The Department of Veterans Affairs and the FHA have issued guidelines concerning the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure (TRID) rule as it relates to VA- and FHA-backed mortgages. The new TRID rule covers loan applications received on or after Oct. 3, 2015. It replaced Truth-in-Lending-Act disclosures and the Department of Housing and Urban Development’s closing (HUD-1) settlement statement. The rule requires that all covered loans be closed using the new closing disclosure. The VA has announced new closing-disclosure guidelines and a new mandatory method for the stacking order of loan files selected for full-loan review. According to the VA, all files selected for full review on or after Oct. 3 may include the HUD-1 statement. The agency is aware that loans will be requested that have the HUD-1 closing document, and that it will perform the full file review with the ...

A trade association representing large financial institutions has asked the FHA to clarify its policy regarding the use of downpayment assistance programs on home purchases financed with FHA mortgage loans. The differences in the interpretation of the Department of Housing and Urban Development’s inspector general and the FHA of downpayment assistance programs (DAP), especially by state housing finance agencies, has created uncertainty among lenders, according to the Consumer Mortgage Coalition. In a letter to HUD Secretary Julian Castro, the CMC expressed concern that lenders may become unwilling to continue offering loans with assisted financing because of legal uncertainty. “This would be unfortunate for moderate-income borrowers nationwide, and it would unnecessarily limit the ability of [state housing finance agencies] to function,” the group said. SHFAs do not rely on taxpayer funding for ...

The Department of Veterans Affairs has issued guidance clarifying certain procedures when conveying a property to the agency in Florida. Overall, it is necessary to provide proper documentation when conveying a property to VA. This usually involves providing an owner’s title insurance policy with no exclusions, other than for taxes that have not been billed but may be accrued against the property. In 2008, Florida amended its condominium and planned unit development (PUDs) laws to allow homeowner associations (HOAs) to collect unpaid dues and assessments. The purpose of the legislative change was to make current owners jointly liable with the past owner for the full amount of past-due HOA dues and assessments, unless the HOA was named in the foreclosure complaint at the time it was filed. However, if the HOA is properly named in the foreclosure, a current owner’s limited liability could be less. In order to ...

Earlier this month, the House of Representatives voted 303-121 in favor of H.R. 3192, The Homebuyers Assistance Act. The legislation would provide the mortgage industry with a regulatory and legal safe harbor until Feb. 1, 2016, for mortgages originated in good faith under the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule, otherwise known as TRID. The rule, designed to streamline the mortgage disclosures under the two laws, took effect Oct. 3, 2015, after nearly two years of notice from the CFPB. “The CFPB and House Republicans agree that a transitional period for TRID compliance which enables lenders to test their systems and ensures there is no large-scale disruption to mortgage lending is necessary,” said Rep. ...

The CFPB is considering banning lenders from using what it characterized as “free pass” arbitration clauses that prevent consumers from participating in class-action lawsuits. “Consumers should not be asked to sign away their legal rights when they open a bank account or credit card,” said CFPB Director Richard Cordray. “Companies are using the arbitration clause as a free pass to sidestep the courts and avoid accountability for wrongdoing. The proposals under consideration would ban arbitration clauses that block group lawsuits so that consumers can take companies to court to seek the relief they deserve.” The proposals the bureau is considering include giving consumers “their day in court” and incentivizing companies to comply with the law to avoid lawsuits. The bureau ...

The CFPB last week issued its latest annual report on student loan complaints, citing in particular concerns about repayment problems facing those with older federal student loans that were made by banks and other private lenders. “We found that servicing issues may make repaying student debt even harder for this group of borrowers, in particular,” said CFPB Acting Student Loan Ombudsman Seth Frotman. The report noted that outstanding federal student loans made by private lenders may have a higher concentration of borrowers in default or delinquency than the student loan market at-large. In another recently released report, the bureau estimated that more than 25 percent of student loan borrowers are delinquent or in default market-wide. The CFPB observed that at ...

ComplianceEase, an automated compliance solutions provider based in Burlingame, CA, has come out with an insurance-backed warranty program for loans that have been audited by its ComplianceAnalyzer solution. The program, called AssureCert, provides warranty coverage for compliance defects, including ones related to the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule (TRID) and the ability-to-repay/qualified mortgage regulation, as well as federal and state consumer lending and high-cost laws and regulations. “The new QM and TRID rules have exposed lenders and investors to civil lawsuits, as well as fines and repurchase risk,” said John Vong, president of ComplianceEase. “Our insurance-backed AssureCert warranty will offer our clients – both large and small –additional protection and peace of mind.” The ...

Bank of America Pulls the Plug on All Marketing Services Agreements. Bank of America, the third-largest residential retail lender in the U.S., has pulled the plug on all marketing services agreements it has with realty firms, sibling publication IMFnews reported last week. The bank confirmed the move to the newsletter, noting that it will discontinue all “space rental agreement programs due to recent regulatory developments.” It added: “We expect our MSA agreements will conclude by Nov. 1, 2015, and we will terminate our lease agreements for space in accordance with their terms. While the decision to wind down our MSA and SRA programs was difficult, the end of these programs allows us to pursue different ways we might help builders ...

The CFPB recently issued much-sought but quite limited guidance to the mortgage industry on marketing services agreements, emphasizing the legal and regulatory risks for lenders. “We are deeply concerned about how marketing services agreements are undermining important consumer protections against kickbacks,” said CFPB Director Richard Cordray. “Companies do not seem to be recognizing the extent of the risks posed by implementing and monitoring these agreements within the bounds of the law.” The guidance, in the form of a five-page bulletin, explains that, while marketing services agreements are usually framed as payments for advertising or promotional services, “in some cases the payments are actually disguised compensation for referrals. Any agreement that entails exchanging a thing of value for referrals of settlement ...

A cross-section of industry representatives and analysts were not very impressed with the long-sought guidance on marketing services agreements that the CFPB put out recently. Michael Barone, a director of legal and regulatory compliance at Lenders Compliance Group, a consulting firm in Long Beach, NY, said the guidance – which he characterized as very short and informal – “was an effort to get something out very quickly,” in response to all the congressional criticism that CFPB Director Richard Cordray received at the hands of critics on Capitol Hill. “It really does not have a lot of teeth at all,” he said of the bulletin. Further, the guidance doesn’t “tell us anything more than where we were an hour before this guidance came ...