In addition to the so-called TRID 2.0 final rule, the CFPB recently issued a notice of proposed rulemaking related to what’s known in the mortgage industry as TRID’s “black hole,” which refers to situations in which a lender is not permitted to use a closing disclosure to reset fee tolerances. More specifically, the proposal addresses when a creditor may use a Closing Disclosure (CD), instead of a Loan Estimate (LE), to determine if an estimated closing cost was disclosed in good faith and within tolerance. Currently, lenders are permitted, under certain limited circumstances, to use revised estimates, instead of the estimate originally disclosed to the borrower, to compare to the charges actually paid by or imposed on the borrower in...

Trade organizations representing the mortgage banking industry provided a number of important suggestions for the CFPB as it proceeds with a Dodd-Frank Act requirement to assess its mortgage servicing rules at the five-year mark. The first issue the American Bankers Association raised in this regard in its comment letter to the bureau was the scope of the assessment. “The CFPB should incorporate all of the servicing rules into its review, including the rules that implement the Truth and Lending Act and the amendments that the CFPB adopted to the servicing rules in 2016,” the ABA said – not just the rules promulgated under the Real Estate Settlement Procedures Act. The bureau also should take into account the rules’ effects upon consumers...

JPMorgan Chase told the CFPB it supports the bureau’s mission of protecting consumers and recognizes that regulatory guardrails are necessary to make sure mortgage servicers adequately address consumers’ needs. “However, certain provisions of Regulation X [which implements the Real Estate Settlement Procedures Act] impose burdens on servicers that increase servicing costs and impact access to consumer credit without providing proportional benefits to consumers,” the servicer said. JPMorgan was one of the industry participants commenting on the CFPB’s proposal to start assessing the effectiveness of its mortgage servicing rules under RESPA. The financial institution went on to some of the problem areas in Reg X that still need to be addressed, one of which has to do with rules for loss...

Last week, the CFPB issued a proposal to temporarily ease reporting requirements under the Home Mortgage Disclosure Act for small banks and credit unions that issue home-equity lines of credit – but based on the number of such loans, not asset size of the institution. Under the CFPB’s HMDA rules scheduled to take effect in January 2018, financial institutions are generally required to report HELOCs if they made 100 such loans in each of the past two years. Under the proposal released last week, the bureau would increase that threshold to 500 loans through calendar years 2018 and 2019 in order to give the consumer regulator the time to consider whether to make a permanent adjustment. “Home-equity lines of credit worsened ...

It’s one thing for a regulatory agency to promulgate a rule and catch a lot of slack from the affected industry. It’s quite another when another regulatory agency takes issue with a rule. The CFPB got a bit of a surprise in this regard when it issued its arbitration final rule last week: the Office of the Comptroller of the Currency expressed concerns about the potential risk the rule could pose to the safety and soundness of the U.S. banking system. In a letter to CFPB Director Richard Cordray, OCC Acting Comptroller of the Currency Keith Noreika, a recent appointee of President Trump, said, “The OCC has a mandate to ensure the safety and soundness of the federal banking system...

The American Bankers Association and banking associations from each of the 50 states and Puerto Rico last week called upon the CFPB to delay the new Home Mortgage Disclosure Act data collection and reporting requirements, which are scheduled to kick in Jan. 1, 2018. “We appreciate the bureau’s efforts to help lenders comply with the new reporting requirements,” the trade groups began. “Nonetheless, banks of all sizes are gravely concerned that they will not be able to assure proper compliance by the January timeframe.” For one thing, the new HMDA rules are inherently complex and very expensive to implement, according to the ABA and its affiliates. Also, they are incomplete. “Recently proposed adjustments to the rule are complicating compliance efforts...

The CFPB has finally issued its long-awaited final rule banning mandatory arbitration in consumer financial contracts. For starters, the final rule prohibits “covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action concerning the covered consumer financial product or service.” Further, the final rule requires “covered providers that are involved in an arbitration [proceeding] pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the bureau and also to submit specified court records.” The new rule applies to the major markets for consumer financial products and services overseen by...

Prospect Mortgage of Sherman Oaks, CA, this week joined a growing list of FHA lenders that have opted to settle federal false claims allegations arising from flawed underwriting and poor quality control. Prosecutors with the U.S. Attorneys Offices for the Northern Districts of Georgia and California announced a $4.16 million settlement with Prospect stemming from alleged fraudulent FHA lending practices at two of its Southeastern branches. An FHA direct endorsement lender, Prospect’s branches in Florida and North Carolina allegedly violated the False Claims Act by falsely certifying compliance with FHA underwriting and quality control requirements. Consequently, the FHA suffered substantial losses in claim payments when the loans defaulted. HUD’s Atlanta Home Ownership Center reported that Prospect had a 12.29 percent default rate, well in excess of the national average, between December 2007 and ...

The Department of Veterans Affairs has awarded a 10-year contract to VRM Mortgage Services to manage VA’s real estate-owned assets and service its loan portfolio. The contract requires VRM, a 10-year-old California-based real estate services contractor, to manage, market and sell VA REO properties, and provide other real estate services as well. The new contract was negotiated from a previous five-year contract that was awarded to VRM when VA consolidated both REO management and portfolio servicing into a single contract.VA has often sold conveyed properties with seller loan financing, known as vendee loans, to help keep distressed vet homeowners in their homes. Vendee lending is an arrangement whereby a buyer uses VA financing to purchase a property in the agency’s REO inventory. “Once a loan is sold under the vendee financing program, we would monitor that loan as well as ...

The Department of Veterans Affairs is seeking approval from the Office of Management and Budget to continue collecting information considered crucial in approving certain lender requests to close VA loans automatically. Currently, non-supervised VA lenders requesting approval to close VA loans on an automatic basis use VA Form 26-8736 to submit the information needed for VA approval. Upon receiving the form, the appropriate VA regional loan center processes and evaluates the information. Without the required data, VA would not be able to determine if a non-supervised lender is qualified for automatic loan processing. The required data include, among other things, a resume of each principal officer’s experience in mortgage lending in a managerial capacity and the latest financial statements audited and certified by a certified public accountant. The form also requires a listing of all ...