The ability of mortgage servicers to call struggling borrowers and help them resolve their problems is being compromised by an order from the Federal Communications Commission and needs to be overturned, a trio of industry groups argued in a recently submitted legal brief. The FCC’s order, released June 18, 2015, aims to bolster consumer protections against unwanted telephone calls and texts by, in part, restricting the ability of mortgage servicers, debt collectors and others to make autodialed or prerecorded phone calls without prior express consent of the person called. Violators can be subject to fines of $500 per phone call. A challenge to the FCC’s order is being led by ACA International before the U.S. Court of Appeals for the ...

The CFPB recently brought an $8 million enforcement action against Clarity Services, a national credit reporting firm based in Clearwater, FL, and its owner, Tim Ranney, for allegedly obtaining consumer credit reports illegally and for failing to appropriately investigate consumer disputes. Clarity focuses on data reporting for the under-banked, near prime, and subprime consumer segments, and provides information that is not available from traditional reporting agencies. Instead, its reports are derived from a variety of financial service providers, including auto financers, check cashers, prepaid card issuers, short-term installment lenders, peer-to-peer micro lenders, small-dollar credit lenders, and online small-dollar credit lenders. “Credit reporting plays a critical role in consumers’ financial lives,” said CFPB Director Richard Cordray. “Clarity and its owner mishandled ...

The CFPB recently filed a $2.59 million federal complaint against EOS CCA, a debt collection firm based in Norwell, MA, accusing the company of reporting and collecting on old cellphone debt that consumers disputed and EOS did not verify. The company also allegedly provided inaccurate information to credit reporting companies about the debt and failed to correct reported information that it had determined was inaccurate. The bureau’s action appears to revolve around the firm’s handling of just one large portfolio. According to the CFPB, in 2012, EOS paid AT&T $35.4 million for a portfolio of more than three million cellphone accounts with a total face value of $2.3 billion. “Many of these debts were old accounts that had been previously ...

Do TRID-Related Loan Delays Bolster Warehouse Profits? It Looks That Way. Thanks to loan closing delays caused by the new “TRID” integrated disclosure rule, mortgages are staying on warehouse lines longer, increasing profits for banks that play in that space. David Frase, president of warehouse lending for Southwest Bank, Dallas, told IMFnews, an affiliated email newsletter, that “loans are staying on lines longer so we make more money.” Frase, however, said he expects that, in time, the TRID kinks will be worked out and that loan closing times will become more normalized. Southwest’s specialty entails mini-correspondent or “broker to banker” lines of credit. “Turn times are slower and processing times are longer,” said Frase. According to figures compiled by Inside ...

The Department of Justice has announced settlements with two nonbank FHA originators to resolve allegations of FHA underwriting fraud and False Claims Act violations. Franklin American Mortgage in Franklin, TN, recently agreed to pay $70 million to resolve allegations it knowingly originated and underwrote FHA-insured loans that did not meet agency guidelines. There were also quality-control issues. According to the DOJ, Franklin Mortgage, a direct endorsement lender, agreed it had certified ineligible loans for FHA insurance starting Jan. 1, 2006, including single-family residential loans, reverse mortgages and streamlined refinances. Those loans later resulted in claims submitted to the Department of Housing and Urban Development, causing losses to the FHA insurance fund. The DOJ also alleged that the nonbank lender employed unqualified junior underwriters and set high quotas for its ...

Quicken Loans’ chief executive officer reiterated threats by company owner Dan Gilbert to exit the FHA business amid concerns about a forthcoming lender-certification rule and an ongoing court battle with the Department of Justice. A report by Reuters quoted Gilbert earlier this week as saying he is considering pulling Quicken Loans out of the FHA market. In an interview with IMFnews, Quicken CEO Bill Emerson said top management would be remiss if it did not think about exiting the business. Quicken will decide whether to stay or go after the FHA releases its revised rule on lender certification later this month, he said. The revised proposal restores a provision initially removed from the original proposal, which would require lenders to certify that neither the firm nor its officers have been suspended, debarred or excluded from participation in any federal agency transactions. In addition, the revised proposed rule requires ...

An Urban Institute analysis echoed observations in the FY 2015 actuarial audit of the FHA Mutual Mortgage Insurance Fund, calling for the separation of the highly volatile reverse mortgage portfolio from the fund. Assessing the performances of the larger forward mortgage portfolio and the smaller Home Equity Conversion Mortgage portfolio when determining FHA’s financial status results in an inaccurate picture, warned Laurie Goodman, director of the institute’s Housing Finance Policy Center. Including the highly unstable, unpredictable HECM business in FHA’s solvency calculation severely distorts the fund’s true financial condition, she said. Goodman’s dire warning puts a damper on the actuarial audit, which, for the first time since 2009, reported the fund’s capital ratio over the 2.0 percent statutory threshold, up from 0.41 percent in FY 2014 and a year earlier than projected in the ...

A coalition of financial services trade groups expressed support for the permanent extension of the one-year protection from foreclosure for service members who have just left the military. The provision under the Servicemembers Civil Relief Act will expire at the end of 2015 and revert to the original 90-day protection unless extended by legislation. Eight industry trade organizations in a joint letter urged House lawmakers to extend the provision through 2016 if they cannot make it permanent. Some service members continue to face financial hardship upon returning to civilian life, the groups noted. Slow recoveries in real-estate markets in certain areas of the country, particularly those around military bases, make it difficult for those retiring or opting out after their tour of duty is up to sell their houses. The protection becomes effective on the date the service member is ...

Warehouse banks ended the third quarter with $46.0 billion of commitments on their books, a 4.2 percent sequential decline as residential originations in the primary market slowed and nonbank customers needed less credit. According to survey figures compiled by Inside Mortgage Finance, warehouse commitments at the end of September were up 27.8 percent from the same point in 2014. The quarterly decline was...

The new and modified data required under the CFPB’s recently released Home Mortgage Disclosure Act final rule will probably result in greater regulatory and legal scrutiny of mortgage lenders, so covered institutions should take a proactive approach to implementation, according to top legal experts. In a recent client alert, the attorneys in the mortgage banking and consumer financial services groups at the Ballard Spahr law firm noted that the new and modified data will include “much more detail about applicants, borrowers, credit, collateral, loan type, pricing, fees, charges, the originator, and the covered institution. The new and modified data will enable regulators and private parties to analyze a lender’s practices in much greater detail than is currently possible.” Analyses of ...