U.S. Military Personnel Continue to Report Problems With Their Mortgages. Complaints to the CFPB from American military personnel about their mortgages rose 10 percent from 2014 to 2015, according to a recent report from the bureau. The good news for mortgage lenders is that total complaints about their operations – roughly 9,900 – were less than half of the total generated by debt collection practices, which came to about 20,500. ... FHFA Wants Public Input on National Mortgage Borrower Survey. The Federal Housing Finance Agency is seeking public comments about the American Survey of Mortgage Borrowers, an information collection effort otherwise known as the National Survey of Existing Mortgage Borrowers. ...

This week, the Supreme Court of the United States invited the U.S. Solicitor General to file a brief “expressing the views of the United States” in the Madden v. Midland Funding case, indicating the court is seriously considering taking the case. Assuming the Solicitor General obliges the high court, attorneys at the Pepper Hamilton law firm believe the brief likely will articulate the views of the primary banking agencies on whether SCOTUS should grant certiorari, along with their relative positions on the issues in the case. Madden involves...

A federal appeals court in Washington, DC, ordered the transfer of a case challenging risk-retention rules to the district court because the petitioner sought review of an agency action “in the wrong court.” Writing for the majority, Judge Janice Brown of the U.S. Court of Appeals for the District of Columbia shifted the Loan Syndications and Trading Association’s (LSTA) challenge to the lower court for lack of statutory authorization to review the rule. “As it turns out, LSTA’s challenge on the merits will have to wait,” she wrote. Jointly prescribed by the Securities and Exchange Commission, Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, the credit risk-retention regulations required...

For years, banks have had a losing record in FHA cases involving False Claims Act allegations. Hence, a federal appeals court’s decision to uphold dismissal of a $2.3 billion lawsuit against a major bank is a rarity. In U.S., ex rel. Advocates for Basic Legal Equality (ABLE) v. U.S. Bank, the U.S. Court of Appeals for the Sixth Circuit affirmed the dismissal of an FCA lawsuit against U.S. Bank because the conduct alleged by the qui tam relator had been previously disclosed publicly in a consent order with federal banking regulators. The court held that ABLE’s claims were barred because the conduct that allegedly violated the FCA had already been disclosed when the plaintiff filed suit in 2013. The Department of Justice declined to intervene. The relator suit alleged that U.S. Bank had a practice of initiating foreclosure on FHA-insured mortgages without complying with the ...

The Department of Veterans Affairs has issued additional lender guidance for dealing with the public water contamination problem in Flint, MI. The guidance expands on the agency’s minimum requirements for properties backed by VA loans. The guidance refers to policy in the VA Lender’s Handbook which requires properties to have “a continuing supply of safe and potable water for drinking and other household uses,” before being approved for a VA-backed home loan. In the VA’s view, safe and potable water also refers to water used for bathing, showering and sanitary uses. Properties not in compliance with this requirement will not be eligible for the VA guaranty. Proper mitigation of lead-contaminated water must include a central filtering system that is acceptable to local health authorities and that can provide safe and potable water. Appraisers must comment and adjust for any ...

The Department of Veterans Affairs FY 2017 budget is seeking $34 million for the VA Loan Electronic Reporting Interface (VALERI) to manage the 2.4 million VA mortgages in portfolio. VALERI connects VA with more than 225,000 approved mortgage servicers and an estimated 320,000 veteran borrowers. Specifically, the system is used to manage and monitor servicer and VA staff activities aimed at providing timely and appropriate loss-mitigation assistance to defaulted borrowers. Without these resources, approximately 90,000 veterans and their families would be in danger of losing their homes each year, the VA said. Furthermore, this could cost the VA $2.8 billion a year in additional expense. In addition, VALERI also supports payment of guaranty and acquisition claims.Meanwhile, starting March 19, VA servicers began using the new version of the bulk upload templates to ...

With the CFPB declining to provide any more formal guidance on legal liability for secondary market players when originators make errors in TRID mortgage disclosures, a group of due diligence firms is moving ahead with its own clarifications. High-level sources familiar with the matter who spoke under the condition of anonymity said the forthcoming clarifications have been vetted by legal counsel and are almost ready for approval. Several top third-party review/due diligence firms are involved in the effort, including Clayton Holdings and Opus. All the major rating agencies are reportedly involved as well. “We’re working to calibrate our methodology, to bring it in line with the spirit of the CFPB letter,” said one attorney close to the matter. He was ...

The Consumer Mortgage Coalition and the Mortgage Servicers Working Group wrote the CFPB recently to express their concerns with the bureau’s proposal on successors in interest and urged a more simplified approach instead. “While the CFPB stated that the successors in interest proposal was designed to make account information available to confirmed successors in interest, and to make loss mitigation procedures available to them, the proposal would not make these available,” the groups said. To begin with, privacy protections that the CFPB has not proposed to amend would continue to prohibit servicers from providing information absent borrower consent. “When the borrower does consent to disclosures, the disclosures are permitted under current law,” the CMC and the MSWG note. Also under ...

CFPB Director Richard Cordray last week defended the approach his agency has taken in its public enforcement actions, which many in the industry have criticized as “regulation by enforcement.” “I think that criticism is badly misplaced,” Cordray said Wednesday in a speech at a meeting of the Consumer Bankers Association in Phoenix. Certainly, he said, any responsible official charged with enforcing the law has to recognize that he should be thoughtful in how he deploys his agency’s limited resources most efficiently to protect the public. “That means working toward a pattern of actions that conveys an intelligible direction to the marketplace, so as to create deterrence that can be readily understood and implemented,” said the CFPB chief. The alternative, as ...

The U.S. District Court for the Central District of California last week granted the CFPB’s request for a final judgement against debt relief company Morgan Drexen, Inc., bringing to an end a lawsuit filed by the bureau back in August 2013. The agency alleged that the company and its leadership charged illegal upfront fees for debt relief services and misrepresented their services to consumers. According to the CFPB, when consumers signed up for Morgan Drexen’s services, the company presented them with two contracts, one for debt settlement services and one for bankruptcy-related services. Based on its investigation, the bureau brought suit alleging that consumers who signed up sought services for debt relief and not bankruptcy, that little to no bankruptcy ...