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Inside the CFPB

June 30, 2008

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Worth Noting …

The Federal Bureau of Investigation last week announced the arrest of over 400 individuals in a nationwide sweep aimed at mortgage fraud. But some observers question whether the government’s efforts are putting much of a dent in a massive problem that’s becoming more visible in the slumping housing market. The dragnet, coined “Operation... Read More

Federal Roundup

U.S. Senate: Omnibus Housing Bill. Senate lawmakers’ attempt to wrap up an historic housing bill that would expand the federal government’s role in... Office of the Comptroller of the Currency:New Data on Loan Modifications. The foreclosure inventory continues to rise, but the number of new foreclosures has declined since... Read More

State Roundup

New York. On June 18, NY Chief Judge Judith Kaye announced a new program to reduce the... Florida. The Sunshine State has a new law protecting homeowners against foreclosure... Rhode Island. H.B. 7723 (S.B. 2598) was signed into law June 6 amending the state’s... Colorado. H.B. 1402 became law on June 5, requiring mortgage lenders to notify borrowers in... Oklahoma. Gov. Brad Henry, D, signed H.B. 2245, which requires entities that own or... Read More

CT Allows Borrowers to Delay Foreclosure through Mediation

Starting July 18, lenders and servicers initiating foreclosure proceedings in Connecticut will be required to notify distressed borrowers of the availability of voluntary mediation programs. The Connecticut legislature has passed legislation recently which, among other things, allows a distressed borrower to forestall foreclosure and mediate with... Read More

New Guidelines Unveiled for Faster Assistance to Borrowers

The Hope Now Alliance has announced new procedures and guidelines to speed up help to homeowners in danger of losing their homes. For the first time, the new guidelines establish a timetable that Hope Now servicers will use when working with a distressed homeowner. The agreement also includes extensive procedures by which servicers will keep homeowners informed about the status of their request for... Read More

Non-Approved Broker Services for FHA Loans Not Compensable

Federal Housing Administration regulations allow a borrower to hire a non-approved mortgage broker to assist him or her to obtain home-loan financing, but the services for which the broker can be compensated are rather limited. A non-approved broker providing loan origination services in relation to an FHA-insured “forward” or traditional mortgage is not eligible for any compensation under... Read More

FASB Ponders Changes to Accounting Rules for Swaps

The Financial Accounting Standards Board is reconsidering its accounting rule for mortgage-backed securities swaps in light of its plan to eliminate “qualifying special purpose entities,” or QSPEs. The issue was raised by board members earlier this month during a discussion of transferred financial assets and guaranteed mortgage securitizations. The discussion... Read More

AGs Deal Countrywide a Double Whammy for Deceptive Practices

The attorneys general of California and Illinois filed separate lawsuits against Countrywide on June 25 for allegedly deceptive lending practices that pushed homeowners into risky loans and eventual foreclosure. The announcement of the lawsuits overshadowed news on the same day that Countrywide shareholders have approved Bank of America’s takeover of the beleaguered company. The deal is... Read More

Lenders Told to Proceed Cautiously In Subprime Litigation Minefield

As an ever-increasing number of cases against subprime lenders mount in 2008, attorneys note that the potential outcome of the cases is difficult to predict as few precedents in the area have been set. However, initial action suggests that lenders have cause for concern.At Mealey’s Subprime Mortgage Litigation and Insurance Coverage Conference in Arlington, VA, recently... Read More

Take a Closer Look at Your Liability Coverage, Experts Advise Lenders

Mortgage lenders should re-evaluate their existing directors and officers (D&O), errors and omissions (E&O), and commercial general liability insurance policies to make sure they are adequately covered in the event of a subprime-related lawsuit, experts say. Even when allegations against a subprime lender satisfy a policy’s coverage provisions, insurance companies will likely assert a... Read More

More Testing Needed on Proposed RESPA Disclosures, Says Fed Staff

The Department of Housing and Urban Development should run more consumer tests to ensure that proposed disclosures under the Real Estate Settlement Procedures Act are clear and well understood by consumers, according to Federal Reserve Board staff. Although HUD engaged in consumer testing, it apparently did not focus on how consumers understood the disclosures on the revised GFE or... Read More

Lawsuit Looms over GSE Appraisal Pact

The controversial new appraisal guidelines agreed to by New York Attorney General Andrew Cuomo, the Office of Federal Housing Enterprise Oversight, Fannie Mae, and Freddie Mac could face legal challenges. But overturning the policy in court will not be easy, attorneys say. There are grounds for a lawsuit and there are a couple of parties that could bring it, said Ray Natter, a partner... Read More

Fed Calls for Harmonized RESPA-TILA Form

The staff of the Federal Reserve Board favors the adoption of a single disclosure form that complies with both the Real Estate Settlement Procedures Act and the Truth and Lending Act, and has called for a coordinated rulemaking with the Department of Housing and Urban Development. Commenting on proposed RESPA reforms, the Fed staff urged HUD to coordinate its proposal with the board’s... Read More

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