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Inside the CFPB

April 30, 2012

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Industry Lists Concerns With CFPB Disclosure

An ad hoc coalition of mortgage lender trade group representatives rattled off a host of concerns it has with the draft proposals from the Consumer Financial Protection Bureau for an integrated mortgage disclosure under the Real Estate Settlement Procedures Act and the Truth in Lending Act. The short list of concerns includes the need for careful synchronization with other rulemaking efforts, especially those involving the “qualified mortgage” and “qualified residential mortgage” designations; the negative and unfair results of lowering cost tolerances; the unintended consequences of expanding... Read More

Lenders Press CFPB for QM Full Safe Harbor

The Consumer Financial Protection Bureau must structure the definition of a “qualified mortgage” under its forthcoming ability-to-repay rule as a legal safe harbor with clear, well-defined standards if regulators want to make sure that qualified borrowers across the credit spectrum maintain access to affordable financing, representatives of the financial services, home building and real estate industries said. Writing to the CFPB late last week, a group of 23 trade associations said, “Structuring the QM as a safe harbor and focusing litigation and enforcement activity on... Read More

Industry Supports Multiple Efforts To Codify Privileged Protections

A handful of mortgage lending-related trade groups joined together to express their strong support of the Consumer Financial Protection Bureau’s proposed rule to codify the legal protections for privileged information that CFPB-regulated financial institutions submit to the bureau. The proposal would make clear that an institution that submits privileged information to the CFPB does not waive any applicable privilege having to do with third parties. It also would make clear that the bureau’s transfer of privileged information to another federal or state agency does not result in a... Read More

CFPB Clarifies Transitional Licensing Under the SAFE Act

It’s now clear that states may provide a transitional license to an individual with a valid license from another state under the Secure and Fair Enforcement for Mortgage Licensing Act and Regulation H. However, they cannot provide a transitional license for a registered loan originator who leaves a federally regulated financial institution to act as a loan originator while pursuing a state license. The clarification came in the form of Consumer Financial Protection Bureau Bulletin 2012-05, issued a week and a half ago, in response to some inquiries... Read More

CFPB Soliciting Small Entities’ Input on Mortgage Servicing Rules

The Consumer Financial Protection Bureau has put together a second panel, as per the Small Business Regulatory Enforcement Fairness Act, tasked with giving the bureau input on the mortgage servicing rules proposal that the CFPB is working on under the Dodd-Frank Wall Street Reform and Consumer Protection Act. “The SBREFA requires the CFPB to convene a small business panel before rolling out regulations that the CFPB director expects to have a significant impact on a substantial number of small business entities,” explained Barbara Mishkin, of counsel in the consumer financial services group... Read More

TILA/GFE Reform, Fair Lending Top Lender Compliance Concerns

The forthcoming combined Truth in Lending Act and Good Faith Estimate disclosure form and related rule pending at the Consumer Financial Protection Bureau is at the top of the list of greatest compliance concerns of mortgage lenders, according to the fourth annual compliance survey by QuestSoft, a provider of compliance software and services to the mortgage industry. Of the 426 lenders that were surveyed on their level of anxiety for regulatory changes, a whopping 81 percent identified this CFPB project as at least a medium (33 percent) or a high (48 percent) concern... Read More

No Private Right of Action Under HAMP, Appeals Court Rules

A homeowner does not have a private right of action against his mortgage servicer under the Obama administration’s Home Affordable Modification Program, the U.S. Court of Appeals for the Eleventh Circuit ruled late last week. In this case, the borrower, Jason Miller, owned a parcel of real property in Hiawassee, GA, which he was able to purchase by taking out a mortgage loan from the unidentified predecessor of the defendant, Chase Home Finance, LLC (Chase). In February 2009, Miller asked for a loan modification from Chase, citing financial difficulties. Chase agreed to... Read More

Financial Stability Board Issues Sound Underwriting Principles

The Financial Stability Board has published principles for sound residential mortgage underwriting practices, emphasizing that participating jurisdictions should make sure lenders are effectively verifying income and other financial information, insisting on reasonable debt service coverage and appropriate loan-to-value ratios, engaging in effective collateral management, and making prudent use of mortgage insurance. The FSB said some or all of the principles may not necessarily be appropriate or applicable for certain niche forms of finance. But jurisdictions should... Read More

State Roundup

Illinois. Gifford State Bank, the defendant lender in Re Crane (Case 11-90592, U.S. Dist Ct, C.D. IL), recently appealed the February ruling of the U.S. Bankruptcy Court for the Central District of Illinois, a decision that let a bankruptcy trustee avoid an Illinois mortgage as to other creditors of the estate because the mortgage failed to expressly state the maturity date and interest rate of the underlying debt. Legislation that would contravene the Crane decision has been introduced in the state House of Representatives with the hope it can be passed before the May 31 end of the session... Read More

Federal Roundup

Federal Reserve Board.Federal Deposit Insurance Corp.Office of the Comptroller of the Currency.Consumer Financial Protection Bureau.National Mortgage Servicing Standards Continue. The interagency group of federal banking regulators continues to work to develop prudential standards for mortgage servicing activities in parallel with the Consumer Financial Protection Bureau’s initiative, which focuses on certain aspects of mortgage servicing... Read More

Worth Noting

The Financial Crimes Enforcement Network’s latest report on mortgage loan fraud reported suspicious activity reports (MLF SARs) shows financial institutions submitted 92,028 MLF SARs last year, a 31 percent increase over the 70,472 submitted in 2010. FinCEN attributed the increase mostly to mortgage repurchase demands. On the other hand, financial institutions submitted 17,050 MLF SARs in the 2011 fourth quarter, a drop of 9 percent over the same period in 2010 when financial institutions filed 18,759 MLF SARs. “While too soon to call a trend, the fourth quarter of 2011 was the first time since... Read More

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