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Volume 28 - Number 19

September 11, 2017

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CFPB Eyeballing Equifax, Forced Arbitration an Issue

An official from the CFPB confirmed late last week the agency is looking into the massive data breach at Equifax, widely seen as the most significant, and potentially most damaging, so far in the age of the Internet. A spokesman for the bureau told this newsletter, “The CFPB has authority over the consumer reporting industry, including supervisory and enforcement authority. The CFPB is authorized to take enforcement action against institutions engaged in unfair, deceptive or abusive acts or practices, or that otherwise violate federal consumer financial laws. We are looking into the data breach and Equifax’s response, but cannot comment further at this time.” However, it’s not just the occurrence of the breach that bothers the consumer regulator. As part ...

CFPB’s Cordray Begins Laying Foundation for Run for OH Governor

CFPB Director Richard Cordray is still on the job, but did take a step toward throwing his hat into the ring for the race for the Ohio governor’s mansion, delivering remarks at the Labor Day Picnic of the Cincinnati AFL-CIO. Cordray, sounding like a political candidate, according to those in attendance, briefly extolled all the work the bureau has done on behalf of consumers, including the mortgage reforms that have forced so much change upon lenders. The director noted, “So far, our enforcement work has led to about $12 billion in relief to 30 million people who were cheated or mistreated, and who deserve to get things fixed and get their money back.” His remarks also harkened back to his ...

Three Key Rulemakings at Stake With Cordray’s Tenure in Flux

The CFPB’s final rule banning arbitration agreements, as well as pending rulemakings on payday and small-dollar lending and on debt collection practices, may live or die on the decision of Director Richard Cordray to exit his term before it expires in July. That prospect could be motivating him to linger in his current gig as opposed to resigning right now to enter the race for Ohio’s governorship, according to an analysis of the current lay of the land at the bureau from a former senior official at the agency. Former CFPB Assistant Director and Deputy General Counsel Quyen Truong, now a partner at Stroock & Stroock & Lavan in DC, noted that it is still unclear whether Republicans in the ...

Congress Starts to Consider TRID Legislation, Other Changes to CFPB

Members of Congress wasted no time getting to work on the CFPB when they returned to the nation’s capital last week after the Labor Day holiday. A subcommittee of the House Financial Services Committee held a hearing to consider a few legislative proposals to foster a more efficient federal financial regulatory regime, including a soon-to-be introduced TRID Improvement Act. Slated to be introduced by Rep. French Hill, R-AR, the TRID Improvement Act of 2017 would amend the Real Estate Settlement Procedures Act and the Truth in Lending Act to expand the period in which a creditor is allowed to cure a good-faith violation on a loan estimate or closing disclosure from 60 to 210 days after consummation. The bill also ...

Smaller Players Support Proposal to Close TRID’s ‘Black Hole’

The biggest mortgage lenders and the national industry trade groups have yet to formally submit comments to the CFPB regarding the bureau’s proposal that would close the so-called black hole associated with the agency’s integrated disclosure rule. But smaller players aren’t waiting around for the big dogs to weigh in and are expressing their support for the agency’s proposed solution. Monica Montgomery, head of mortgage compliance for Dubuque Bank & Trust, said she fully supports removing the four-business-day limit for providing closing disclosures for purposes of resetting tolerances and determining if an estimated closing cost was disclosed in good faith. “There are many circumstances where a closing is delayed beyond the control of the creditor after a CD had been ...

PHH, Realogy, Others Settle RESPA Case for $17 Million

A complaint filed in late 2015 in U.S. District Court for the Central District of California in an attempt to initiate a class-action case against PHH Corp. and Realogy Holdings Corp. and some of their subsidiaries and affiliates has been brought to an end, after the defendants agreed to pay $17 million to resolve the dispute. PHH, Realogy and the other industry participants were accused of violating Section 8(a) of the Real Estate Settlement Procedures Act by allegedly “paying and receiving kickbacks, referral fees, or other things of value in connection with the referral of title insurance and other settlement services to Title Resource Group and its affiliates.” They also were accused of running PHH Home Loans as an improper ...

Ocwen Agrees to Pay $1M to Settle Force-Placed Insurance Issue

Ocwen Financial Corp. and Ocwen Loan Servicing recently agreed to pay a $1 million fine to resolve an issue of force-placed insurance (FPI) under the national mortgage settlement that was reached in 2014. At issue was the company’s performance as loan servicer as measured against one particular metric, metric 29, the purpose of which is to test whether Ocwen complied with the servicing standards regarding the timeliness of terminating FPI and refunding premiums to affected borrowers. Under the settlement, Ocwen must terminate FPI within 15 days of obtaining proof that a borrower has an existing insurance policy. As it turned out, Ocwen exceeded the mandated error threshold of 5 percent for Metric 29 during the first quarter of 2017, according ...

Federal District Court Sanctions CFPB for Deposition Conduct

The CFPB suffered another legal blow recently when a federal district court judge in Atlanta granted defendants’ requests for sanctions against the bureau stemming from its behavior related to the defendants’ depositions of agency witnesses. The action stems from an enforcement action the CFPB brought in April 2015 against a number of individuals and entities in connection with what the bureau alleged was a massive debt-collection scheme. The issue prompting the judge’s crackdown was the CFPB's reluctance and apparent refusal to be deposed by some of the defendants. First, it objected to such depositions. Then when more defendants filed similar notices, the bureau responded with motions for protective orders. Then when depositions finally occurred, a CFPB witness used “memory aids” ...

CFPB Takes Action Against Lead Aggregator Over Alleged Steering

Last week, the CFPB brought an enforcement action against Zero Parallel, an online lead aggregator based in Glendale, CA, for allegedly steering consumers toward lenders who offered illegal or unlicensed loans that were void in the consumer’s state. According to the bureau, consumers who applied for loans through Zero Parallel’s network had no control over which lenders received their applications. “Zero Parallel regularly sold leads for consumers located in states where the resulting loan was void,” said the consumer regulator. The CFPB ordered Zero Parallel to end its alleged illegal conduct and pay a $100,000 penalty. Also, under the terms of the consent order, Zero Parallel is required to undertake reasonable efforts to ensure that loan applications it sells do ...

Other News in Brief/Industry News in Brief

State Regulators Start Work on a Next-Generation Technology Platform. The Conference of State Bank Supervisors has initiated what it characterizes as a major redesign of the Nationwide Multistate Licensing System (NMLS), which is the core technology platform state bank regulators utilize. According to the CSBS, the redesign will enable the regulators to transform the licensing and supervision of non-bank financial institutions, including financial technology companies, or so-called fintechs. “Technology and data are powerful tools that can create sweeping benefits throughout the financial regulatory system,” said Louisiana Office of Financial Institutions Commissioner John Ducrest. “And that vision drives our efforts with the next-generation NMLS. We are committed to nothing less than modernized state regulation for a modernized financial services industry.” The ...

Poll

The year is almost 75% done. How is mortgage origination volume at your shop?

We will fund about the same as we did in 2016.
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We will fund more than last year – by a lot.
We will fund less than last year – by a little.
We will fund less than last year – by a lot.

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