PHH Corp. has until Dec. 22, 2016, to respond to an order by the District of Columbia Circuit Court of Appeals related to its battle with the CFPB over alleged violations of the Real Estate Settlement Procedures Act. The appeals court had directed the lender to reply to the bureau’s petition for an en banc rehearing of the recent ruling by a three-judge panel of the court. Back in October, the panel determined that two aspects of the CFPB’s structure – the dismissal of the director of the agency only for cause and the single directorship as opposed to a multi-member bipartisan commission – were unconstitutional. Additionally, the judges found in favor of the company’s arguments, among others, around the correct interpretations ...

Current and former Democrat members of Congress recently submitted a joint brief to the D.C. Circuit Court of Appeals in support of an en banc rehearing in the PHH Corp. v. CFPB case, including Dodd-Frank drafters and supporters, such as one of the bill’s namesakes, former Rep. Barney Frank, along with Sen. Elizabeth Warren, both from Massachusetts. The lawmakers argued that this case presents “a question of exceptional importance” and requires an en banc rehearing because the three-judge panel’s decision restructures the CFPB in a way that conflicts with Congress’s legislative plan. “By severing the for-cause removal provision, the panel decision fundamentally altered the CFPB’s structure in a way that is at odds with Congress’s design and will undermine the ...

The CFPB last week fined three reverse mortgage lending companies for allegedly deceptive advertisements, including claiming that consumers could not lose their homes. The CFPB ordered American Advisors Group (Orange, CA), Reverse Mortgage Solutions (Houston), and Aegean Financial (El Segundo, CA) to cease their allegedly deceptive advertising practices, implement systems to ensure they are complying with all laws, and pay civil penalties. The bureau claimed that the companies ran ads that misrepresented that consumers could not lose their homes and that they would have the right to stay in their homes for the rest of their lives. The companies also were accused of falsely telling potential customers that they would have no monthly payments and that a reverse mortgage would ...

The TRID 2.0 clarifying rulemaking proposal fails to alleviate most of the concerns that investors in the secondary mortgage market have about their potential legal liability, according to Pacific Investment Management Company. In its recent comment letter to the CFPB, PIMCO noted, “In most cases, the errors that relate to the [TRID] disclosures are subtle and technical in nature and do not result in corresponding consumer harm or confusion. Nevertheless, because the … rules implement provisions of the Truth in Lending Act that may carry actual or statutory damages and assignee liability to purchasers, there are serious concerns among secondary purchasers due to the rules’ expansion of liabilities in mortgage origination and investing.” Moreover, asset managers and other loan purchasers ...

Mortgage programs that use less than 24 months of bank statements to verify a borrower’s ability to repay back a loan are riskier than more traditional mortgages and may be prone to running afoul of the CFPB’s ATR rule, according to a new report from Moody’s Investors Service. “Although longer-term bank statement programs would likely satisfy the CFPB’s ATR rule, short-term programs may not,” analysts at Moody’s said. “To fully understand cashflow patterns typical of the borrower’s line of work, the longer the track record, the better,” they added. “The fewer statements a program requires, the higher the likelihood for inconsistencies in the calculation of available income from loan-to-loan.” Under the ATR rule, as Moody’s noted, the originator is required ...

In the wake of the Wells Fargo scandal involving the creation of unauthorized deposit and credit card accounts, the CFPB has issued a warning to lenders about the risks consumers face from improperly managed sales incentives. In CFPB Compliance Bulletin 2016-03, Detecting and Preventing Consumer Harm from Production Incentives, the bureau remarked, “The risks these incentives may pose to consumers are significant and both the intended and unintended effects of incentives can be complex, which makes this subject worthy of more careful attention by institutional leadership, compliance officers, and regulators alike.” For instance, “Such incentives may lead to outright violations of federal consumer financial law and other risks to the institution, such as public enforcement, supervisory actions, private litigation, reputational ...

ResCap Liquidating Trust last week filed two new lawsuits against lenders as it continued its efforts to recover losses due to bad loans purchased from correspondents that later forced the company into Chapter 11 bankruptcy. No other details were provided by defendant attorneys with American Mortgage Law Group, which warned that the Dec. 2 filings in Minnesota federal district court may trigger a second wave of litigation by the trust. AMLG said it has been helping a number of lenders with pre-litigation demands from the trust and has seen increased activity on that front. On Nov. 16, a federal judge dismissed...

The National Fair Housing Alliance filed a housing discrimination lawsuit against Fannie Mae for allegedly not properly maintaining real estate-owned properties in 38 metropolitan areas with high proportions of African-Americans and Latinos.The lawsuit was filed this week in the federal district court in San Francisco. Fannie denies the allegations. According to the NFHA and 20 local fair housing groups across the country, Fannie purposely does not maintain its foreclosed properties in middle- and working-class minority neighborhoods to the same level of quality it does for foreclosures it owns in comparable white neighborhoods. Foreclosed properties in minority communities were littered with debris and trash, marked by graffiti...

Fannie Mae has not treated its foreclosed properties in African-American and Latino communities the same as those in predominately white neighborhoods, according to a federal lawsuit filed this week by the National Fair Housing Alliance. The NFHA, along with 20 fair housing and civil rights groups, said its investigation found signs of racial discrimination when it comes to the upkeep and marketing of Fannie’s real estate-owned properties in 38 metropolitan areas across the country. These properties in minority neighborhoods were blighted...

The DC Circuit Court of Appeals recently ordered PHH Corp. to respond to the Consumer Financial Protection Bureau’s petition for an en banc rehearing in the long-running dispute over alleged violations of the Real Estate Settlement Procedures Act. The lender’s response is due late this week. The court has also invited the U.S. solicitor general to weigh in on the constitutional and RESPA questions associated with the case. No timetable was suggested. However, industry legal observers expect the USSG to respond promptly, given the pending change of presidential administrations, and to support the bureau’s positions. Attorneys at the BuckleySandler law firm noted...