The Department of Treasury has signaled that the CFPB should work with other federal agencies and state regulators to create consistent mortgage servicing regulations across the industry. In a recent report on nonbank issues, Treasury expressed its concern regarding inconsistency in mortgage servicing regulations that could create compliance headaches for residential loan processors while increasing costs. “In light of that, the CFPB is taking the lead ...

Dozens of military and veteran groups are urging Acting CFPB Director Mick Mulvaney not to weaken military lending protections. Thirty-eight groups – including the National Military and Veteran Alliance, the Student Veterans of America, and the Air Force Sergeants Association – in late August sent a letter to Mulvaney and Defense Secretary James Mattis calling for continued strong enforcement and supervision of the Military Lending Act. “We urge you to stand with ...

The CFPB recently refused to set aside or modify a civil investigative demand filed against a debt collection company, the latest sign that the bureau is being tough in pursuing certain investigations, said attorneys.The CFPB filed two CIDs in 2017 under former Director Richard Cordray against Firstsource Advance regarding debt collection issues. The company then sought to set aside or modify the bureau’s second CID, but the agency denied the petition ...

It has been more than three years since FHA introduced a new streamlined process of identifying loan defects and their severity to minimize or avoid enforcement action and hefty penalties under the False Claims Act. Despite calls by the mortgage industry to improve and clarify the process – the Single-Family Loan Quality Assessment methodology or “defect taxonomy” – the FHA has yet to make a move to meet industry demands for more detailed defect taxonomy. Contacted for an update on the defect taxonomy, a Housing and Urban Development spokesperson said simply, “Nothing to report on this.” An outgrowth of lender concern over the government’s indiscriminate use of the FCA to prosecute mortgage fraud and recover FHA losses, the defect taxonomy establishes nine categories of loan defects in loans it endorses. The nine defect categories replaced the 99 loan defect codes that were ...

Ocwen Financial Corporation is no longer in danger of losing its Ginnie Mae issuer status after the agency earlier this month officially announced its concerns over the specialty servicer’s problems with state regulators are resolved. Ocwen, a publicly traded Florida corporation, disclosed in a new filing that, based on information it provided to Ginnie Mae regarding the resolution of state cease-and-desist orders issued by a coalition of state banking regulators, the agency considers the issue to be concluded. In April last year, 30 state mortgage regulators issued cease-and-desist orders to prevent Ocwen from servicing loans within their jurisdictions. The servicer was accused of substandard loan servicing that violated state and applicable federal laws The orders generally prohibited Ocwen from acquiring new mortgage servicing rights, originating or acquiring new mortgage loans for which Ocwen would be the ...

All 49 Democratic senators last week signed a letter to Acting CFPB Director Mick Mulvaney, urging him to continue protecting servicemembers and their families under the Military Lending Act. The letter follows reports that Mulvaney plans to suspend examining lenders for MLA compliance. The senators called on Mulvaney not to halt military lending checks or take steps that would potentially harm servicemembers and their families. “The CFPB should not be abandoning ...

The CFPB recently finalized its proposed amendment to allow certain financial institutions to be exempt from sending annual privacy notices to their customers. The Gramm-Leach-Bliley Act generally requires financial institutions to provide customers with annual notices regarding their privacy policies. If the institution shares consumer information with third parties, the annual notice must provide customers with an opportunity to opt out of such sharing. The CFPB issued ...

The Department of Justice this week announced a $4.9 billion settlement with the Royal Bank of Scotland to resolve legacy-related claims that the bank misled investors on the quality of residential MBS they purchased from RBS between 2005 and 2008.

The Mortgage Bankers Association called upon Congress to pass legislation to restore Ginnie Mae eligibility for so-called orphaned VA loans, which have caused a temporary disruption in the government-backed secondary market. In written testimony to the Senate Committee on Veterans’ Affairs last week, the MBA urged lawmakers to make technical corrections to restore the eligibility of certain Interest Rate Reduction Refinance Loans for pooling. The MBA estimated the VA orphan loan mess at roughly $500 million. Due to new loan seasoning requirements in the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, sime IRRRLs were rendered ineligible for Ginnie MBS pools. The loans were in transit when legislation addressing the problem of VA loan churning and serial refinancing became law in May. The new law’s seasoning provisions turned out to be ...

A Treasury Department report called on the Department of Housing and Urban Development to establish clear standards for determining which mortgage-related violations and loan defects the Department of Justice should pursue under the False Claims Act. The report also recommended that DOJ ensure that materiality, for purposes of the FCA, is linked to the standards of the agency administering the program to which the claim has been filed. Furthermore, it urged both HUD and the DOJ to work together to clarify the process by which they can jointly resolve claims. The report was issued pursuant to President Trump’s February 2017 executive order establishing his administration’s policy to regulate the U.S. financial system according to a set of core principles. Both HUD and the DOJ have been successful in using the statute to prosecute FHA lenders who knowingly commit fraud or make ...