Consumer complaints to the CFPB fell by double digits in nearly every category during the fourth quarter of 2015, with total complaints down 20.1 percent for the period, despite the one area that showed an increase – prepaid cards – skyrocketing 242.1 percent, according to the latest analysis by Inside the CFPB. However, the lending industry’s performance vis-à-vis consumers generally deteriorated in most categories on an annual basis, the latest data from the CFPB consumer complaint database show.Leading the improved performance during 4Q15 was the student loan sector, which saw gripes drop by a huge 31.7 percent, followed by declines in the debt collection space (off 27.5 percent), and in the home mortgages and credit report categories, both of which saw ...

FHA lenders funded $12.3 billion in new Home Equity Conversion Mortgage loans during the first nine months of 2015, up a hefty 22.2 percent from the same period in the prior year, according to Inside FHA/VA Lending’s analysis of agency data. Likewise, HECM endorsements increased 17.3 percent to $4.5 billion in the third quarter from $3.9 billion in the prior quarter. This was the highest HECM endorsements have been since the second quarter of 2013, when they totaled $4.1 billion. Purchase loans accounted for 85.8 percent of all HECM originations over the nine-month period. The majority of borrowers favored adjustable-rate HECMs over fixed-rate HECMs, which accounted for only 14.8 percent of HECM transactions. In addition, the initial principal amount at loan originations totaled $7.3 billion, up from $4.6 billion midway through 2015. The volume increase is attributable to program changes implemented ... [1 chart]

The share of “unacceptable” ratings for defective FHA loans following a post-endorsement technical review has dropped from double- to single-digits in FY 2015 due to lenders’ mitigation efforts, according to the FHA’s latest loan-review results. FHA’s initial unacceptable rate has remained at 45 to 47 percent over the last four quarters, but lender submission of mitigating documentation has reduced that rate to 5 percent as of Oct. 31, 2015, the FHA report said. This means an overall mitigation rate of nearly 90 percent of the FHA-insured loan sample. The number of initially unacceptable findings and those findings subsequently mitigated are based on 6,415 FHA-insured mortgages that underwent post-endorsement technical reviews between April 1 and June 30, 2015. Of the total loans reviewed, 68.6 percent were purchase loans, 17.9 percent streamline refinance and ...

Joint civil fraud initiatives have resulted in $558.5 million in recoveries and receivables to the Department of Housing and Urban Development in FY 2015, according to the HUD inspector general’s semiannual report to Congress. The amount includes civil settlements of $212.5 million from First Tennessee Bank, $29.6 million from Reverse Mortgage Solutions, and $1.8 million from three other settlements. The settlements resolved enforcement actions brought by the Department of Justice on behalf of HUD in pursuit of civil remedies under a variety of statutes, including the False Claims Act, Program Fraud Civil Remedies Act, and the Financial Institutions Reform, Recovery and Enforcement Act. Recoveries and receivables for other entities during the reporting period – April 1 to Sept. 30, 2015 – totaled $86.9 million and $268.2 million for the entire fiscal year. Some of the payments were made to the ...

VA Servicer Reminders. The new maximum allowable foreclosure timeframes published in the Federal Register on Dec. 4, 2015, will be effective for all loan terminations completed on or after Jan. 3, 2016. In addition, the new Net Value percentage (15.95 percent) took effect on Dec. 23, 2015. All Notices of Value issued on or after Dec. 23, must be calculated using the new percentage. Meanwhile, pre-approval requests to deviate from a regulation must be submitted through VALERI (VA Loan Electronic Reporting Interface), the agency’s loan administration system. VA does not grant pre-approval on claim expenses or for additional time to foreclose. These items must be appealed ...

The House Financial Services Committee held an oversight hearing last week on the Financial Stability Oversight Council, of which the CFPB is a voting member. In response to a softball question tossed in his direction by Rep. Nydia Velázquez, D-NY, CFPB Director Richard Cordray took advantage of the opportunity to tout the work the bureau does and its relation to addressing systemic risk in the U.S. economy. Velázquez stated: “The CFPB’s core mission is consumer protection, which may not seem linked to systemic risk. However, I don’t think that’s the case. Can you elaborate on what role consumer financial protection plays in the stability in the economy and how your agency’s work helps inform FSOC?” Cordray replied: “It’s worthy of ...

The more consumers complain to the CFPB about their financial services providers, the more likely those providers are to be fined, and the higher those fines are likely to be, new research suggests. For instance, lenders and other financial services providers face a 58 percent chance of being fined when complaints to the CFPB breach the 2,000 threshold for a company, according to an analysis by PerformLine, a “software-as-a-service” marketing compliance company based in Morristown, NJ. Among the other key findings were a 34 percent increase in the number of consumer complaints year-over-year since 2012, and average fines ranging from $134 million (for companies that received 2,000-10,000 complaints) to $758 million (for companies with 10,000+ complaints). Sliced another way, the ...

Consumers appear to have more to complain about to the CFPB when it comes to their various bank account products and services and less when it comes to money transfers these days. According to the latest analysis by Inside the CFPB of third quarter 2015 information from the bureau’s consumer complaint database, consumer gripes about bank accounts rose 5.4 percent at the nine-month mark in the year versus the same period in 2014. However, consumer kvetching fell by 4.6 percent from the second quarter. Things seem to be much better in the money transfer space, which saw end-user grumblings drop a big 25.4 percent year over year as of the end of September, and down a significant 12.6 percent quarter ...

The Department of Justice has announced settlements with two nonbank FHA originators to resolve allegations of FHA underwriting fraud and False Claims Act violations. Franklin American Mortgage in Franklin, TN, recently agreed to pay $70 million to resolve allegations it knowingly originated and underwrote FHA-insured loans that did not meet agency guidelines. There were also quality-control issues. According to the DOJ, Franklin Mortgage, a direct endorsement lender, agreed it had certified ineligible loans for FHA insurance starting Jan. 1, 2006, including single-family residential loans, reverse mortgages and streamlined refinances. Those loans later resulted in claims submitted to the Department of Housing and Urban Development, causing losses to the FHA insurance fund. The DOJ also alleged that the nonbank lender employed unqualified junior underwriters and set high quotas for its ...

Quicken Loans’ chief executive officer reiterated threats by company owner Dan Gilbert to exit the FHA business amid concerns about a forthcoming lender-certification rule and an ongoing court battle with the Department of Justice. A report by Reuters quoted Gilbert earlier this week as saying he is considering pulling Quicken Loans out of the FHA market. In an interview with IMFnews, Quicken CEO Bill Emerson said top management would be remiss if it did not think about exiting the business. Quicken will decide whether to stay or go after the FHA releases its revised rule on lender certification later this month, he said. The revised proposal restores a provision initially removed from the original proposal, which would require lenders to certify that neither the firm nor its officers have been suspended, debarred or excluded from participation in any federal agency transactions. In addition, the revised proposed rule requires ...