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 ...

In its first government referral, the Online Interest-Based Advertising Accountability Program last week referred SunTrust Bank Inc. to the CFPB after SunTrust allegedly refused to participate in the advertising industry’s self-regulatory process. The Accountability Program said it uses this “cooperative inquiry process” to help companies understand and comply with the cross-industry Self-Regulatory Principles for Online Behavioral Advertising. "As part of its ongoing monitoring and enforcement processes regarding website operators’ duty to provide consumers with transparency and control of OBA,” the Accountability Program said it sent a letter of inquiry to SunTrust after examining the bank’s website and observing “third parties known to be engaged in collecting consumers’ web browsing activity in order to serve them interest-based ads.” Citing the OBA...

Officials at Walter Investment Management revealed that the nonbank servicer is in talks with the CFPB and the Federal Trade Commission to settle a potential enforcement action by the federal regulators likely involving Green Tree Servicing LLC, its wholly owned subsidiary. The disclosure was made in the company’s Form 10-Q filing with the Securities and Exchange Commission late last week. Here’s the background: In response to a civil investigative demand from the FTC issued in November 2010 and a CID from the CFPB in September 2012, Green Tree Servicing produced “documents and other information concerning a wide range of its loan servicing operations,” Walter said. On Oct. 7, 2013, the CFPB notified Green Tree Servicing that bureau staff was considering...

The Department of Veterans Affairs will soon begin looking closely at whether lenders are complying with the agency’s requirement for a quality control plan. Participants at a recent VA lender conference in Houston said officials warned of impending audits of lenders’ quality control regimes as the agency tightens its oversight. All lenders authorized to process VA loans automatically are required to maintain a QC plan and execute it in the course of making VA loans. Lenders were advised to familiarize themselves with VA’s QC plan requirements and be ready when VA scrutinizes the process in future lender-monitoring audits, participants said. This initiative is consistent with VA auditing an increasing percentage of loans to refine its ...

The Department of Housing and Urban Development will soon seek comment on a proposal to extend equal protection to reverse mortgage borrowers and their non-borrowing spouses from displacement due to eviction or foreclosure. The proposed rule would codify the changes to existing Home Equity Conversion Mortgage regulations and make other alternative revisions as appropriate, according to HUD. The FHA expects to publish a notice of proposed rulemaking soon. Currently, the National Housing Act provides for a “safeguard to prevent displacement of the homeowner.” The provision defers repayment of the HECM until the homeowner’s death, the sale of the home, or the occurrence of other events specified in the regulations. Such events include the homeowner’s failure to reside in the property or failure to pay the required taxes and insurance. Without this provision, a reverse mortgage is ...

The House Appropriations Committee this week approved the FY 2015 Transportation, Housing and Urban Development funding bill, which, among other, things contains a provision prohibiting federal housing agencies from facilitating the use of eminent domain in resolving foreclosure problems. Specifically, the FHA, Ginnie Mae and the Department of Housing and Urban Development would not be allowed to use funds appropriated by Congress to “insure, securitize or establish a federal guarantee” of any mortgage or mortgage-backed security that refinances or replaces a mortgage that has been subject to eminent domain condemnation or seizure by a state, municipality or any other political subdivision of a state. In addition, the bill would prohibit the use of appropriated funds or any receipts or amounts collected under any FHA program to implement the FHA’s new Homeowners Armed with Knowledge (HAWK) program. HUD has proposed to ...

A coalition of industry trade associations is urging the FHA to harmonize its regulatory treatment of transfer fee covenants with the Federal Housing Finance Agency. In a joint letter, the group said the FHFA’s final rule on transfer fee covenants “establishes a clear, national standard to protect homeowners from equity-stripping private transfer fees while preserving the preeminence of state and local governments over land-sue standards.” The letter was sent in response to reports that FHA may issue a proposed rule on transfer fee covenants that will apply to FHA-insured mortgages. A private transfer fee covenant is attached to real property by the owner or another private party – frequently the property developer – and provides for a fee to be paid to specified third party every time the property is resold. The fee typically is a percentage of the property’s sales price and ...