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Inside the CFPB

September 25, 2006

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Fed to Amend TILA for New AMP Disclosures

The Federal Reserve Board is planning to develop and test new disclosures for nontraditional or alternative mortgage products to determine the language and format that works best with consumers. Commenting on a Government Accountability Office study on the impact of mortgage disclosures, the Fed said it would use design consultants to help in drafting model disclosures that can effectively convey information clearly and simply to consumers. The agency also plans to use... Read More

CAFA Results in More Removals to Fed Courts

Last year’s passage of the Class Action Fairness Act appears to have increased the number of class-action filings and removals of cases from state to federal courts over the last couple of months, said the Federal Judicial Center in an interim report on CAFA’s judicial impact. The second installment of the FJC’s long-term study of CAFA’s effect on the federal courts found a spike in class-action filings in or case removals to federal district courts during the months after the statute took effect on... Read More

Disclosures Too Complex for Basic Adult Reader, GAO Study Asserts

The current disclosures for alternative or nontraditional mortgage products are too complicated and confusing for a person with a sixth-to-eighth grade education to understand, a recent Government Accountability Office study has found. The GAO study on the effectiveness of alternative-mortgage product disclosure, found that today’s disclosures are written at the level of a person in the 9th to 12th grade, “with an average near the 11th grade,” the study concluded... Read More

Wholesaler Settles Fair Lending Complaint with HUD, Advocates

Mortgage wholesaler SouthStar Funding has agreed to settle an administrative complaint filed by community reinvestment advocates alleging discriminatory lending in Baltimore’s inner city and in other similar areas across the country. The fair lending complaint against SouthStar Funding was filed by the National Community Reinvestment Coalition in April and was resolved through the Department of Housing and Urban Development’s conciliation process... Read More

DOL Finds Mortgage Loan Officers Exempt from Overtime Regulations

Mortgage loan officers, like certain “outside sales” employees, are exempt from the overtime and minimum wage rules of the Fair Labor Standards Act., according to a formal opinion issued by the Department of Labor Sept. 8 in response to a mortgage industry request. The Mortgage Bankers Association asked the DOL nearly a year ago to clarify whether mortgage loan officers are excluded from overtime and minimum wage requirements under the DOL’s newly revised rules on “white collar” exemptions... Read More

Bank Recounts Ratings Odyssey, Sees Downgrade as an ‘Aberration’

How does a Community Reinvestment Act-covered institution jump from a “needs-to-improve” to a “satisfactory” performance rating? In the case of Republic Bank & Trust Co., it took a strong commitment to discard a profitable product that had been affiliated with the bank since 1997. The Kentucky-based institution was downgraded by the Federal Deposit Insurance Corp. from an “outstanding” CRA rating to a needs-to-improve rating in October 2004 after agency examiners found potential violations of... Read More

OCC Reveals How CRA Examiners Approach New ISB Evaluations

If you are a mortgage lender classified as an “intermediate small bank” under the revised Community Reinvestment Act regulations for banks and thrifts, how familiar are you with the new CRA performance exam for this new category? Even though the revised CRA rules became effective on Sept. 1, 2005, some institutions may still be unfamiliar with an ISB exam and how it compares with the CRA lending, investment and service tests for large banks, according to the Office of the Comptroller of the Currency’s latest update... Read More

Industry Warns of Dire Results if PA Adopts Licensee Conduct Rule

The use of subjective standards in determining which lending conduct and practices should be prohibited would only result in compliance problems and increased lender liability, according to the Mortgage Bankers Association and its Pennsylvania affiliate. In a joint comment letter, the MBA and the Mortgage Bankers Association of Pennsylvania warned that proposed state regulations on lending abuses would not provide the certainty or clarity required by the primary and secondary mortgage markets... Read More

State Roundup

Ohio. Attorney General James Petro has proposed rules to crack down on predatory lending. In particular, lending that does not take into account a borrower’s ability to repay or...New York. The New York State Banking Department has issued guidelines to assist mortgage brokers in preparing for fair-lending examinations... Read More

Federal Roundup

Federal Trade Commission/Hispanic Fraud Prevention: The FTC and a number of federal and state agencies will jointly host a Hispanic Fraud-Prevention Forum in New York City on Sept. 27, 8:30 a.m. to 3:30 p.m., at the Alexander Hamilton U.S. Customs House...Department of Housing and Urban Development/Hotline Enhancements: An increase in calls coming into HUD’s toll-free fair housing complaint line shows that recent improvements made to the system are paying off, the department reports... Read More

Worth Noting…

America’s Community Bankers has chosen Edentify, Inc. as a “preferred solution provider” to assist member banks... The second annual “Diversity and Emerging Markets Conference & Career Fair” is scheduled for... The American Conference Institute is hosting its 3rd National Forum on Mortgage Fraud...The National Real Estate Development Center has announced its 8th Annual FHA Mortgagees... The Consumer Bankers Association’s Fair Lending Conference will be at the Ritz Carlton... Read More

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