FHA is offering new options to victims of hurricanes Harvey, Irma and Maria as well as California wildfires and subsequent flooding and mudslides to avoid foreclosures. Eligible disaster victims in Texas, Louisiana, Georgia, Florida, South Carolina, California, Puerto Rico and the U.S. Virgin Islands may get FHA foreclosure relief, which would allow them to remain in their homes and, at the same time, reduce losses to the mortgage insurance fund. FHA has instructed servicers to reach out to the victims with the new option, “Disaster Standalone Partial Claim.” The new option allows an interest-free second loan to cover up to 12 months of missed mortgage payments. The loan is payable only when the borrower sells the home or refinances the mortgage. The expanded loss mitigation will also streamline income documentation and other requirements to expedite relief to struggling homeowners while they are ...

The Department of Veterans Affairs will require lenders to provide early disclosures to veterans seeking to refinance into a VA Interest Rate Reduction Refinance Loan. The new policy aims to ensure that the VA streamline refi loan they sought would actually lower their monthly mortgage payments and is not just a scam for lenders to charge higher fees. Loan churning, or serial refinancing, is at the root of the VA policy change. Churning refers to multiple refinancing of an unseasoned mortgage loan within a very short time, often within six months of origination. Serial refinancing may add more payments and interest to the new loan, prolonging debt repayment, and can strip equity. It also potentially raises the risk of default by the borrower. In addition, the risk of prepayment could affect pricing of Ginnie Mae securities, which could cause lenders to charge higher rates on VA loans to make up for the ...

The Consumer Financial Protection Bureau last year logged 988 servicemember complaints related to the origination and servicing of VA and FHA mortgages. CFPB data showed VA outscored FHA on the number of complaints, 740 to 248, respectively, in 2017. The top five reasons for servicemember complaints were trouble during the payment process, difficulty in paying the mortgage, loan servicing, applying for a purchase mortgage or refinance, and closing a loan. Other complaints were about loan modification and foreclosure, mortgage brokers, incorrect information, settlement process and costs, underwriting/credit decision, credit-reporting company’s investigation of a consumer problem, and improper use of a credit report. Abusive practices related to loan churning might not be reflected clearly in servicemembers’ complaints in 2017 compared to the previous year, but a deeper dive into the ... [Chart]

Consumer complaints overall continued their downward trajectory in the fourth quarter, but it was a different story when it came to areas such as student loans and credit reports, both of which shot upwards on an annual basis. Overall, total gripes from end users of the financial system fell 24.1 percent year over year and 23.1 percent from the third quarter of 2017 to the fourth. But criticisms about student loans surged 109.9 percent on an annual basis, despite a drop of 30.1 percent from 3Q17 to 4Q17. Credit reports were similarly slammed, with a 99.8 percent leap in complaints year over year, a 32.2 percent fall off quarter to quarter notwithstanding. On the other hand [includes exclusive data chart] ...

A recent report from the JPMorgan Chase Institute found that payment reduction was the most effective form of post-crisis loan modification, and a 10 percent drop in the mortgage payment lowered default rates by 22 percent.

Consumer complaints to the CFPB about credit reports jumped in the third quarter, during which the massive Equifax data breach occurred, and year over year, according to a new analysis by Inside the CFPB. Gripes to the bureau leapt by 53.4 percent from the second quarter to the third, our analysis found, and skyrocketed 86.2 percent from year-ago levels. Criticisms about credit reports went from 12,830 in the first quarter of 2017 to 19,685 in the second, to 29,466 in the third. And it may get worse before it gets better, as the bad news about the Equifax hack makes its way further into the general population.Equifax-related complaints rose 131.2 percent during the period ending ... [With exclusive data]

A previously obscure FHA program for properties in designated disaster areas is getting more interest from lenders in the wake of hurricanes Harvey and Irma. According to FHA data, there has been a noticeable increase in loans originated under the FHA 203(h) mortgage insurance program, which is designed specifically for hard-hit homeowners in presidentially declared major disaster areas (PDMDA). Origination under the 203(h) program rose from $17.8 million in 2015 to $64.1 million in 2017, data showed. Use of the 203(h) product spiked in the fourth quarter of 2016, when 180 loans totaling $34.0 million were originated, up from 47 in the previous quarter and 26 loans from the same period in 2015. The U.S. experienced more floods in 2016, 19 in all, than any year on record, according to an analysis by Munich Re, a global reinsurance firm. In post-hurricane guidance, FHA urged lenders to ...

An official from the CFPB confirmed late last week the agency is looking into the massive data breach at Equifax, widely seen as the most significant, and potentially most damaging, so far in the age of the Internet. A spokesman for the bureau told this newsletter, “The CFPB has authority over the consumer reporting industry, including supervisory and enforcement authority. The CFPB is authorized to take enforcement action against institutions engaged in unfair, deceptive or abusive acts or practices, or that otherwise violate federal consumer financial laws. We are looking into the data breach and Equifax’s response, but cannot comment further at this time.” However, it’s not just the occurrence of the breach that bothers the consumer regulator. As part ...

The CFPB’s final rule banning arbitration agreements, as well as pending rulemakings on payday and small-dollar lending and on debt collection practices, may live or die on the decision of Director Richard Cordray to exit his term before it expires in July. That prospect could be motivating him to linger in his current gig as opposed to resigning right now to enter the race for Ohio’s governorship, according to an analysis of the current lay of the land at the bureau from a former senior official at the agency. Former CFPB Assistant Director and Deputy General Counsel Quyen Truong, now a partner at Stroock & Stroock & Lavan in DC, noted that it is still unclear whether Republicans in the ...

The CFPB suffered another legal blow recently when a federal district court judge in Atlanta granted defendants’ requests for sanctions against the bureau stemming from its behavior related to the defendants’ depositions of agency witnesses. The action stems from an enforcement action the CFPB brought in April 2015 against a number of individuals and entities in connection with what the bureau alleged was a massive debt-collection scheme. The issue prompting the judge’s crackdown was the CFPB's reluctance and apparent refusal to be deposed by some of the defendants. First, it objected to such depositions. Then when more defendants filed similar notices, the bureau responded with motions for protective orders. Then when depositions finally occurred, a CFPB witness used “memory aids” ...