The CFPB’s integrated disclosure rule will be “treacherous” for mortgage lenders and will likely be as challenging to comply with as its massive size and complexity suggests, according to top industry experts. Speaking to attendees of an Inside Mortgage Finance webinar last week on the CFPB’s TILA/RESPA Integrated Disclosure rule – known as “TRID” – Rod Alba, senior regulatory counsel for the American Bankers Association, rattled off a number of concerns that mortgage lenders still have with the new rule, which is set to take effect Aug. 1, 2015. “The regulation is enormously voluminous in length. The sheer size of this rule, we think, makes this regulation treacherous for banks in terms of liability, in terms of enforcement, in terms of understanding ...

Long-time leaders in the money transfer space Western Union and MoneyGram – along with relative newcomer PayPal – are collectively responsible for a huge 62 percent of the complaints consumers filed with the CFPB about their wire transfer transactions over the last year, according to a new analysis and ranking by Inside the CFPB. Western Union had the dubious distinction of leading the way with 356 cumulative gripes from the second quarter of 2013 to the second quarter of 2014. The biggest belly-ache about the company fit into the “fraud or scam” category, with 160 such citations, followed by “money not available as promised,” which was cited by 56 consumers. MoneyGram came in with the second-largest number of consumer grievances (215), with ...

The CFPB recently warned credit card companies of the risk of engaging in deceptive and/or abusive acts and practices in connection with solicitations that offer a promotional annual percentage rate (APR) on a particular transaction – such as convenience checks, deferred interest/promotional interest rate purchases, and balance transfers – over a defined period of time. The bureau said it is concerned that some companies are luring consumers with offers of reduced or zero interest for a specific purchase or balances transferred from another credit card, and then hitting them with surprise interest charges. In CFPB Bulletin 2014-02, the bureau states that it has observed that some card issuers do not adequately convey in their marketing materials that a consumer who accepts such ...

Last week, the law firm of Fredrick J. Hanna & Associates filed a motion to dismiss the enforcement action brought by the CFPB against it back in July. The bureau accused the firm and its three principal partners – Frederick Hanna, Joseph Cooling and Robert Winter – of operating a debt-collection lawsuit mill that used illegal tactics to intimidate consumers into paying debts they may not owe.Between 2009 and 2013, the firm filed more than 350,000 debt-collection lawsuits in Georgia alone, according to the CFPB. The bureau further alleged the defendants collected millions of dollars each year through these lawsuits, often from consumers who may not actually have owed the debts.But in its motion to dismiss, Hanna & Associates argued ...

The CFPB remains quite concerned about the risks consumers face from the sustained high volume of mortgage servicing transfers and issued new guidance that highlights what its examiners will pay keen attention to going forward. “The CFPB advises mortgage servicers that its examiners will be carefully reviewing servicers’ compliance with federal consumer financial laws applicable to servicing transfers,” the new guidance stated. These will include Regulation X under the Real Estate Settlement Procedures Act, Regulation Z under the Truth in Lending Act, Regulation V under the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions on unfair, deceptive, or abusive acts or practices (UDAAPs). At the top of ...

The CFPB recently fined auto finance company First Investors Financial Services Group Inc. $2.75 million for allegedly failing to fix known flaws in a computer system that was providing inaccurate information to credit reporting agencies. The bureau also ordered the Houston-based company to fix its errors and change its business practices. The CFPB said its investigation found that First Investors furnished inaccurate information about its customers to credit reporting agencies for at least three years. “When First Investors discovered the problem in April 2011, it notified the vendor but did nothing more,” the CFPB said. “The company did not replace the system or take any steps to correct the inaccurate information it had supplied. “It continued for years to use ...

Bipartisan Legislation Would Increase Threshold for CFPB Supervision. Right before Congress took off for its summer recess, Republican Sen. Pat Toomey of Pennsylvania and Democrat Sen. Joe Donnelly of Indiana introduced S. 2732, the Consumer Financial Protection Bureau Examination and Reporting Threshold Act of 2014. The act would increase the current $10 billion asset threshold figure at which regulated depository institutions are subject to direct examination and reporting requirements of the CFPB to $50 billion. “The higher threshold would be substantially the same as the threshold for a bank to be designated ‘systemically important’ (i.e., assets of $50 billion or more),” said attorney Barbara Mishkin, of counsel with the Ballard Spahr law firm, in a recent client note. CBO Pegs ...

Roughly $1 billion in damages will flow through to the FHA and Ginnie Mae from Bank of America’s record $16.65 billion global mortgage-backed securities settlement with the Department of Justice. Although most of the DOJ’s case centered around faulty private-label MBS that BofA and its forbears (namely Countrywide and Merrill Lynch) underwrote during the housing boom, a small piece of the settlement is tied to servicing chores that the bank did for Ginnie Mae. And apparently, BofA didn’t do a very good job of servicing the underlying product. The bank took over as the subservicer on roughly $26.2 billion in mortgage servicing rights that once belonged to Taylor, Bean & Whitaker, a large nonbank based in Ocala, FL. When TBW went bust in the second half of 2009, BofA was given the subservicing contract. “BofA serviced the loans for us,” said Ginnie Mae president Ted Tozer. “And they did a ...

A decision by the Department of Housing and Urban Development to suspend a Texas mortgage firm and its top executive was not “arbitrary and capricious” and did not violate due process, according to a recent Houston district court ruling. The court granted HUD’s motion for summary judgment and dismissed all of the plaintiffs’ claims with prejudice. In Allied Home Mortgage Corp. v. Donovan, (No. H-11-3864, 2014 WL 3843561, S.D. Tex. Aug. 5, 2014), a U.S. Attorney’s Office sued Allied Home Mortgage Corp. and its chief executive officer, James Hodge, in Manhattan federal district court for allegedly lying about its compliance with FHA requirements. Specifically, the former Houston-based mortgage net branch operator (currently doing business as Allquest Home Mortgage Corp.) allegedly violated the False Claims Act and the Financial Institutions Reform, recovery and Enforcement Act by ...

Two states have passed legislation placing varying spins on the Department of Housing and Urban Development’s counseling requirements for lenders and borrowers of FHA-insured reverse mortgages. In California, the state Senate unanimously approved AB 1700, which would mandate a seven-day “cooling off” period between the time a borrower receives counseling and when an application is taken. AB 1700 passed the CA Assembly by a vote of 73 to 1. In addition, the bill would require a lender to provide a worksheet guide that addresses certain issues the borrower should consider and discuss with the counselor, such as income and ability to repay as well as taxes and insurance. The counselor and the borrower are both required under the bill to sign the worksheet guide before any reverse mortgage application is taken. No schedule has been set for ...