The CFPB and the Navajo Nation took joint action last week against companies and individuals who allegedly operated an illegal tax-refund scheme. The alleged scam was based on tax-preparation franchises steering low-income consumers, including many citizens of the Navajo Nation, toward high-cost tax-refund-anticipation loans, the bureau said. The complaint identified Jeffrey Scott Thomas, who through his company, J Thomas Development of NM, Inc., owned four H&R Block tax-preparation franchises in New Mexico. The bureau and the Navajo Nation did not find that H&R Block participated in this scheme, the CFPB said, and H&R Block terminated its relationship with those franchises, which then closed in September 2014. “Before they closed, the tax franchises catered largely to low-income citizens of the Navajo ...

A group of investors who purchased more than $8 billion in loans from mini-correspondents in 2014 responded to the CFPB’s “mini-corr” guidance and suggested the bureau use somewhat different questions when trying to determine if an entity under review has in fact made the transition from mortgage broker to correspondent lender. According to a copy of the materials sent to the bureau and obtained by Inside the CFPB, the first question the investors suggested was, when does the sales transaction take place when a loan is sold by a lender to an investor? To ensure that a transaction in question truly occurs as a sale in the secondary market, as opposed to a table-funded transaction, several steps should transpire, the ...

The CFPB put out a final interpretive rule last week on how lenders should provide mortgage applicants with a list of local homeownership counseling organizations. Lenders may fulfill this Dodd-Frank Act requirement by using bureau-developed housing counseling lists, which are available via an online tool the CFPB created in 2013, or by generating their own lists using the same Department of Housing and Urban Development data the bureau uses to build its lists. The interpretive rule restates guidance the CFPB issued in 2013, and provides further guidance for lenders who are building their own lists of housing counselors. In response to questions the CFPB has received, the guidance also includes new instructions about how to provide applicants abroad with homeownership ...

CFPB Community Bank Advisory Council Meeting April 22. CFPB Director Richard Cordray plans to discuss credit scores and credit reporting and the related implications for community banks when the bureau convenes the next meeting of its Community Bank Advisory Council on April 22, from 3:00 p.m. to 4:30 p.m., in Washington, DC. The event is scheduled to be held at the bureau’s location at 1275 First Street, N.E., and is open to the public, but an RSVP is required to attend. CFPB to Hold Research Conference May 7-8. The CFPB plans to host its first research conference May 7-8, 2015. The conference will focus on high-quality consumer finance research, with academic and government researchers presenting their research papers. “The goal ...

CFPB Deputy Director Steven Antonakes revealed recently that the bureau is increasingly concerned about the subprime auto finance sector and will crack down on any practices that prove to be too risky for consumers. Speaking at an event of the Consumer Bankers Association, Antonakes identified a loosening of credit in the subprime auto loan market as one of the emerging risks the bureau is paying close attention to. “From our standpoint, it is not inherently troubling that more consumers are getting auto loans; under the right conditions, increased access to credit is good for the economy and individual upward mobility,” the deputy director said. “However, we have noticed some trends in connection with this credit expansion that give us cause ...

The CFPB brought an enforcement action against National Corrective Group, a nationwide debt collection operation based in San Clemente, CA, and CEO Mats Jonsson, accusing them of using deceptive threats of criminal prosecution and jail time in order to intimidate consumers into paying debts for bounced checks. The bureau also accused the company of misleading consumers into believing they have to sign up for a costly financial education program to avoid criminal charges. The CFPB complaint also alleges that National Corrective Group created a false impression for consumers that its communications were from a state or district attorney’s office. “The company sent letters on prosecutors’ letterheads that appeared to be signed by the state or district attorney,” the bureau said...

Some of the top mortgage lenders in the United States plan to move up their consumer disclosure- related processes even more than the CFPB is requiring under its integrated disclosure rule, which takes effect Aug. 1, 2015. It looks like they are just trying to be conservative and provide a bit of a cushion, at least in the initial transition period to a revamped disclosure regime. Bob Kelly, head of Truth in Lending Act/Real Estate Settlement Procedures Act implementation at Bank of America, told Inside the CFPB, “One thing that I think the CFPB sought to really have is that customers know before they owe. From a customer perspective, they often felt that the process to close was hurried and ...

It’s Time to Scale Back Dodd-Frank, Industry Says. With a new Republican majority now in power and calling the shots on Capitol Hill, the industry consultants at The Collingwood Group recently asked mortgage industry officials what they thought the new Congress could do to bolster the housing market. Their answer? Rein in Dodd-Frank. “Although just fewer than 50 percent of respondents selected ‘repeal Dodd-Frank’ or ‘abolish the CFPB,’ the comments submitted clearly indicate that these industry insiders prefer a tempered approach with reasonable modifications to these two reactionary reform measures stemming from the crisis,” Collingwood said. “Many respondents stated that the Dodd-Frank Act should be revised to remove barriers to innovation and to reduce the cost of manufacturing a mortgage.” ...

Fitch Ratings has issued a report updating its standards for rating residential MBS under the ability-to-repay and qualified mortgage rules that went into effect early last year. Issued by the Consumer Financial Protection Bureau, the rules outline a set of underwriting criteria, which, when met for a particular loan, protects the lender from any undue litigation risk and provides a safe harbor for the loan. The rules affect...

The Department of Veterans Affairs will continue removing barriers to delivering home-loan benefits to veterans and service members in 2015, focusing more on further improvements in appraisal and servicing. “It’s going to be geared around improving on the things we have already done,” said Mike Frueh, director of the VA Home Loan Guaranty program. VA loan originations are on the upswing and the agency wants to maintain the trend by getting more vets and active-duty personnel into the program. Last year, 18 percent of VA loans were to active-duty service members and 82 percent to veterans. Frueh said the VA program is by far the better deal. Interest rates are lower on a VA loan than on conventional loans and, generally requires no downpayment, he noted. In addition, VA loans do not have mortgage insurance. Based on the volume of VA loans originated in 2014, veteran borrowers ...