The CFPB suffered another legal blow recently when a federal district court judge in Atlanta granted defendants’ requests for sanctions against the bureau stemming from its behavior related to the defendants’ depositions of agency witnesses. The action stems from an enforcement action the CFPB brought in April 2015 against a number of individuals and entities in connection with what the bureau alleged was a massive debt-collection scheme. The issue prompting the judge’s crackdown was the CFPB's reluctance and apparent refusal to be deposed by some of the defendants. First, it objected to such depositions. Then when more defendants filed similar notices, the bureau responded with motions for protective orders. Then when depositions finally occurred, a CFPB witness used “memory aids” ...

Last week, the CFPB brought an enforcement action against Zero Parallel, an online lead aggregator based in Glendale, CA, for allegedly steering consumers toward lenders who offered illegal or unlicensed loans that were void in the consumer’s state. According to the bureau, consumers who applied for loans through Zero Parallel’s network had no control over which lenders received their applications. “Zero Parallel regularly sold leads for consumers located in states where the resulting loan was void,” said the consumer regulator. The CFPB ordered Zero Parallel to end its alleged illegal conduct and pay a $100,000 penalty. Also, under the terms of the consent order, Zero Parallel is required to undertake reasonable efforts to ensure that loan applications it sells do ...

State Regulators Start Work on a Next-Generation Technology Platform. The Conference of State Bank Supervisors has initiated what it characterizes as a major redesign of the Nationwide Multistate Licensing System (NMLS), which is the core technology platform state bank regulators utilize. According to the CSBS, the redesign will enable the regulators to transform the licensing and supervision of non-bank financial institutions, including financial technology companies, or so-called fintechs. “Technology and data are powerful tools that can create sweeping benefits throughout the financial regulatory system,” said Louisiana Office of Financial Institutions Commissioner John Ducrest. “And that vision drives our efforts with the next-generation NMLS. We are committed to nothing less than modernized state regulation for a modernized financial services industry.” The ...

Independent mortgage bankers are leading all other lenders in providing mortgage loans to first-time homebuyers, minorities, lower-income borrowers and rural areas, and yet they are more regulated than banks, according to a new industry report. The report from the Community Home Lenders Association underscores the fact that IMBs are small businesses that don’t have access to federally insured deposits. It claims that IMBs have done a better job of servicing home loans ...

The Department of Housing and Urban Development this week announced changes to the FHA-insured reverse mortgage program, including a 200 basis point adjustment in the upfront mortgage insurance premium that may shut out some potential borrowers. HUD officials acknowledged during a press call that changes in both the upfront MIP and the HECM principal limit factors could reduce the number of borrowers initially by as much as 20 percent. Officials estimated that there are approximately 24 million seniors with untapped equity in their homes. “Overall, it is still a very large potential market,” said one official who spoke on background. “In the last few years, we did about 45,000 to 50,000 reverse mortgages annually. The net effect of all these changes is a better and safe HECM program for seniors. We’ll just have to wait and see how it plays out.” The revisions would help stabilize the ...

Working past age 62 is usually a less costly way to increase a senior’s Social Security benefit than borrowing a reverse mortgage, according to the Consumer Financial Protection Bureau. In a report published last week, the CFPB warned that a strategy touted by financial consultants to seniors – borrowing a reverse mortgage loan to get more SS benefits later – could result in significant costs that may erase gains from delaying SS benefits. The strategy would require older homeowners to borrow a reverse mortgage at age 62, the minimum age a person can begin collecting SS benefits, in order to delay claiming such benefits. This means retirees would use the proceeds from a reverse mortgage to replace the money they would otherwise receive from SS in the years between 62 up to their full benefit age of 66 (for those born before 1960) and 67 (for those born after 1960), or their maximum ...

With speculation mounting that CFPB Director Richard Cordray could be out the door as early as the Labor Day weekend, the CFPB late last week announced it is amending the 2015 updates to the Home Mortgage Disclosure Act rule. The bureau has temporarily changed reporting requirements for banks and credit unions that issue home-equity lines of credit, and clarified the information that financial institutions are required to collect and report about their mortgage lending. Under the rules that are scheduled to take effect January 2018, financial institutions would have been required under HMDA to report HELOCs if they made 100 such loans in each of the last two years. The final rule issued this past Thursday increases that threshold to ...

Legal liability in the context of the so-called black hole in the CFPB’s TRID integrated disclosure rule remains a source of much anxiety for mortgage lenders, according to experts such as Rod Alba, senior vice president of mortgage markets, financial management and public policy for the American Bankers Association. “For lenders in general, [the biggest concern] is simply the liability that results from allowing the transaction to be negotiated until the last minute,” he said last week in an interview. “We don’t like telling the consumer, ‘You’re now three business days from closing; we can no longer negotiate and you must go through on this deal.’ That’s not pleasant.” Alba continued: “The consumer may say, ‘Well, no, that chimney has ...

The CFPB and the other members of the Federal Financial Institutions Examination Council last week issued new examiner transaction testing guidelines for all financial institutions that report under the Home Mortgage Disclosure Act. The rules will apply to the examination of HMDA data collected starting in 2018 and reported beginning in 2019. The guidelines eliminate the file-error resubmission threshold under which a financial institution would have to correct and resubmit its entire Loan Application Register (LAR) if the total number of sample files with at least one error reached or exceeded a certain threshold, the bureau said. They also establish allowable tolerances for certain data fields for the purpose of counting errors toward the field-error resubmission threshold.Additionally, they provide ...

Campaign for Accountability, a self-styled watchdog organization, recently filed a Freedom of Information Act request with the CFPB to find out what actions the agency has taken to hold Clayton Homes and its mortgage lending subsidiary, Vanderbilt Mortgage, accountable for alleged predatory lending practices.Clayton Homes, based in Maryville, TN, is one of the nation’s largest mobile home sellers, and is owned by Warren Buffett’s Berkshire Hathaway. Said Campaign for Accountability Executive Director Daniel Stevens: “Clayton Homes appears to have been preying on some of our most vulnerable citizens. As the company expands its footprint to reach more Americans, it is imperative to know whether the government found any wrongdoing and, if so, what actions were taken.” The watchdog group...