World Acceptance Corp., a publicly traded small-loan consumer finance company based in Greenville, SC, recently revealed that CFPB enforcement staff is considering whether to recommend the agency bring legal action against the company. The company received a civil investigative demand from the bureau back in March, the stated purpose of which is to determine whether the company has been or is “engaging in unlawful acts or practices in connection with the marketing, offering, or extension of credit.” World Acceptance Corp. responded, within the deadlines specified in the CID, to “broad requests for the production of documents, answers to interrogatories and written reports related to loans made by the company and numerous other aspects of the company’s business,” the firm said ...

The National Association of Women in Real Estate Businesses is among the industry groups that generally support the final interagency statement on diversity policies and practices issued by the CFPB, the federal banking regulators and the Securities and Exchange Commission. However, in its comment letter to the agencies, one of the issues the group addressed was ways to enhance the quality, utility and clarity of the information to be collected under the final statement. “Detail is important; when releasing information, agencies and their regulated entities must carefully detail the ways they are promoting diversity and the success and shortcomings of each of their efforts,” the NAWREB said. “The difficulty will always be ensuring that the minority and women inclusion is ...

The CFPB’s arbitration report to Congress “contains substantial methodological flaws and does not support a ban on arbitration clauses in consumer credit contracts,” law professors at the University of Virginia and George Mason University concluded in a recent study. “To the contrary, the data presented in the report show that consumers on balance are better off if they have the arbitration process available to them for dispute resolution,” they added. “Rather than relying on flawed methodology and inaccurate data, the CFPB should focus on the actual benefits arbitration provides to consumers.” Jason Scott Johnston, a law professor at UVA, and Todd Zywicki, a law professor at GMU, reviewed the bureau report for the Mercatus Center and determined that CFPB’s findings ...

Securitization industry participants raised concerns after an appeals court last week refused to hear an appeal of an earlier ruling that reversed the long-held federal preemption that nonbanks have relied on to keep securitized loans exempt from state usury laws. The U.S. Court of Appeals for the Second Circuit denied the appeal of Madden v. Midland Funding last week. No explanation was provided with the denial. The appeal was supported by the Structured Finance Industry Group and the Securities Industry and Financial Markets Association, among others. SFIG said...

Two more long-running legacy MBS lawsuits were resolved last week after defendants Goldman Sachs and Deutsche Bank separately agreed to settle with plaintiffs. The NECA-IBEW Health & Welfare Fund, a union pension fund in Decatur, IL, is seeking preliminary court approval of a $272 million settlement with Goldman Sachs on behalf of entities that purchased MBS issued by defendant GS Mortgage Securities and which Goldman underwrote. If approved, the settlement would put...

Two FHA lenders in Texas have agreed to pay a total of $469,419 in civil money penalties to resolve government allegations they charged bogus fees to borrowers to inflate the purchase amount of newly built manufactured housing. Among 11 alleged violations of FHA rules, the Department of Housing and Urban Development’s Mortgagee Review Board accused American Home Free Mortgage of Prosper, TX, of artificially increasing mortgage costs by an average of $12,000 per loan through improper fees. The fees were paid allegedly to a company owned and operated by AHFM’s sales manager. In addition, HUD alleged there were multiple violations of quality and annual certification requirements. As part of the settlement agreement, without admitting to any fault or liability, AHFM agreed to pay a $169,419 fine and to the permanent withdrawal of its FHA approval. In June 2014, the MRB also heard a ...

The FHA will not issue a new case number for any FHA-to-FHA refinance if the current mortgage has a repair or rehabilitation escrow account in FHA Connection. The change, which is one of several updates to FHA Single Family Policy Handbook 4000.1, applies only to FHA streamline refis. It aims to ensure that escrow funds of the mortgage being refinanced are properly applied as well as conform to system requirements. The updated sections become effective on Sept. 14, 2015. Another change clarifies that the payoff statement for the mortgage being refinanced is the only document required when calculating the maximum mortgage amount for simple refi transactions. In addition, guidance for loan-to-value limits for cash-out refis has been updated to clarify that the 85 percent LTV restriction applies only to cash-out refis. HUD also noted that appraisers have flexibility in regards to when inspections should ...

FHA Begins Registration of Lenders to Prepare their Transition to the EAD Portal. Lender registration for the transition phase of the new Electronic Appraisal Delivery portal began on Aug. 18. Lenders may select any of the seven onboarding phases, which FHA has established to ensure that lenders have more time to work within the EAD portal to ensure that their systems, data flow and operational process meet portal requirements before the June 27, 2016, mandatory-use date. Although lenders may enter at any phase they choose, the FHA strongly encourages lenders to register for the earliest onboarding phase, and to do it as soon as possible. That would give them more time to get ready for the full transition, the agency said. The first phase begins on Oct. 15, 2015, with additional phases beginning each month and running through the first half of 2016. Information on the onboarding phases as well as ...

A federal appeals court in New Orleans has overturned a 2014 district court ruling, reviving two government MBS lawsuits that were initially dismissed because they were filed past the state’s established time limit. The Federal Deposit Insurance Corp.’s separate lawsuits against RBS Securities Inc., on one hand, and against Deutsche Bank and Goldman Sachs, were both filed on Aug. 17, 2012. The complaints alleged that the banks misled investors about the credit quality of the mortgage loans that backed $840 million in non-agency MBS. The district court’s decision to dismiss, however, turned on...

Emerging eClosing technology may make borrowers a little smarter, according to the Consumer Financial Protection Bureau, but it isn’t easy for lenders to implement. A CFPB report on the agency’s eClosing project found that borrowers who participated in the pilot scored slightly higher in a quiz on the closing process than did those who relied on good-old paper. The eClosers were...