The spike in FHA delinquencies in the fourth quarter of 2016 justifies the Trump administration’s decision last month to suspend and review the outgoing administration’s lowering of FHA mortgage insurance premiums, said House Financial Services Committee Chairman Jeb Hensarling, R-TX. Commenting on the Mortgage Bankers Association’s quarterly delinquency rate survey, Hensarling praised President Trump’s decision to set aside the 25-basis-point premium reduction, which Inside FHA/VA Lending reported first on Jan. 6, 2017. “Lowering premiums at this time was a big mistake,” said Hensarling. “The sudden increase in delinquencies makes it clear that President Trump was absolutely right to undo the previous administration’s irresponsible action.” Hensarling recalled that in 2013 “taxpayers had to spend $1.7 billion to bail out the FHA.” Going forward, the FHA must be fiscally sound, with a ...

Three federal agencies have announced a joint settlement agreement and consent order with a New York FHA lender and several of its top executives to resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act and the False Claims Act. The U.S. Attorney for the Eastern District of New York, the Office of the Inspector General for the Department of Housing and Urban Development, and the Inspector General of the Federal Deposit Insurance Corp. announced the $1.25 million settlement with Franklin First Financial, Ltd., its Chief Executive Officer Frederick Assini, Chief Operating Officer Christopher Berman, and Andrew Dauro, a manager of the company. The lawsuit alleged that the defendants made illegal payments on behalf of borrowers from February 2009 through March 2010 to keep default rates low so that Franklin First could keep its ...

Whether President Trump is serious about replacing the head of the Consumer Financial Protection Bureau remains to be seen. But his enthusiasm over the prospect may have gotten the better of his legal judgement and in fact perhaps laid the foundation for such a replacement to be reversed, one noted legal scholar suggested recently. “If Trump is planning on attempting to remove CFPB Director Richard Cordray ‘for cause,’ he’s hardly going about it in a smart way,” Adam Levitin, a law professor at Georgetown University, said in a recent online blog posting. “The Trump administration keeps generating more and more evidence that any for-cause removal would be purely pretextual, which strengthens Cordray’s hand were he to litigate the removal order (as he surely would).” To begin with, the reasons that are offered as justification for sacking Cordray – such as claims of employee discrimination at the bureau or the agency’s settlements with auto finance companies – refer...

The CFPB recently brought a more traditional interpretation to its enforcement of the Real Estate Settlement Procedures Act in an action against Prospect Mortgage, two real estate brokers and a mortgage servicer that focuses on alleged kickbacks for referrals of mortgage business. Among the lender’s alleged violations of RESPA was the use of lead agreements to pay brokers for referrals. According to the CFPB’s consent order, Prospect entered into such agreements with more than 200 different counterparties, most of which were real estate brokers. Under these arrangements, Prospect paid the counterparty for each lead it received. However, these counterparties went “well beyond simply transferring information about prospective buyers,” the CFPB alleged. They also referred prospective buyers to Prospect’s loan officers....

In addition to bringing an enforcement action against Prospect Mortgage for alleged violations of the Real Estate Settlement Procedures Act, the CFPB also acted against ReMax Gold Coast and Keller Williams Mid-Willamette, two real estate brokers, and Planet Home Lending, a mortgage servicer – all of whom it accused of taking illegal kickbacks from the lender. Specifically, the CFPB accused both brokers of participating in “certain lead agreements and desk license agreements” with Prospect Mortgage, and of accepting payments from the lender in exchange for referrals in violation of RESPA and its implementing regulation, Regulation X.The bureau also said RGC’s agents “required hundreds of consumers wishing to place an offer on one of their properties offered for sale to pre-qualify ...

An analysis by the Mortgage Bankers Association of the CFPB’s latest foray back into the enforcement of the Real Estate Settlement Procedures Act noted that some of the allegations in the consent orders would have been troubling under the enforcement regime of the Department of Housing and Urban Development.However, the orders also highlight several new points in the way the bureau is enforcing Section 8 of RESPA, the MBA said. “These include that the arrangements steer consumers, exclude other competitors, and were arrived at based on internal analyses of business and that click-throughs to lenders in joint marketing arrangements somehow amount to compensated referrals,” the trade group said. Further, the consent order addressing Planet Home Lending also clarifies that ...

PHH Corp. won another round against some new antagonists in its dispute with the CFPB over alleged violations of the Real Estate Settlement Procedures Act. Earlier this month, a three-judge panel of the U.S. District Court of Appeals for the District of Columbia Circuit agreed with the lender and refused to allow three separate efforts to intervene in the case. In a simple, single-page order, the three judges “ordered that the motions be denied.” The ruling affects an effort by Sen. Sherrod Brown, D-OH, and Rep. Maxine Waters, D-CA, to insert themselves in the case on behalf of the CFPB. The lawmakers had warned the appeals court that if their effort to intervene was denied, they would seek recourse from ...

The unusual recent case of an unidentified finance company filing suit to prevent the CFPB from disclosing its investigation of the firm, and from bringing any action against it unless and until the agency is restructured in line with the U.S. Constitution, is “yet another challenge to the CFPB’s vast investigative and enforcement authority,” according to two attorneys with the Hudson Cook law firm. “This is a new front in the battle against CFPB overreach,” the pair said in a client note. The stakes here can be high. “Companies facing a CFPB investigation often confront a difficult choice of complying with the investigative demand or fighting the CFPB’s authority,” said the attorneys. “But challenging the CFPB is an uphill battle ...

Hensarling Threatens to Use Budget Reconciliation Process to Push Through CHOICE Act 2.0. Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, raised some industry eyebrows last week when details of his new, more aggressive Financial CHOICE Act got leaked to the press, and he indicated he might use the budget reconciliation process to push the bill through Congress.... CFPB Brings Legal Action Against Debt Relief Law Firms, Attorneys. The CFPB recently sued Howard Law PC, Williamson Law Firm LLC, and Williamson & Howard LLP, as well as attorneys Vincent Howard and Lawrence Williamson, in federal court, accusing them of collaborating to charge illegal fees to consumers looking for debt relief....