On Jan. 21, 2016, the FHA issued a reminder to lenders to register for one of the three remaining phases of Electronic Appraisal Delivery (EAD) Onboarding, before the electronic appraisal submission requirements become mandatory on June 27, 2016. The remaining onboarding phases are the following: Feb. 15-April 15 (registration closes on Feb. 14); March 15-May 15 (registration closes March 14); and April 15-June 15 (registration closes on April 14). All appraisals for FHA case numbers assigned on or after June 27, 2016, must be submitted to FHA through the ...

The mortgage industry’s continued use of marketing services agreements and other affiliated business arrangements hangs in the balance in a long-running dispute between PHH Corp. and the Consumer Financial Protection Bureau, which will be the subject of oral arguments April 12, 2016, before the U.S. Court of Appeals for the District of Columbia. “The PHH appeal is one of the most important Real Estate Settlement Procedures Act opinions to be decided by the courts in decades,” legal expert Phillip Schulman told Inside Mortgage Finance this week. “It will determine whether Section 8(c)(2) of the act merely clarifies the Section 8(a) anti-kickback provisions of the statute, as CFPB Director Richard Cordray claims, or whether it creates a safe harbor that exempts payments from a RESPA violation if those payments are for goods provided or services rendered, as the plain language of the act and several previous circuit courts have held.” Further, “This appeal will have...

A battle on the legislative or even legal front may be brewing that challenges the Federal Housing Finance Agency’s recent decision to exclude certain types of insurance companies from membership in the Federal Home Loan Bank system. The biggest impact of the final rule would be to force a number of real estate investment trusts that have formed captives to gain access to the FHLBanks to give up low-cost FHLBank advances. “The impact on mortgage liquidity and credit access should be...

The recent letter from CFPB Director Richard Cordray to the Mortgage Bankers Association clarifying certain aspects of the bureau’s integrated disclosure rule has some important take-aways – and certain limitations – the industry should be mindful of, according to some top industry attorneys. In a recent online blog posting, attorneys Donald Lampe and Leonard Chanin of Morrison & Foerster LLP identified a handful of key take-aways for mortgage market participants related to the TRID rule. First, “If mortgage loan originators and others involved in the origination, financing and sales of mortgage loans are not familiar with the benefits of [specific] Know Before You Owe disclosure cure provisions, now is the time to assess them,” the attorneys began. They then noted that Cordray’s ...

Investors in non-agency U.S. residential mortgage-backed securities are unlikely to face much in the way of risk stemming from lender non-compliance with the new requirements of the CFPB’s integrated disclosure rule known as TRID, according to analysts at Fitch Ratings. “Although the frequency of non-compliance issues will likely be elevated initially as lenders implement the new changes, those non-compliance issues are not likely to translate into higher risk for bondholders,” the analysts said in a recent report. Their initial due diligence sampling of prime jumbo mortgages in the secondary market has revealed a high level of compliance issues thus far. However, most of them appear to be good-faith errors. The ratings service is continuing its discussions with market participants on ...

Credit union representatives are urging the CFPB to address the increased regulatory burden associated with complying with the bureau’s new Home Mortgage Disclosure Act regulation, as well as related privacy issues the new rule raises. “The final rule added a significant number of new data points to the reporting requirements established in Regulation C, while modifying almost all the existing data points,” said Alexander Monterrubio, regulatory affairs counsel for the National Association of Federal Credit Unions, in a recent comment letter to the CFPB. While some of the data points were specifically mandated by the Dodd-Frank Act, many of them were added at the bureau’s discretion, and that will prove to be problematic. “These discretionary data points have swelled the ...

The CFPB Office of Inspector General found the victim identification process associated with payouts from the bureau’s Civil Penalty Fund is generally effective but could be improved. “During our audit of the CPF, we noted an opportunity to enhance the victim identification process,” the OIG said in a new report. Specifically, the OIG found that the Office of the Chief Financial Officer has not documented the roles and responsibilities of the Office of Technology and Innovation (T&I) in the victim identification process. “The victim identification process is data dependent and in some instances requires the involvement of T&I to produce preliminary lists of eligible victims,” the report added. The OIG attributed the absence of documented roles and responsibilities for T&I ...

PHH, CFPB Have a Court Date. The U.S. Court of Appeals for the District of Columbia has scheduled to hear oral arguments in the case of PHH Corp. v. CFPB on April 12 at 9:30 am ET. Analysts at Compass Point Research & Trading said in a client note that “the oral argument date is consistent with our expectations and supports our 4Q16 estimate for a decision.” The crux of the dispute is the bureau’s assertion that PHH violated the Real Estate Settlement Procedures Act by illegally referring borrowers to mortgage insurance companies in exchange for kickbacks. Back in January 2014, the CFPB initiated an administrative proceeding against PHH. Administrative Law Judge Cameron Elliot subsequently held that PHH’s referrals of ...

Credit Plus Offers Reps-and-Warrants Coverage to Help Lenders Cope with CFPB, OCC Expectations. Credit Plus, a Salisbury, MD-based third-party verifications specialist for mortgage professionals, has come out with representations-and warranties-insurance coverage for all of its services, responding to the CFPB’s and the Office of the Comptroller of the Currency’s expectation that lenders are now ultimately responsible for practicing effective third-party risk management. The insurance coverage allows customers to better defend their companies against the negative financial consequences of a possible loan default and the resulting repurchase requests, the company said. “While we are confident in the quality of our verification services, we are also a strong proponent of best practices,” said Greg Holmes, national director of sales and marketing at ...

Goldman Sachs last week announced it has agreed to a $5.1 billion settlement, the largest regulatory penalty in the firm’s history, concluding an investigation brought by the Residential MBS Working Group of the U.S. Financial Fraud Enforcement Task Force. The agreement in principle is poised to resolve actual and potential civil claims by the U.S. Department of Justice, the New York and Illinois attorneys general, the National Credit Union Administration (as conservator for several failed credit unions) and the Federal Home Loan Banks of Chicago and Seattle. At issue are...