Last week, the Republican-controlled House Financial Services Financial Institutions and Consumer Credit Subcommittee considered nearly a dozen pieces of legislation to rein in the CFPB, provide lenders with some regulatory relief, and bring greater transparency and accountability to the agency. Most Democrats on the committee and some consumer advocate groups were either skeptical or outright opposed to the measures, fearing each of the bills would weaken or eviscerate the agency – or result in “death by a thousand paper cuts,” as Rep. Carol Maloney, D-NY, put it. Meanwhile, Republicans and lender groups supported the collection of bills brought before the subcommittee as corrections to a flawed Dodd-Frank Wall Street Reform and Consumer Protection Act that need to be enacted before bad...
The Department of Veterans Affairs said there may be a need for further clarification of its newly issued qualified mortgage (QM) rule to allay lender fear of potential liability if they originate VA streamlined refinances, also known as Interest Rate Reduction Refinance Loans (IRRRL), with a rebuttable presumption. Industry sources say VA lenders remain apprehensive despite assurances by agency officials that little has changed in the VA lending process as a result of the agency’s interim final rule. VA issued its QM document on May 9 in compliance with the Dodd-Frank Act, defining the types of VA loans that are “qualified mortgages” for purposes of the new ability-to-repay (ATR) provisions of the Truth in Lending Act. The Act also imposed similar requirements upon the FHA and the Department of Agriculture for the loans they insure or guarantee. The agency said it issued the rule on ...
The slowdown in VA activity in the last quarter of 2013 spilled over into the first quarter of this year as lenders reported a 13.0 percent decline in loan production during the period, according to an Inside FHA Lending analysis of agency data. The downward trend in volume began at the end of the first quarter last year although VA still considered 2013 a record year for VA originations. VA lenders reported $19.5 billion in total production for the quarter, down from $22.4 billion in the previous quarter. Production, likewise, dropped 47.9 percent this year compared to the same period last year. Despite the slowdown, lenders remain optimistic about the VA market. “We have spent a lot of time understanding the perils of lending to veterans and learning to deal with the losses, and we are all in with VA lending,” said one lender. “When you do VA loans you talk about having ... [1 chart]
The fourth edition of the CFPB’s Supervisory Highlights report, released last week, reveals that recent “nonpublic supervisory actions” and self-reported violations in a number of program areas have resulted in more than $70 million in remediation for approximately 775,000 consumers. The report also highlighted what the bureau characterized as illegal actions uncovered by the agency’s supervision of the payday, debt collection and consumer-reporting markets – which are now being supervised on a federal level for the first time due to the authority conferred upon the CFPB by the Dodd-Frank Wall Street Reform and Consumer Protection Act. “For the first time at the federal level, nonbank financial institutions are subject to supervisory oversight that holds them accountable for how they treat consumers,"...
The Department of Veterans Affairs is studying the impact of fees and may propose alternative regulations to amend the current structure, according to agency officials. In a briefing with the National Association of Realtors, VA staff attorney Erica Lewis said the agency has begun looking at the fees VA charges in response to complaints from some lenders. During the briefing, some NAR members expressed concerns that some of the VA loan requirements, such as pest inspections, disadvantage veterans because they may dissuade sellers from accepting offers that could potentially create additional fees, which cannot be paid by the homebuyer. Lewis also suggested that real estate agents request a waiver from the VA field office nearest to the location of the property being purchased to ...
Providers of consumer financial services products, be forewarned: If the CFPB has not gotten around to regulating you yet, don’t rest too easy. It definitely plans to do so. The latest edition of the CFPB’s Supervisory Highlights report indicated larger indirect nonbank auto lenders are next on its to-do list. But if past is prologue, the odds are strong that sector won’t be the last to feel the bureau’s expanding scrutiny.As per the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has authority to supervise certain nonbanks, including mortgage companies, private student lenders, and payday lenders, as well as nonbanks the bureau defines through rulemaking as “larger participants.” To date, the agency has issued rules to supervise...
The FHA has proposed to bring its adjustable-rate mortgage (ARM) rules in line with those of the Consumer Financial Protection Bureau to enable FHA lenders to comply with the new servicing requirements under the Truth in Lending Act. Specifically, two proposed changes would align both agencies’ interest-rate adjustment and disclosure-notification regulations for ARM borrowers as required by the revised TILA. The CFPB issued its final TILA servicing rule in February 2013 but delayed the effective date for another year to allow the Department of Housing and Urban Development sufficient time to write rules for new notification requirements for FHA-insured ARMs with a 30-day look-back period. Hence, FHA ARMs must comply with the new TILA rule on or after Jan. 10, 2015. The FHA insures 1-, 3-, 5-, 7- or 10-year ARMs. The CFPB’s revised look-back period and notification requirements would ...
Given the expanding reach of the CFPB’s regulatory oversight wingspan, many types of entities beyond a traditional financial services company could find themselves subjected to unanticipated and unwanted scrutiny in the form of a civil investigative demand from the bureau. Attorneys at the Latham & Watkins law firm in Washington, DC, recently detailed how affected companies should plan and respond to such a demand. First, upon receipt of a CID, a company should immediately begin to develop a response plan, including an analysis of the company’s ability to respond in a timely manner. “Important response deadlines come up in a matter of days after service of a CID, so delays can impair a company’s ability to effectively respond in a ...
The CFPB and the state attorneys general are well-positioned to work together and are continuing to do so, even though they have not completed efforts to strike a formal memorandum of understanding explicitly spelling out the terms of their cooperative relationship, one legal expert said recently. One of the areas in which such cooperation is continuing is in issues that affect U.S. military service members, according to attorney Clarine Nardi Riddle, who chairs the government affairs practice of the Kasowitz, Benson, Torres & Friedman law firm in Washington, DC. Riddle served from 1989 to 1991 as the first female state attorney general of Connecticut after a stint as the deputy AG in the preceding three years. “There’s a natural sweet ...
President Obama is expected to announce his intent to nominate Housing and Urban Development Secretary Shaun Donovan as director of the Office of Management and Budget and San Antonio Mayor Julian Castro to replace him. If confirmed by the Senate, Castro would be the second Hispanic after Henry Cisneros to assume the top post at the Department of Housing and Urban Development. Also a former mayor of San Antonio, Cisneros served as HUD secretary during the Clinton administration from 1993 to 1997. Currently in his third term as mayor, Castro is a strong advocate of affordable housing, neighborhood revitalization, inner-city investment and child education and works closely with the San Antonio Housing Authority. San Antonio mortgage bankers said they have had little interaction with Castro, who, they say is “big on housing issues.” “We’re hoping to hear a little bit more about his ...