Thanks in part to the recent consent order Wells Fargo reached with the CFPB, the Office of the Comptroller of the Currency recently gave the top mortgage lender in the U.S. a rare “needs to improve” rating under the Community Reinvestment Act – this despite citing Wells’ overall “outstanding” performance on the lender’s performance examination components, the lender noted. The rating is based on the most recent CRA performance evaluation, which covers the years 2009-2012. The agency referenced the lender’s recent $100 million consent order with the CFPB, and a related action brought by the city and county of Los Angeles that resulted in a $50 million fine, and numerous other enforcement actions. The OCC said the bank’s overall CRA performance ...

State attorneys general from Delaware and Massachusetts announced a $25.9 million settlement last week with Santander Consumer USA Holdings involving subprime auto ABS. The settlement relates to post-crisis activity and the AGs said it was the first settlement with state AGs relating to subprime auto loan funding. The office for Massachusetts Attorney General Maura Healey said the settlement is part of the AG’s ongoing review of securitization practices in the subprime auto market. “We found...

Golden State Tobacco Securitization Corp. is preparing to issue a $618.8 million ABS backed by revenues from a tobacco settlement reached in 1998. Several states have issued such deals, though the sector received a blow last year when Fitch withdrew its ratings and criteria for tobacco ABS. Under the settlement with 46 states and Washington, DC, the major cigarette manufacturing companies must make payments to each state annually, in perpetuity. The payments are based on cigarette sales, among other factors. At the time of the settlement, the revenues for states were estimated to be $306.0 billion for the first 25 years of the agreement. States can issue...

Wells Fargo’s legal woes are continuing after a federal judge in the U.S. District Court for the Southern District of New York last week ordered the company to face several lawsuits by institutional investors alleging MBS fraud. U.S. District Judge Katherine Polk Failla ruled that Wells Fargo must face five lawsuits by a few dozen funds that are holding the bank liable for losses incurred after the MBS they purchased lost value due to the financial crisis. The plaintiffs include...

The Consumer Financial Protection Bureau late last week filed its much-anticipated response to the decision by the U.S. Court of Appeals for the District of Columbia Circuit to grant the agency’s request for an en banc rehearing in its legal wrangling with PHH Mortgage over allegations of violating the Real Estate Settlement Procedures Act. The CFPB made three main arguments. First, the bureau’s structure is constitutional. “Neither the bureau’s single-director structure, nor the for-cause removal provision, unduly interferes with the president’s ability to take care that the laws be faithfully executed” under the U.S. Constitution, it said. If the court were to decide that the agency’s structure is unconstitutional, the bureau added...

The mortgage market has paid close attention to a lawsuit brought by PHH Mortgage that challenges the constitutionality of the Consumer Financial Protection Bureau, and the Trump administration’s recent move to side with the mortgage lender. Now, the Treasury Department is making a similar argument that the structure of the Federal Housing Finance Agency is also unconstitutional. Both the CFPB and FHFA, the regulator of Fannie Mae and Freddie Mac, are independent agencies led by a single director whom the president can only fire for cause. In an advisory filed March 24, the Treasury backed...

As different as the presidential administrations of Barack Obama and Donald Trump may appear, one thing they have in common is an apparent unwillingness to get into the statutory weeds when it comes to the interpretation and enforcement of the Real Estate Settlement Procedures Act. Earlier this month, the Department of Justice under the Trump administration, just as it had under the Obama administration, side-stepped the RESPA issues associated with the long-running battle between PHH Mortgage and the CFPB.In its amicus brief with the U.S. Court of Appeals for the District of Columbia Circuit, the government said simply: “The United States takes no position on the statutory issues in this case….” For the Trump administration, the case comes down ...

President Trump recently signed yet another executive order to roll back the reach of the federal government – this one promoting “a comprehensive plan for reorganizing the executive branch.” But unlike some of the earlier EOs from the White House, the odds seem to be higher that this one may apply to the CFPB. In an email exchange, former CFPB official Benjamin Olson, now a partner with the BuckleySandler law firm in Washington, DC, was asked if this EO applies to his former employer. He replied: “Yes and no. Unlike past orders that referred to ‘executive departments and agencies,’ this one refers to agencies ‘defined in’ 5 U.S.C. 551(1), which seems to include – or at least not exclude – independent agencies such ...

The CFPB has fined Nationstar Mortgage $1.75 million for allegedly violating the Home Mortgage Disclosure Act by “consistently failing to report accurate data about mortgage transactions for 2012 through 2014,” the agency said. The CFPB said it found that Nationstar’s HMDA compliance systems were flawed and generated mortgage lending data with significant, preventable errors. “Nationstar also failed to maintain detailed HMDA data collection and validation procedures, and failed to implement adequate compliance procedures,” the bureau alleged. “It also produced discrepancies by failing to consistently define data among its various lines of business.” Further, data samples reviewed by the CFPB showed substantial error rates in three consecutive reporting years, the bureau said. “In the samples reviewed, the CFPB found error rates ...

The new political landscape in Washington, DC, has intersected with the judicial movement on the PHH Corp. v. CFPB case to give the mortgage industry some hope that the bureau can be scaled back. But the task is complicated by the fact that the new administration is headed by a political novice, and by the fact that the industry itself is not particularly unified about what kind of changes should be made. During a recent webinar sponsored by Inside Mortgage Finance, three top industry attorneys discussed some of the prospects for change on three separate fronts of the federal government: the executive branch, the legislative branch and the judicial branch. If there’s a single theme or take-away from the event,...