The number of VA loans with a deficiency fell in April from March but was up 71.7 percent from the same period a year ago, according to the VA Lender Report Card. The report card includes VA loan reviews and deficiencies by month from April 2014 through April 2015. VA loan originations over the one-year period totaled 563,967, the report showed. Of those loans, 303,149 were purchase loans, 162,447 were streamlined refinances, and 98,371 were cash-out refis. A total of 39,037 loans were reviewed by VA, which comprised about 7.0 percent of total volume. Altogether, 14,793 loans (37.9 percent) had deficiencies. The average deficiency response time was 28.1 days. Of the 1,726 loans the VA examined in April, 613 (35.5 percent) contained deficiencies, down from 1,234 loans (33.7 percent of 3,662 loans reviewed) that were found with flaws in March. The number of deficient loans found in ...

A VA mortgage servicer must immediately schedule an inspection and protect a property securing a VA loan if the property has been left vacant or abandoned by its owners. According to new guidelines issued by the VA, loan servicers must conduct an inspection immediately after becoming aware that the property’s physical condition may be in jeopardy. If local codes require more extensive protection than what VA requires, servicers should adhere to local requirements, the agency said. Failure to protect and preserve the collateral may result in a reduced guaranty claim if the servicer’s failure increased the VA’s liability on the loan. Unless the loan is undergoing loss mitigation, a property inspection is also required before the 60th day of delinquency or before starting foreclosure, whichever is earlier, the VA said. In addition, a property inspection will be required at least once a month after ...

The Department of Housing and Urban Development’s Inspector General has slammed Ginnie Mae for understating the severity of misstatements in prior year financials. In a memorandum, the HUD IG said Ginnie Mae’s inadequate disclosures in a restatement notification did not help users of financial statements understand the full impact of the material misstatements. The reporting errors were identified in an IG audit of Ginnie’s fiscal year 2014 financial statements. According to the IG, the misstatements in the 2014 audit were due to improper accounting for FHA’s reimbursable costs and the flawed accounting treatment and inadequate disclosure of borrowers’ mortgage escrow funds held in trust by Ginnie in its defaulted issuers’ portfolio. These errors may have affected Ginnie Mae’s prior year financial statements as far back as FY 2011, the IG concluded. In its audit report, the IG ...

The CFPB and all of the prudential banking regulators will recognize the good-faith efforts of the mortgage industry to comply with the bureau’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule as of its effective date of Oct. 3, 2015. “During initial examinations for compliance with the rule, the agencies’ examiners will evaluate an institution’s compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance,” said CFPB Director Richard Cordray, in a letter to industry trade groups. “Examiners will expect supervised entities to make good-faith efforts to comply with the rule’s requirements in a timely manner,” the director continued. “Specifically,...

The full House of Representatives is expected to vote sometime this week on legislation that would provide a regulatory and legal safe harbor for mortgages originated under the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule until Feb. 1, 2016. Speaking of the legislation at issue, H.R. 3192, the Homebuyers Assistance Act, House Majority Leader Kevin McCarthy, R-CA, said, “This bipartisan bill provides certainty to businesses that are trying to comply with the rule as well as an opportunity to work out any implementation issues that come up.” One industry observer who anticipates a “big margin” vote indicated he expects the bill will split rank-and-file Democrats from their caucus leadership. Meanwhile, industry readiness continues to ...

Real estate, title and mortgage industry groups are doing more than lobbying Congress and the CFPB for relief when it comes to compliance with and enforcement of the bureau’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule. They are also continuing to work hard to get their own respective memberships as up to speed as possible before examiners show up on their doorsteps. For instance, the American Bankers Association sent a letter to member CEOs last week to assist executive management and line business managers in decision making as the industry completes final arrangements to comply with TRID. “Bankers are making assessments of systems readiness, staff training, capabilities of settlement services providers, and potential compliance risk ...

Mortgage Bankers Association President and CEO David Stevens again called for formal guidance from the CFPB on the legitimacy of marketing services agreements in the wake of some recent troubling developments after the bureau assumed enforcement of the Real Estate Settlement Procedures Act as a result of the Dodd-Frank Act. Speaking at the MBA’s recent 2015 regulatory compliance conference in Washington, DC, Stevens told a crowd of attendees, “We sent a letter to [CFPB] Director [Richard] Cordray weeks ago asking that the bureau simply clarify whether MSAs are considered acceptable and what constitutes an acceptable [agreement] if that’s the case. That was our question. We’re not saying we’re for them, against them; just please tells us if we’re going to ...

Last week, the CFPB announced it had brought two separate actions against Cincinnati, OH-based Fifth Third Bank, one for alleged discriminatory auto loan pricing and another for alleged illegal credit card practices. In the auto-lending enforcement action, the bureau and the Department of Justice alleged that the bank violated the Equal Credit Opportunity Act by charging African-American and Hispanic borrowers higher dealer markups for their auto loans than non-Hispanic white borrowers. They also asserted that Fifth Third’s allegedly illegal discriminatory pricing and compensation structure meant thousands of minority borrowers from January 2010 through September 2015 were charged, on average, over $200 more for their auto loans. The CFPB and DOJ action requires Fifth Third to change its pricing and compensation ...

Late last week, the CFPB brought a $48 million enforcement action against Los Angeles-based Westlake Services, an indirect auto-finance company, and Wilshire Consumer Credit, its auto-title lending subsidiary, for allegedly pressuring borrowers using illegal debt collection tactics. Westlake Services specializes in purchasing and servicing auto loans, including many subprime and near-prime loans. Wilshire Consumer Credit offers title loans directly to consumers, largely via the Internet, and services those loans. Wilshire also purchases and services title loans made by others. The bureau accused the companies of deceiving consumers by calling under false pretenses and using phony caller ID information, falsely threatening to refer borrowers for investigation or criminal prosecution, and illegally disclosing information about debts to borrowers’ employers, friends and family...

The CFPB recently issued some final changes to its mortgage rules to help foster responsible lending by small creditors, especially those operating in rural and underserved areas. The new rule, which was proposed in January, aims to increase the number of community banks and credit unions that are able to offer certain types of mortgages in rural and underserved areas. It also gives small creditors time to adjust their business practices to comply with the rules. “The financial crisis was not caused by community banks and credit unions, and our mortgage rules reflect the fact that small institutions play a vital role in many communities,” said CFPB Director Richard Cordray. “These changes will help consumers in rural or underserved areas ...