The FHA has proposed key changes to rules for 203(k) consultants, direct endorsement (DE) underwriters and nonprofit groups that do business with the agency. The changes are part of a draft section, “Doing Business with FHA – Other Participants,” which will be incorporated into the overall Single Family Policy handbook. The draft contains information regarding eligibility, approval and recertification requirements for 203(k) program consultants, direct endorsement (DE) underwriters and nonprofit groups. The FHA posted the draft versions of “Doing Business with FHA – Other Participants in FHA Transactions” and “Quality Control, Oversight and Compliance – Other Participants in FHA Transactions” on its SF Housing Policy Drafting Table for public review and comment. The draft consolidate various existing Department of Housing and Urban Development handbooks, mortgagee letters, housing notices and ...

Ginnie Mae will soon introduce the third prong of a strategy to improve its oversight of participants in its mortgage-backed securities program – a performance scorecard for issuers – and monitoring of its risk. Essentially a “scorecard,” the Issuer Operational Performance Profile (IOPP) will enable issuers to better understand and comply with Ginnie Mae’s expectations. It also provides a way for issuers to measure and improve their performance and compare it to the performance of their peers. Final testing and training for IOPP began this winter, with deployment expected “in early 2015,” the agency said. Issuers will be scored monthly based on a series of metrics. Each issuer will be rated against its peers by applying a weighting algorithm and, in some cases, adjusting for certain control factors. Each issuer will receive two scores: one for operational management and ...

Trying to handicap a forthcoming ruling from the highest court in the land is notoriously fraught with difficulty and unpredictability, given that the justices of the U.S. Supreme Court have a penchant for playing devil’s advocate on both sides of a legal issue. But comments made this week by one of the conservative justices, Antonin Scalia, during the high court’s consideration of the latest disparate-impact case to reach it made it clear he believes the legal doctrine of disparate impact is a part of the contemporary legal landscape. And that could prove to be pivotal to the ultimate outcome. The central legal question in Texas Department of Housing and Community Affairs, et al., v. The Inclusive Communities Project Inc. (No. 13-1371) is whether disparate-impact claims are cognizable under the Fair Housing Act of 1968. The state of Texas is challenging...

The U.S. Supreme Court this week denied a petition by major banks to reject a lower court decision to allow a National Credit Union Administration MBS lawsuit to go forward. The SCOTUS chose not to hear the case, a lawsuit filed by the NCUA to recover damages suffered by five now-defunct federal credit unions as a result of investments in non-agency MBS sold by the banks. The suit is...

The CFPB is likely to throw its weight around just as much this year as it did last year, only its focus and intensity will be more diverse in terms of the industries that will be affected. Back in 2014, much of the regulatory concern among lenders had to do with the bureau’s ability-to-repay rule with its qualified mortgage standard, and to lesser extents its rules on mortgage servicing and loan originator compensation. Make no mistake. The mortgage industry is still in the CFPB’s crosshairs. The biggest payload to be delivered in this regard in 2015 is the long-awaited and much discussed integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. That rule ...

The CFPB has reached out to sympathetic constituencies in search of more legal cases in which it can submit amicus, or “friend of the court,” briefs, a letter from the bureau suggests. The text of the letter was reproduced on a legal blog hosted by the consumer advocacy group, Public Citizen. “The bureau welcomes and encourages suggestions of cases as candidates for amicus curiae participation,” said the Dec. 17, 2014, letter, signed by Meredith Fuchs, general counsel, and Nandan Joshi, director of the amicus program. “We seek your recommendations as important stakeholders in the area of consumer finance.” The occasion precipitating the letter apparently was the three-year anniversary of the program. “Through the amicus program, the bureau has sought to ...

The CFPB’s proposal to reduce regulatory uncertainty for financial innovation through the selective use of “no-action” letters is based on a good idea but is likely to fail to meet its objective unless important changes are made, according to three industry trade groups. For instance, when it comes to submitting requests for a “no-action” letter, the set of products and services to which the bureau’s proposal may apply is difficult to identify, the American Bankers Association, the American Bankers Insurance Association and the Consumer Bankers Association said in a joint comment letter to the regulator. “On the one hand, the proposal requires that the product must not be well established; on the other, it may not cover ‘hypothetical products that ...

The CFPB’s second report to the appropriations committees of both the U.S. Senate and the House of Representatives suggests the bureau has a full plate when it comes to enforcement-related probes of financial services providers. For instance, “Investigations currently underway span the full breadth of the bureau’s enforcement jurisdiction,” the report stated. “Further detail about ongoing investigations will not generally be made public by the bureau until a public enforcement action is filed.” Elsewhere, the report reminded lawmakers that the bureau was a party in 41 public enforcement actions from Oct. 1, 2013, through Sept. 30, 2014, the period covered by the report, and it proceeded to highlight all of them.However, not all of them have been settled, such ...

CFPB Raises TILA Reg Z Exemption Threshold. The CFPB raised the asset size for banks exempt from the requirement to establish an escrow account for higher-priced mortgages under Regulation Z (Truth in Lending Act) from $2.028 billion to $2.060 billion, as of Jan. 1, 2015. The adjustment is based on the 1.1 percent increase in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in November 2014. The adjustment to the escrow exemption asset-size threshold will also increase a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. CFPB Increases HMDA Reg C Exemption Threshold. The bureau slightly ratcheted up the asset- size exemption threshold for financial institutions reporting ...

Bank of America’s never-ending litigation woes spilled into 2015 as Ambac Assurance hit the bank with a new lawsuit related to toxic mortgages. Credit Suisse and Wells Fargo also welcomed the new year facing MBS lawsuits. According to analysts at Stone Fox Capital, an investment advisory firm, Ambac is claiming $600 million in losses, which arose from insuring approximately $1.7 billion in MBS transactions from 2005 to 2007. The MBS were issued by Countrywide Financial, which BofA acquired in 2008 and has been the principal cause of its legal headaches ever since. Ambac emerged...