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Inside the CFPB

July 14, 2008

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Worth Noting …

Despite lenders’ promises to help borrowers, foreclosure is still the most common outcome for homeowners struggling to make mortgage payments, the California Reinvestment Coalition’s latest survey on loan modification has found. In its third survey of industry efforts to help distressed California homeowners avoid foreclosure, the CRC found that mortgage servicers are still not doing enough to... Read More

Federal Roundup

Office of Thrift Supervision: Mortgage Metric Report. Foreclosures continued to rise in the first quarter despite an increase in loss mitigation efforts and a slight... Department of Housing and Urban Affairs: Use of Non-Approved Brokers in FHA Lending. HUD has issued guidance reminding lenders of existing policy regarding the use of non-approved... Read More

State Roundup

Ohio. On June 26, the Dayton Mortgage Fraud Task Force arrested six suspects in an alleged mortgage fraud scheme that... Arizona. The state Senate has passed S.B. 1028, which would require new loan originators to complete certain mortgage-related... Massachusetts. Gov. Deval Patrick has announced the “Home for the Brave” mortgage program, which will offer safe, affordable... Read More

CRA Examiners Find Fewer Non-Compliant Banks in First Half

Community Reinvestment Act examiners with three federal banking agencies found not a single non-compliant bank or thrift during the first half of 2008. The last time that happened was in 2004, with the same agencies, according to Inside Regulatory Strategies’ mid-year analysis of CRA ratings. At the half-year mark, the Office of Thrift Supervision... [Includes two charts] Read More

Servicer Lawsuit may Adversely Impact Loan Modification Efforts

A lawsuit filed against subprime servicer Litton Loan Servicing regarding its use of a third party to contact delinquent borrowers may have adverse implications for the industry’s loss mitigation efforts. Filed last month in federal court in Illinois, the suit alleges that Litton violated the Fair Debt Collection Practices Act by using Titanium Solutions to collect information from... Read More

Court Affirms Freddie’s Right to Maintain ‘Exclusionary List’

Freddie Mac was well within its legal rights and broke no law in placing a mortgage broker on a list of people and companies with whom it does not want to do business, according to the U.S. Court of Appeals for the 9th Circuit. In Family Home and Finance Center, Inc. v. Federal Home Loan Mortgage Corp., the appeals court rejected the broker’s claim for intentional interference with contract because... Read More

Lenders Reminded of Rules on HELOC Term Changes, REOs

The Federal Deposit Insurance Corp. has issued guidance for federally insured lenders when considering changes to the terms of any home-equity line of credit, as well as guidance reminding them of their responsibilities when handling foreclosure of real estate owned properties. With property values declining across the nation, HELOC portfolios are feeling the pinch. Responding to... Read More

Experts Troubled by Growing Use of State UDAP Laws in Lending Cases

Legal experts expressed concern over the increased use of state unfair-and-deceptive-practices statutes in mortgage-related cases in the wake of recent state lawsuits against Countrywide. Robert Jaworski, a compliance expert and a partner at the New Jersey office of Reed Smith, said there is a trend among state attorneys general to use the broader statute to go after lenders under the... Read More

Affirmation of Rescission Decision In TILA Case Could Be Disastrous

A lawsuit that originated in Wisconsin in 2005 could expose the mortgage industry and secondary market participants to enormous litigation risk if a federal appeals court in Illinois upholds the original decision in the coming weeks. In January 2007, U.S. District Judge Lynn Adelman ruled that Maryland-based Chevy Chase Bank violated the Truth in Lending Act by hiding the true terms of... Read More

ASF Expands List of Borrowers Eligible for Teaser Freeze Plan

The American Securitization Forum last week expanded its five-year, teaser-freeze loan modification program to apply to any subsequent rate reset on subprime ARMs, in addition to the initial rate reset that was required under the original guidance. The updated “Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans,” which... Read More

Industry Intensifies Lobbying for Merged RESPA-TILA Disclosures

The mortgage industry is on a lobbying blitz to get the Department of Housing and Urban Development and the Federal Reserve Board to work together to harmonize emerging disclosure changes. HUD has not responded to calls by financial trade groups and federal banking regulators to coordinate with the Fed in developing a single form for disclosures under the Real Estate Settlement... Read More

Senate Passes Omnibus Housing Bill

The U.S. Senate on July 11 approved omnibus housing legislation requiring, among other things, earlier Truth in Lending Act disclosures to consumers to help facilitate shopping for the mortgage loan that would best fit their financial needs. H.R. 3221, the Foreclosure Prevention Act of 2008, passed on a 63-5 vote following weeks of debate, procedural hitches and a veto threat... Read More

Fed Approves TILA-HOEPA Final Rule

The Federal Reserve Board today made some significant changes to an earlier proposed rule in approving final revisions implementing the Truth in Lending Act and the Home Ownership and Equity Protection Act to protect consumers from unfair, abusive, or deceptive lending and servicing practices while preserving responsible lending and sustainable homeownership. The final rule which the... Read More

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