The CFPB recently brought a $32.25 million enforcement action against First National Bank of Omaha, alleging deceptive marketing and illegal billing of add-on credit card products that it claimed harmed hundreds of thousands of borrowers. According to the CFPB, from 2002 until at least 2012, First National Bank of Omaha offered add-on debt cancellation products with its credit card, including products dubbed “Secure Credit” and “Payment Protection.” The bureau said the bank promoted these products as providing a monthly payment to the cardholder’s account in the event of certain hardships, such as involuntary unemployment, hospitalization or disability. Cardholders were charged a monthly fee for the products. First National Bank of Omaha also offered credit monitoring products, including “Privacy Guard” and ...

The CFPB recently brought a $4 million enforcement action against Wells Fargo, alleging the bank engaged in illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. “Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts,” said CFPB Director Richard Cordray. The bureau said it identified breakdowns throughout Wells Fargo’s servicing process, such as failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information. One of the CFPB’s charges against the company was that it processed payments in a way that maximized fees for many consumers. “Specifically, if a borrower made a ...

The Mortgage Bankers Association strongly urged the Department of Housing and Urban Development and the FHA to issue authoritative guidelines for lenders participating in state and local housing finance programs that rely on premium pricing to fund downpayment assistance. In a recent letter to members, the MBA recommended that FHA lenders “tread carefully” and seek legal advice until HUD provides more definitive guidance on downpayment assistance and premium pricing. Lenders should consider carefully whether and when to participate in DPA programs from housing finance agencies that rely on premium-pricing mechanisms, the letter said. The MBA said it would continue to press HUD for clarification on this contentious issue. The FHA and HUD’s inspector general are currently at odds over permissible sources of single-family downpayment assistance offered through housing finance agencies. Although the ...

A new audit report from the Department of Housing and Urban Development’s inspector general recommended that the agency continue its efforts to collect millions of dollars in partial claims that came due during fiscal year 2015. According to a HUD IG report, the department left uncollected approximately 1,361 partial claims, worth about $21.5 million. The IG discovered the oversight during an audit of HUD’s partial claim collections. The IG reviewed a statistical sample of 135 of 10,561 partial claims associated with FHA loans that terminated in FY 2015. “HUD had not collected 36 of the claims that should have been collected,” the report stated. “We used this result to project that a total of 1,361 partial claims were not collected.” The claims were never returned to the FHA mortgage insurance fund, as required by agency rules, to strengthen FHA solvency, the report said. A partial claim is a loss ...

The Federal Communications Commission has issued a baffling final rule restricting the way servicers can collect on or service student loans, mortgages and other debts owed to the federal government.Specifically, the rule implements a key provision in the Bipartisan Budget Act of 2015 amending the Telephone Consumer Protection Act to exclude robocalls from the TCPA consent requirement if they are made solely to collect a debt owed to or guaranteed by the federal government.The TCPA generally requires a caller to obtain “prior express consent” from the call recipient before making a telemarketing call or an auto-dial call to the recipient’s landline or cell phone.However, the mortgage industry raised concerns that TCPA’s consent requirement could create potential liability for important servicing calls that could help homeowners save their homes, which prompted Congress to pass the Budget Act amendment. Last month, the FCC specifically excluded the federal government from the TCPA’s consumer protections by ruling that the government is not a “person” subject to the TCPA. Here is where the FCC rule gets confusing. commission is authorized to adopt rules to “restrict or limit the number and duration” of any wireless calls to collect debt owed to the federal government.”

Major industry trade groups are asking FHA and VA to suspend proposed guidelines for energy-improvement loans and give stakeholders an opportunity to comment. In a joint letter, 11 trade groups warned that the proposed agency guidelines regarding Property Assessed Clean Energy (PACE) loans raises serious concerns that must be resolved before implementation of any PACE guidance. Prior to the issuance of the new guidelines, both FHA and VA prohibited the financing or refinancing if there was a lien other than the FHA-insured or VA-guaranteed mortgages. PACE programs are available in 19 states but most are in California. They provide financing for home improvements and clean-energy upgrades that would result in more efficient use of water and electricity, and ultimately savings for homeowners. The PACE obligation is repaid through a property-tax assessment, which takes a ...

The FHA has announced new streamlined procedures to help delinquent homeowners avoid foreclosure and stay in their homes. The agency is revising loss-mitigation procedures servicers use when evaluating and choosing the best home-retention options for delinquent borrowers by reducing waiting time for results. The new streamlined procedures are designed to enhance servicers’ ability to evaluate foreclosure-avoidance alternatives, especially for the FHA-Home Affordable Modification Program (FHA-HAMP). Specifically, FHA will require servicers to convert successful three-month trial modifications into permanent modifications within 60 days instead of the average four to six months. Borrowers who have three missed mortgage payments would be able to opt for a partial claim to bring their arrearages current versus the previous four-month minimum. In addition, the FHA will eliminate the ...

Mortgage Company President Charged with Defrauding Ginnie Mae. Robert Pena, president and founder of the now-defunct Mortgage Security Inc., was charged in federal district court in Boston for allegedly bilking Ginnie Mae out of nearly $3 million. MSI was an approved participant in the Ginnie Mae mortgage-backed securities program, pooling eligible single-family mortgages and selling the securitized products to investors. The firm also serviced the underlying loans. In 2011, Pena allegedly began diverting borrower payments and huge loan-payoff amounts into secret accounts, which he used to fund personal and business activities. Likewise, he is said to have funneled borrowers’ escrow funds and mortgage-insurance premiums into other personal accounts. In total, Pena pocketed $3 million due Ginnie Mae, which had to pay investors whose investments it had guaranteed, according to the ...

The CFPB’s TILA/RESPA Integrated Disclosure Rule continues to have mixed results, at least from the perspective of the nation’s mortgage originator community. According to the recently released results of a survey by the National Association of Realtors of mortgage originators during the second quarter of 2016, delays attributed to TRID eased between the first and second quarters of the year, as did lenders’ reluctance to offer pre-approval letters, while cancellations ticked up. Originators were asked, since April 1, what share of their company’s mortgage transactions had been delayed or cancelled due to a TRID-related issue versus non-TRID issues. Mortgages delayed due to TRID ticked barely down, from 1.8 percent in 1Q16 to 1.7 percent in 2Q16. In the fourth quarter ...

The Federal Communications Commission recently promulgated final rules that restrict how companies can attempt to collect on delinquent agency mortgages, federal student loans and other debts owed to the federal government, including through the use of so-called robocalls. The new rules limit the number of robocalls to wireless numbers, including text messages, to three per month. The new rules also only allow robocalls concerning debts that are delinquent or at imminent risk of default, unless there is prior express consent otherwise. The new rules require that, absent consent, callers only call the individual who owes the debt, not his or her family or friends. This includes limiting the number of robocalls allowed to reassigned numbers. The new rules reiterate that ...