The American Bankers Association, the Consumer Bankers Association and The Financial Services Roundtable told the CFPB its controversial arbitration proposed rule “is not in the public interest, is not for the protection of consumers, and is not consistent with the CFPB’s March 2015 empirical study of arbitration,” as their attorneys at Ballard Spahr succinctly summarized their joint comment letter. Further, the groups urged the bureau to withdraw its proposal and to refrain from re-issuing another unless it is consistent with the statutory requirements of Section 1028 of the Dodd-Frank Act. “First, the proposed rule is not ‘in the public interest,’ nor does it meet the requirement to provide for consumer protection, because it would inflict serious financial harm on consumers ...

CFPB Proposes Changes to FOIA Procedures, Treatment of Information; Would Expand Disclosure of Confidential Supervisory Information to State AGs. The CFPB has proposed amendments to the procedures used by the public to obtain information from the bureau under the Freedom of Information Act, the Privacy Act of 1974, and in legal proceedings.... Bank of America Close to Fulfilling Settlement Obligations. Bank of America has conditionally fulfilled more than 91 percent of its obligation to provide $7 billion worth of consumer relief under the terms of its historic mortgage settlement agreement with the U.S. Department of Justice and six states, according to Eric Green, the independent monitor of the agreement...

A high profile shareholder’s request to access Freddie Mac’s corporate records was shot down in a case dismissal last week as a federal court ruled that all shareholder rights were transferred to the Federal Housing Finance Agency during the conservatorship. In Timothy J. Pagliara v. Federal Home Loan Mortgage Corporation, plaintiff Tim Pagliara, chief executive of CapWealth Advisors and the executive director of Investors Unite, a GSE shareholders group, filed a lawsuit in court in March to gain access to Freddie’s records, as an individual stockholder. He owns approximately 346,000 shares of Freddie’s junior preferred stock, according to court documents.

One former GSE executive lost his severance package case and another settled in a long-standing civil fraud lawsuit. Both cases came to a conclusion last week. Anthony Piszel, former chief financial officer at Freddie Mac, appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie owed him payment for his “golden parachute” compensation after he was terminated without cause at the start of the conservatorship. The question came down to whether or not a government prohibition on making golden parachute payments to terminated Freddie employees was illegal or not. Piszel was terminated two weeks after...

Moody’s Investors Service has asked the U.S. District Court for the Southern District of New York to dismiss the remaining claim in a lawsuit alleging manipulation of credit ratings leading up to the financial crisis. In its motion to dismiss, Moody’s said that plaintiff Ilya Eric Kolchinksy’s second amended complaint fails to show that the rating agency used its electronic “ratings delivery service” to issue false ratings on MBS that later turned bad. In 2012, Kolchinsky, a former managing director at Moody’s, filed...

The Mortgage Bankers Association strongly urged the Department of Housing and Urban Development and the FHA to issue authoritative guidelines for lenders participating in state and local housing finance programs that rely on premium pricing to fund downpayment assistance. In a recent letter to members, the MBA recommended that FHA lenders “tread carefully” and seek legal advice until HUD provides more definitive guidance on downpayment assistance and premium pricing. Lenders should consider carefully whether and when to participate in DPA programs from housing finance agencies that rely on premium-pricing mechanisms, the letter said. The MBA said it would continue to press HUD for clarification on this contentious issue. The FHA and HUD’s inspector general are currently at odds over permissible sources of single-family downpayment assistance offered through housing finance agencies. Although the ...

A new audit report from the Department of Housing and Urban Development’s inspector general recommended that the agency continue its efforts to collect millions of dollars in partial claims that came due during fiscal year 2015. According to a HUD IG report, the department left uncollected approximately 1,361 partial claims, worth about $21.5 million. The IG discovered the oversight during an audit of HUD’s partial claim collections. The IG reviewed a statistical sample of 135 of 10,561 partial claims associated with FHA loans that terminated in FY 2015. “HUD had not collected 36 of the claims that should have been collected,” the report stated. “We used this result to project that a total of 1,361 partial claims were not collected.” The claims were never returned to the FHA mortgage insurance fund, as required by agency rules, to strengthen FHA solvency, the report said. A partial claim is a loss ...

The Federal Communications Commission has issued a baffling final rule restricting the way servicers can collect on or service student loans, mortgages and other debts owed to the federal government.Specifically, the rule implements a key provision in the Bipartisan Budget Act of 2015 amending the Telephone Consumer Protection Act to exclude robocalls from the TCPA consent requirement if they are made solely to collect a debt owed to or guaranteed by the federal government.The TCPA generally requires a caller to obtain “prior express consent” from the call recipient before making a telemarketing call or an auto-dial call to the recipient’s landline or cell phone.However, the mortgage industry raised concerns that TCPA’s consent requirement could create potential liability for important servicing calls that could help homeowners save their homes, which prompted Congress to pass the Budget Act amendment. Last month, the FCC specifically excluded the federal government from the TCPA’s consumer protections by ruling that the government is not a “person” subject to the TCPA. Here is where the FCC rule gets confusing. commission is authorized to adopt rules to “restrict or limit the number and duration” of any wireless calls to collect debt owed to the federal government.”

The FHA has announced new streamlined procedures to help delinquent homeowners avoid foreclosure and stay in their homes. The agency is revising loss-mitigation procedures servicers use when evaluating and choosing the best home-retention options for delinquent borrowers by reducing waiting time for results. The new streamlined procedures are designed to enhance servicers’ ability to evaluate foreclosure-avoidance alternatives, especially for the FHA-Home Affordable Modification Program (FHA-HAMP). Specifically, FHA will require servicers to convert successful three-month trial modifications into permanent modifications within 60 days instead of the average four to six months. Borrowers who have three missed mortgage payments would be able to opt for a partial claim to bring their arrearages current versus the previous four-month minimum. In addition, the FHA will eliminate the ...

Mortgage Company President Charged with Defrauding Ginnie Mae. Robert Pena, president and founder of the now-defunct Mortgage Security Inc., was charged in federal district court in Boston for allegedly bilking Ginnie Mae out of nearly $3 million. MSI was an approved participant in the Ginnie Mae mortgage-backed securities program, pooling eligible single-family mortgages and selling the securitized products to investors. The firm also serviced the underlying loans. In 2011, Pena allegedly began diverting borrower payments and huge loan-payoff amounts into secret accounts, which he used to fund personal and business activities. Likewise, he is said to have funneled borrowers’ escrow funds and mortgage-insurance premiums into other personal accounts. In total, Pena pocketed $3 million due Ginnie Mae, which had to pay investors whose investments it had guaranteed, according to the ...