The CFPB’s ability-to-repay rule with its qualified mortgage standard has not dampened mortgage credit availability – market dynamics did that before the rule kicked in, according to a new analysis from the Urban Institute’s Housing Finance Policy Center. “The second anniversary of the QM rule is an appropriate occasion to evaluate the rule’s impact on credit availability,” Research Associate Bing Bai, Director Laurie Goodman and Senior Fellow Ellen Seidman wrote in a brief published late last month. The data they reviewed suggest that the impact of QM has been small: mortgages with interest-only features and prepayment penalties were virtually extinct before QM took effect; the adjustable-rate mortgage share of the market still tracks interest rate changes; and the share of loans ...

In response to federal legislation that was enacted late last year, the CFPB last week announced an application process for requests that areas not deemed “rural” receive that designation under federal consumer law. “Under this process, those now outside rural counties or census blocks can apply to be designated as rural and may be eligible for specific exemptions and provisions for certain mortgage lenders,” the agency said. The CFPB will accept applications starting March 31. The application process will be open through Dec. 4, 2017. “However, any application submitted after April 8, 2017, will be considered only if the bureau determines the designation decision process for that application can be completed by the sunset date of Dec. 4, 2017, based ...

Before the CFPB’s new Home Mortgage Disclosure Act rules kick in, now would be a great time for the mortgage industry to take steps to improve the HMDA process, according to Kathleen Blanchard, president of Key Compliance Services. “As another HMDA season draws to a close, take some time to consider the HMDA process and how to make it better,” she advised in a recent online blog. “The HMDA Loan Application Register is an important document that is very labor intensive, with monetary penalties attached for inaccuracies. Take a project management approach and create a strong process to get it right.” Blanchard said she sees financial institutions scrubbing LARs at year end, making changes to applications and loans that should ...

The Mortgage Bankers Association last week indicated it plans to press the CFPB for relief on a handful of fronts this year, most notably, the integrated disclosure rule known as TRID, the pending new reporting regime under the Home Mortgage Disclosure Act, and the broader “regulation by enforcement” approach the bureau seems to have taken. “Since the TRID rule’s implementation, a significant number of issues have emerged – mostly due to lingering misperceptions, differing interpretations, and technical ambiguities in the regulation,” the trade group said during a recent press briefing about its priorities for 2016. “It also has become clear that, while the vast majority of lenders were educated about the rule, many other important actors in the real estate transaction ...

The CFPB’s recently finalized “no action” policy towards market innovators that come up with new financial services products will probably depress the development of new mortgage loan products, numerous industry legal experts say. Under the policy, bureau staff would issue no-action letters (NALs) to specific applicants, stipulating that the CFPB staff “has no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter.” Also, such a letter could be modified or revoked at any time at the discretion of bureau staff. Further, issued NALs would be publicly disclosed as a general practice, and they would not be binding on the bureau, other regulators or parties in litigation. Former CFPB official ...

The CFPB took two separate actions against Citibank last week for alleged illegal debt sales and debt collection practices. In its first action, the CFPB ordered Citibank to cough up nearly $5 million in consumer relief and pay a $3 million penalty for allegedly selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers. The second action was taken against both Citibank and two debt collection law firms it used that allegedly falsified court documents filed in debt collection cases in New Jersey state courts. The CFPB ordered Citibank and the law firms to comply with a court order that Citibank refund $11 million to consumers and forgo collecting about $34 million ...

he CFPB initiated its first data security enforcement action last week, ordering online payment platform Dwolla, based in Des Moines, IA, to pay a $100,000 penalty for allegedly deceiving consumers about its data security practices, to stop misrepresenting those practices and to fix them. According to the bureau, from December 2010 until 2014, Dwolla claimed to protect consumer data from unauthorized access with safe and secure transactions. The company also claimed that it encrypted all sensitive personal information and that its mobile applications were safe and secure. As a result of its investigation, the CFPB said that, among other issues, Dwolla misrepresented its data-security practices by falsely claiming they exceed or surpass industry security standards. “Contrary to its claims, Dwolla ...

Mass Defection of Top Financial Services Attorneys at K&L Gates. A total of 26 top attorneys – including Laurence Platt, Phillip Schulman, Steven Kaplan, Melanie Brody and Jonathan Jaffe – have jumped ship from the K&L Gates law firm in Washington, DC, to the rival Beltway law shop of Mayer Brown. Their new Consumer Financial Services Group will advise leading financial services companies – including banks, investment banks, private equity funds, hedge funds, mortgage companies, marketplace lenders, emerging payment companies and start-ups –as well as various types of participants in the consumer credit and real estate finance arenas. Their specialized focus will include counseling clients on federal and state laws governing the making, servicing, purchase and sale of residential mortgage loans and the ...

The five largest mortgage servicers that got into trouble because of their flawed servicing and foreclosure practices have passed their final test for compliance with the 2012 National Mortgage Settlement, according to the Office of Mortgage Settlement Oversight. The OMSO report summarizes a set of five compliance reports filed by NMS Monitor Joseph Smith with the U.S. District Court for the District of Columbia for five servicers that were subject to the $25 billion ...

An appeals court in Massachusetts recently ruled in favor of a borrower in a case involving the determination of the borrower’s ability to repay a balloon mortgage, setting a concerning precedent, according to industry lawyers. Moronta v. Nationstar Mortgage involves a refinance originated by Fremont Investment & Loan in January 2007 for a borrower in Quincy, MA. The refi included a first-lien 3/1 adjustable-rate mortgage that amortized over 50 years with a ...