A number of industry software and technology vendors told the CFPB they must have a minimum of one year to fully test and comply with all the changes the agency wants to implement with its TRID clarifying proposed rule. Computer systems and software vendor Jack Henry & Associates said that due to the nature of these proposed changes (which will require revisions to forms, calculations and logic in the software), the industry needs an absolute minimum of 12 months for its implementation period. “Software providers such as Jack Henry & Associates work with multiple business partners and need lead time to analyze, plan, design, develop, test, document and distribute software changes to our financial institution clients prior to the implementation ...

Comments by CFPB Director Richard Cordray at last week’s Mortgage Bankers Association conference in Boston indicate that the industry can expect the bureau’s diagnostic approach to enforcing the TRID rule will continue, apparently until further notice. “As I told you last year, in our examination work around compliance with this rule, we and the other regulators have pledged to be sensitive to the progress made by lenders that are squarely focused on making good faith efforts to come into compliance with the rule on time,” Cordray said. “We have also said that our approach would be diagnostic and corrective, not punitive. That is precisely what we are doing.” This means that the regulators will evaluate a company’s compliance management system ...

The CFPB said last week it will issue warning letters to 44 residential lenders and mortgage brokers that are not properly collecting Home Mortgage Disclosure Act information – data that helps the agency uncover discriminatory lending practices – and advised them to review their practices and step up their compliance efforts, if need be. The bureau said it has information that appears to show they may be required to collect, record and report data about their housing-related lending activity, and that they may be in violation of those requirements. The CFPB said it identified the 44 companies by reviewing available bank and nonbank mortgage data. The identities of the 44 firms were not provided by the agency. “Financial institutions that fail to ...

Mortgage servicers are going to have to bring their “A” game more consistently to the table if they wish to avoid punitive actions from the CFPB, the bureau’s director, Richard Cordray, made clear recently. Speaking to the attendees of the Mortgage Bankers Association conference in Boston last week, the nation’s top consumer regulator said it is regrettable that much of the damage done during the financial crisis to consumers and the broader economy could likely have been contained early on by more effective servicing. “A more effective system might have been up to the task of working with struggling borrowers to find appropriate ways to avoid foreclosure through loan modifications and short sales,” Cordray said. “But servicers were ill prepared ...

One little noticed provision of the CFPB’s recent proposal on disclosures of records and information would constrain regulated entities from sharing information about when they are being investigated by the CFPB – a concept industry representatives strongly oppose. More specifically, the proposal would restrict individual entities that are the subject of a civil investigative demand (CID) from voluntarily disclosing the receipt of such a demand, which is confidential investigative information (CII), without first getting permission from the CFPB. In a joint comment letter submitted to the CFPB, the Consumer Mortgage Coalition, the Credit Union National Association, the Independent Community Bankers of America, the Mortgage Bankers Association, and the National Association of Federal Credit Unions said they strongly oppose this component of ...

Another burr under the industry’s saddle stemming from the CFPB’s recent proposal on disclosures of records and information is a proposed significant expansion of the bureau’s ability to share confidential supervisory information (CSI) with other agencies or entities. Under current rules, the bureau may disclose CSI only to the small set of federal and state agencies that have “jurisdiction over a supervised financial institution.” However, the bureau has proposed disseminating CSI to any “federal, state or foreign governmental authority, or an entity exercising governmental authority” whenever “it is relevant to the exercise of the agency’s statutory or regulatory authority.” This is extremely problematic to the industry, according to a joint comment letter submitted to the CFPB by the Consumer Mortgage ...

Allegations in an impending government MBS fraud case against Moody’s Corp. will likely mirror allegations of fraud and misrepresentation in a 2013 civil suit against Standard & Poor’s, according to industry observers. Moody’s disclosed the expected case in a recent filing of third-quarter earnings results with the Securities and Exchange Commission. According to the credit rating agency, lawsuits are likely pending from both the Department of Justice and state attorneys general over ratings of MBS in the years leading up to the financial crisis. In a letter dated Sept. 29, 2016, the DOJ informed...

The Cato Institute recently filed an amicus brief challenging the Federal Housing Finance Agency’s denial of compensation benefits to a former Freddie Mac CFO at the start of the conservatorship. The FHFA terminated Anthony Piszel two weeks after the government took over the GSEs in September 2008. The primary issue was whether a government prohibition on making golden parachute (severance) payments to terminated Freddie employees was illegal or not. Piszel appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie breached its contract and owed him payment for his golden parachute compensation.

Fairholme Files Motion to Force Government to Produce Docs ASAP. Plaintiffs in Fairholme Funds Inc. v. United States, et al, filed an emergency enforcement motion this week arguing that the government is purposely taking too long to produce documents and requesting unnecessary extensions. “The defendant has repeatedly delayed complying with the court’s order,” said Fairholme in the court documents. The judge gave the government until Nov. 1 to produce the documents. Freddie prices $217M K-deal. Freddie Mac priced a new offering of Structured Pass-Through Certificates (K Certificates) that are backed by underlying collateral consisting of supplemental multifamily mortgages. The company expects to issue approximately $217 million in K Certificates, which...

In a class-action ruling that could have implications for legacy MBS lawsuits, a federal appeals court confirmed a recent U.S. Supreme Court landmark decision on standing and statutory damages. Ruling in Nicklaw v. CitiMortgage earlier this month, the U.S. Court of Appeals for the Eleventh Circuit held that to establish standing in order to bring a lawsuit alleging only a statutory violation, a plaintiff must allege a concrete harm or injury resulting from the violation. Relying on the alleged statutory violation alone would only result in a dismissal, the court warned. The 11th Circuit decision is...