Mortgage lenders throughout the land are justifiably anxious about complying with the CFPB’s TRID integrated disclosure rule. But compliance professionals at Treliant Risk Advisors recently provided a number of key checkpoints that lenders can use to prepare themselves and examine their own degree of compliance. During a presentation at the American Bankers Association’s recent regulatory compliance conference in San Diego, Lyn Farrell, a managing director at Treliant, rattled off a list of TRID technical compliance testing criteria for attendees. First, lenders should “ensure that the testing scope includes all covered products from all applicable channels,” Farrell said. They also should check that their institution provides all disclosures by the appropriate deadlines, including, of course, all loan estimates and closing disclosures....

A special edition of the CFPB’s supervision highlights report issued last week claims that some mortgage servicers continue to use failed technology that has already harmed consumers, putting such firms in violation of the agency’s servicing rules, which were released in 2013. “Mortgage servicers can’t hide behind their bad computer systems or outdated technology. There are no excuses for not following federal rules,” said CFPB Director Richard Cordray. “Mortgage servicers and their service providers must step up and make the investments necessary to do their jobs properly and legally.” The bureau acknowledged that some servicers have made significant improvements in the last several years, partly by enhancing and monitoring their service platforms, staff training, coding accuracy and auditing, and allowing ...

Mortgage lenders looking to get ahead of the fair lending enforcement curve need to be aware that the industry will face greater scrutiny from the CFPB on two main fronts: access to credit and pricing issues, according to one top attorney. Speaking at the American Bankers Association’s recent regulatory compliance conference in San Diego, Andrew Sandler, chairman and executive partner at the BuckleySandler law firm in Washington, DC, said, “There are really two sets of issues that we’re seeing in fair lending, and that we’re increasingly going to see over time. The first is access to credit as an absolute concept.” As the U.S. came out of the financial crisis, as policymakers adopted all kinds of rules, regulations, philosophies and ...

In an effort to spur better industry compliance with its 2013 mortgage servicing rules, the CFPB last week released an updated mortgage servicing exam manual, reflecting a greater emphasis on the handling of consumer complaints as well as fair lending. The bureau regularly publishes a mortgage servicing chapter of the CFPB Supervision and Examination Manual to reflect regulatory changes, to make technical corrections, and to update examination priorities. This new, third iteration of its exam procedures offers guidance to financial institutions and mortgage companies on what the bureau will be looking for in its exams. Among other things, mortgage servicers should note a greater emphasis in exams on the handling of consumer complaints. The CFPB has enhanced the section related ...

The Structured Finance Industry Group late last week published a final draft of the standards for due diligence firms to use when testing loans for compliance with the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule. “The underlying premise of this documentation is to establish a best practices approach to pre-securitization testing logic that will drive the due diligence conducted by third-party review firms,” SFIG said. The RMBS 3.0 TRID Compliance Review Scope documentation addresses...

A federal appeals court in New York this week will hear arguments from African-American subprime borrowers in Detroit in connection with a proposed class action challenging Morgan Stanley’s mortgage securitization practices during the subprime mortgage boom. The American Civil Liberties Union and its partners are seeking class-action status for the borrowers’ Fair Housing Act claims, which were initially rejected by a lower court. The court previously ruled that each borrower would have to sue on his or her own. The issue on appeal at the U.S. Court of Appeals for the Second Circuit is...

The slow foreclosure timelines in states with a judicial foreclosure process appear to have a silver lining: home-price bubbles are more prevalent in other states, according to Fitch Ratings. In a report released this week, analysts at the rating service said home prices nationally appear to be on solid footing, although some regional pockets of price risk are growing, primarily in states in the West and Southwest. Fitch said...

Earlier this month, the Consumer Financial Protection Bureau asked to intervene in a federal whistleblower case brought against Ocwen Loan Servicing in order to protect the confidentiality of its supervisory information. “The bureau seeks to intervene for the limited purpose of invoking the bank examination privilege and the bureau’s regulations to protect confidential and privileged bureau supervisory records and information related to the bureau’s supervision of Ocwen,” the CFPB said in its motion filed in U.S. District Court for the Eastern District of Texas, Sherman Division. Counsel for the relators in the case, Michael Fisher and Brian Bullock, and the defendants, Ocwen Loan Servicing and Ocwen Financial Corp., told...

The mortgage industry and secondary-market investors continue to struggle with uncertainty over the degree of liability for errors in complying with the Consumer Financial Protection Bureau’s integrated-disclosure rule, commonly known as TRID. Many hope the pending TRID 2.0 rulemaking expected from the CFPB this July will clarify and resolve the exasperating ambiguity and at least let industry participants and investors know exactly where they stand and what risks they are taking on. One of the most important areas for investors is contractual liability. “Under most mortgage loan purchase agreements, there is a representation and warranty for absolute compliance [or] a signed agreement saying that you’re only liable for material violations,” said Richard Horn, a Washington, DC, attorney. Speaking at this week’s American Bankers Association conference, the former CFPB official said, “But whatever the agreement, you still have contractual liability for the loans that you sell, so keep that in mind.” Civil liability is...

FHA lenders will face stiffer maximum monetary penalties later this year for various violations of agency rules and regulations. The higher monetary penalties are the result of legislation signed into law late last year requiring federal agencies to adjust the current maximum penalty amounts for inflation in order to maintain their deterrent effect. Specifically, the Federal Civil Penalties Inflation Adjustment Act of 2015 (2015 Act) requires federal agencies to adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule and subsequent annual adjustments for inflation. The interim final rules with the initial penalty adjustments must be published by July 1, 2016. The new penalty levels must take effect no later than Aug. 1, 2016. Additionally, agencies are required to make annual inflation adjustments, starting Jan. 15, 2017, and for each year going forward. The adjustments will ...