If the CFPB thought that mandating a 43 percent debt-to-income ratio requirement for a residential mortgage, as seen in its ability-to-repay rule, would lower the odds of a borrower later going into default, it might want to think again. The JPMorgan Chase Institute recently reviewed more than 400,000 mortgage modifications that received payment reduction, principal reduction, or a combination of the two during the financial crisis, and came to the conclusion that payment reduction did a better job bringing relief to struggling homeowners than principal reduction. “Our data showed that for borrowers who were underwater, payment-focused mortgage debt reduction was more effective at slowing default than principal-focused mortgage debt reduction,” the institute said in a report last week. “In addition, ...

A new report from the Office of the Inspector General of the Federal Deposit Insurance Corp. found that examiners in the agency’s Division of Depositor and Consumer Protection need to do a better and more consistent job of reviewing lenders’ compliance with the CFPB’s ability-to-repay and loan originator compensation rules. The ATR rule directed most mortgage lenders to make a reasonable and good-faith determination, at or before loan consummation, that a consumer would have a reasonable ability to repay a residential mortgage loan according to its terms. Some lenders and loan programs are exempt from this requirement. The LO comp rule placed limits on loan originator compensation and imposed new requirements on loan originators. Both rules took effect Jan. 10, 2014....

It’s Official: Cordray is Running for Governor in Ohio. After months of rumors and speculation, former CFPB Director Richard Cordray recently declared his candidacy for governor in his home state of Ohio. Although he faces at least four rivals for the Democrat nomination, at least one observer in the state considers him the instant favorite.... Mulvaney, Trump and Wells Fargo. Since Mick Mulvaney assumed the directorship of the CFPB, he has imposed a 30-day freeze on all new bureau regulations, and reportedly stopped all new contracting and all new lawsuits, has installed his aides into important positions at the agency, and temporarily froze all payments from the bureau’s civil penalty fund....

Participants in the commercial MBS market appear to have some certainty regarding the use of third-party purchasers to meet risk-retention requirements. The Securities and Exchange Commission seems to have helped resolve concerns about the accounting treatment for such deals, though a formal statement hasn’t been issued.

Congress on Thursday passed a stopgap-spending bill to prevent a potential government shutdown and to give lawmakers time to negotiate crucial issues. The House voted 235-193 to pass the measure. A short time later, the Senate quickly approved it 81-14. The temporary spending bill will keep the government running through Dec. 22. The continuing resolution or CR, that has kept the government open would have expired on Dec. 8. Both the House and Senate are scheduled to adjourn on Dec. 15. Congress will need to pass a final appropriations bill or another continuing resolution to keep the government operating after Dec. 22. Despite differences over tax reform, FY 2018 budget, immigration, health care and other issues, lawmakers do not want a shutdown, mortgage industry sources said. Republicans, in particular, hope to enact their $1.5 trillion tax package by Christmas. On the other hand, ...

Overshadowed by all the drama associated with the resignation of CFPB Director Richard Cordray and the struggle over who is to serve as his temporary replacement was some potentially significant legislative activity on Capitol Hill. A number of bills were recently introduced or are in the process of facing votes that could affect the CFPB, some of its rulemakings and the regulations it enforces. Rep. Sean Duffy, R-WI, chairman of the House Financial Services Subcommittee on Housing and Insurance, and Sen. Mike Enzi, R-WY, chairman of the Senate Budget Committee, late last week introduced bicameral legislation to restrain the CFPB’s rates of pay. Specifically, the legislation, H.R.4499, the CFPB Pay Fairness Act, would require the director of the bureau to ...

The mortgage industry continues to have serious consumer privacy and data concerns with the CFPB’s Home Mortgage Disclosure Act proposed guidance. But with new leadership in place, the bureau has a great chance to deal with the issues in a more appropriate manner, according to the Housing Policy Council of the Financial Services Roundtable. With new Acting Director Mick Mulvaney in place, the bureau could change course, electing to satisfy the statutory obligation to follow a formal rule-making process and also reconsidering the CFPB’s position regarding the disclosure of loan-level data, according to Ed DeMarco, president of FSR’s HPC. “Securing sensitive consumer data is a top priority for the financial industry,” said DeMarco, the former chief of the Federal Housing ...

As the CFPB prepares to move forward with a new strategic plan – which may well be revised, now that Mick Mulvaney is in charge – the mortgage industry again called on the bureau to move beyond “regulation by enforcement.” Instead, it should provide more of the detailed guidance lenders and servicers and other participants need to fully comply with the agency’s rules and regulations and best serve consumers, top industry representatives said. In a recent comment letter to the bureau, the Mortgage Bankers Association noted that the CFPB is at an inflection point in 2017. Now it can “pivot and focus its resources on providing supervision and binding, authoritative guidance that helps responsible parties, including those in the mortgage industry, comply ...

The CFPB and VA recently issued their first WARNO, or “warning order,” to members of the U.S. armed forces and veterans with VA home loans, urging them to stay on their toes and avoid deceptive mortgage refinance offers. “If you have a VA home loan, then there is a good chance that you have already come into contact with unsolicited offers to refinance your mortgage that appear official and may sound too good to be true,” the two agencies said. Many of these solicitations promise extremely low interest rates, thousands of dollars in cash back, the ability to skip mortgage payments, and no out-of-pocket costs or waiting period. “Don’t be fooled,” the CFPB and VA said. “Before responding to any ...

It’s unlikely the mortgage lending and servicing industry will see any big changes at the CFPB right away – at least in terms of new regulations and rule-makings – once Richard Cordray formally exits the stage as director of the bureau, most experts said. “Until the president installs a new director, it should be business as usual,” former CFPB official Benjamin Olson, now a partner with Buckley Sandler in Washington, DC, told Inside the CFPB. As excited as some mortgage industry representatives were upon hearing the news, all of the bureau’s rulemakings related to mortgage lending and servicing have already been issued and finalized, so that’s all water under the bridge. A new director will not be able to willy-nilly revoke or ...