...

The Small Business Administration is urging the Consumer Financial Protection Bureau to delay making any changes until it has fully analyzed the impact of a proposed rule establishing new disclosure requirements and forms under integrated federal consumer protection regulations. Speaking on behalf of small banks and settlement service providers, the SBA’s Office of Advocacy in a comment letter warned that proposed changes to the finance charge and to the high-cost mortgage coverage test could potentially lead some small businesses to leave the marketplace or stop making mortgage loans. In addition, the agency reiterated its concerns about the inadequate notice for small entities about the proposal. On Aug. 23, the CFPB published...

Secondary mortgage market participants have expressed support for the Consumer Financial Protection Bureau’s efforts to establish clear standards for mortgage servicing that would balance investor and borrower interests. Issued last week, the proposed rules focus primarily on borrower protection and are described as measures that would benefit borrowers by eliminating surprises and run-arounds. However, they do not address servicers’ conflicts of interest that result in servicer breaches, which mortgage-backed securities investors have raised in the past, and other investor complaints. Specifically, the proposed rules implement...

The Consumer Financial Protection Bureau late last week issued its long-awaited proposal to establish national mortgage servicing standards for banks and nonbanks alike, extending a number of key aspects of the big national servicing settlement to the entire industry in the process. The proposed rule covers nine major topics and would implement changes made by the Dodd-Frank Act to the Truth in Lending Act and the Real Estate Settlement Procedures Act. The proposed rule generally requires servicers of closed-end residential mortgage loans (other than reverse mortgages) to send a periodic statement for each billing cycle, and the CFPB’s proposal spells out the timing, form and content requirements of such statements, and includes sample forms that servicers can use. Special rules will apply...