Following up on the recent pledge by CFPB Acting Director Mick Mulvaney to “seek evidence” that the bureau is fulfilling its mission, the CFPB has issued a formal request for information on civil investigative demands, a source of tremendous controversy and uncertainty for the industry during the tenure of former director Richard Cordray. The agency asked for “comments and information from interested parties to assist it in assessing potential changes to the bureau’s CID processes, consistent with law, to consider whether any changes to the processes would be appropriate,” said the document. Entities that have received CIDs as well as their attorneys were invited to comment. “The issuance of CIDs is an essential tool for fulfilling the bureau’s statutory mission ...

The CFPB last week moved to restructure how the agency enforces fair lending laws, consolidating that function under the director’s office, which is headed by interim appointee Mick Mulvaney. In a statement provided to Inside the CFPB, John Czwartacki, senior advisor to the acting director, said: “The bureau’s statutory mandate includes the supervision and enforcement of fair lending laws and regulations [and] the bureau will continue to perform those functions.” He added: “The fact is, it never made sense to have two separate and duplicative supervision and enforcement functions within the same agency – one for all cases except fair lending, and the other only for fair lending cases. By announcing our intent to combine these efforts under one roof, we ...

The Consumer Mortgage Coalition recently wrote to CFPB Acting Director Mick Mulvaney to express the continuing, unresolved concerns its members have with some of the bankruptcy-related provisions of the bureau’s mortgage servicing rules. As of April 2018, mortgage servicers will have to send monthly billing statements to consumers in active bankruptcy cases and certain bankruptcy cases in which the debtor’s personal liability was previously discharged. This is problematic for a number of reasons, according to the CMC. First, these proposed rules conflict with well-settled bankruptcy law prohibiting a creditor from collecting from consumers who are in an active bankruptcy case or who have previously been discharged from personal liability in a prior bankruptcy case. “The courts have held these provisions ...

House Rules Committee Expected to Clear Legislation to Tweak Points and Fees Definition under the ATR Rule. The House Rules Committee is expected to clear sometime this week H.R. 1153, “The Mortgage Choice Act,” legislation that would make two adjustments to the Truth in Lending Act (TILA) definition of points and fees to ensure greater consumer choice in mortgage and settlement services under the ability-to-repay/qualified mortgage rule.... OIG Has Mixed News for CFPB on Mobile Device Data Security. The CFPB got a dinged report card from the Office of Inspector General in terms of the security of mobile technology that bureau staff use. “Mobile devices help CFPB staff carry out their duties, but the portability of these devices heightens the risk of loss or theft of IT equipment and data,” said the OIG in explaining its motivation for evaluating the CFPB’s mobile encryption practices....

The Consumer Financial Protection Bureau last year logged 988 servicemember complaints related to the origination and servicing of VA and FHA mortgages. CFPB data showed VA outscored FHA on the number of complaints, 740 to 248, respectively, in 2017. The top five reasons for servicemember complaints were trouble during the payment process, difficulty in paying the mortgage, loan servicing, applying for a purchase mortgage or refinance, and closing a loan. Other complaints were about loan modification and foreclosure, mortgage brokers, incorrect information, settlement process and costs, underwriting/credit decision, credit-reporting company’s investigation of a consumer problem, and improper use of a credit report. Abusive practices related to loan churning might not be reflected clearly in servicemembers’ complaints in 2017 compared to the previous year, but a deeper dive into the ... [Chart]

Ginnie Mae is expanding its guidelines to clarify the amount of risk it considers acceptable for an issuer’s mortgage servicing rights portfolio and what administrative actions an issuer with excessive portfolio risk could face. The move is part of the agency’s continuous monitoring of issuer activity and MSR portfolios to ensure they are not putting issuers, investors or the program at risk. In its revised MBS Guide, Ginnie provides examples that fall outside of the acceptable risk parameters. Issuers deemed to carry excessive risk will find their participation in the MBS program greatly restricted, the agency warned. In addition, Ginnie may require offenders to recalibrate their high-risk portfolio to more acceptable risk levels, diversify their portfolio, or restrict their participation in Ginnie’s co-issue program, Pool Issues for Immediate Transfer (PIIT) and/or multiple pools. Ginnie is urging issuers to review the ...

The Department of Justice has had a busy month in terms of False Claims Act enforcement.Eagle Home Mortgage, a subsidiary of Lennar, is under government investigation for its FHA underwriting and quality-control processes – code words for a potential FCA lawsuit. Lennar, a nationwide builder of new homes, disclosed the probe in its annual Securities and Exchange Commission filing. The company said the Department of Justice has subpoenaed its mortgage subsidiary for documents relating to FHA-insured loans originated and sold in previous years. There were no other details. Lennar said Eagle has provided the DOJ with information related to the loans and is cooperating with investigators. “The DOJ has to date not asserted any claim for damages or penalties,” the Miami-based homebuilder said. Meanwhile, in federal district court in Detroit last week, government prosecutors argued with Quicken Loans’ attorney, Jeffrey Morganroth, over a motion to narrow the loan sample the ...

Sen. Elizabeth Warren, D-MA, recently questioned whether CFPB Acting Director Mick Mulvaney is intentionally trying to undermine the bureau, utilizing some Inspector General concerns about the agency’s data security as a pretext. In a letter to Mulvaney and Leandra English, the deputy director of the federal regulator, Warren said the CFPB cannot fulfill its core functions without collecting personally identifiable information. “When a consumer submits a complaint, the CFPB asks for information such as their name and account number to enable the agency to help resolve the dispute,” Warren said. “CFPB bank examiners and enforcement lawyers regularly use account-level data provided by regulated institutions to detect improper and unlawful activity.” Similarly, the bureau’s Office of Fair Lending collects and analyzes ...

In another historic move, CFPB Acting Director Mick Mulvaney late last week shocked defenders of the bureau under Richard Cordray by announcing he had submitted to the Federal Reserve the bureau’s quarterly appropriations request for the second quarter of fiscal year 2018, requesting zero funds. In a letter to departing Fed chief Janet Yellen, Mulvaney spelled out his rationale. “The reason for this is straightforward: I am informed that the projected second quarter expenses for the bureau are approximately $145 million. “During my review of the financial condition of the bureau, I learned that, as of the beginning of the fiscal year 2018, the bureau had a balance [in its fund] at the Federal Reserve Bank of New York in ...

Last week, the CFPB put out a call for evidence to make sure it is “fulfilling its proper and appropriate functions to best protect consumers.” The agency said it will soon publish in the Federal Register a series of Requests for Information (RFIs) seeking comment on enforcement, supervision, rulemaking, market monitoring, and education activities. The bureau’s expectation is that the RFIs will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities. “In this New Year, and under new leadership, it is natural for the bureau to critically examine its policies and practices to ensure they align with the bureau’s statutory mandate,” said Acting Director Mick Mulvaney. “Moving forward, ...