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Inside the CFPB

June 25, 2012

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Feds Issue Financial Remediation Guidance

The Office of the Comptroller of the Currency and the Federal Reserve Board late last week put out guidance that will be used to calculate the compensation or other remedy that borrowers will receive for financial injury identified during the independent foreclosure review that was set up last spring in the wake of the industry’s foreclosure practice debacle. The Financial Remediation Framework provides examples of situations where compensation or other remediation is required for financial injury due to servicer errors, misrepresentations or other deficiencies... Read More

Disparate Impact Revisits the SCOTUS

The Township of Mount Holly, NJ, has formally asked the U.S. Supreme Court to consider a case that once again raises the question of whether disparate impact claims can be brought under the Fair Housing Act. The issues raised in this case are pretty much those in Magner v. Gallagher, the case that would have settled the disparate impact issue except for the last-minute decision by the City of Saint Paul to dismiss its appeal, according to Christopher Willis, a partner with Ballard Spahr, which represents one of the non-township defendants in the case. Township of Mount Holly, NJ, et al.,... Read More

Borrowers Can’t Seek Rescission After TILA’s Three Year Repose

In Rosenfield v HSBC Bank, the U.S. Court of Appeals for the Tenth Circuit recently ruled that borrowers cannot seek rescission after the Truth in Lending Act’s three-year statute of repose expires, even if the borrower had sent a notice of rescission within the three-year period. Beyond the ruling of the facts of the case, the court’s decision is another blow to the Consumer Financial Protection Bureau. Early this year, the CFPB had argued in a friend-of-the-court brief that TILA Section 125 (U.S.C. Section 1635) gives consumers a statutory right to rescind qualifying mortgage... Read More

Basel III Poses a Challenge to Fair Lending, Legal Expert Says

The Basel III international capital standards recently proposed by U.S. banking regulators may have been like a slow train coming, visible from a distance for a long time, but that’s not keeping some surprises from being detected. One such surprise has to do with potentially negative public policy implications when it comes to fair lending, as far as some top industry attorneys are concerned. Currently, mortgages backed by Ginnie Mae get a zero risk weight, while those backed by Fannie Mae or Freddie Mac get a 20 percent risk weight. Most residential mortgages without Uncle Sam’s... Read More

Mortgage Loan Officers Ruled Not Exempt from Overtime

Judge Reggie Walton in U.S. District Court for the District of Columbia has rejected a Mortgage Bankers Association challenge to an “Administrator’s Interpretation” by the U.S. Department of Labor that loan officers in the mortgage banking industry generally do not qualify as exempt employees under the administrative exemption of the federal Fair Labor Standards Act. The ruling, if left intact, is seen as a victory for mortgage loan officers and a loss for those that employ them. Last year, the MBA pressed for the court’s review of the 2010 Administrator’s Interpretation, asserting... Read More

Lending Industry Keeps Opining On CFPB Disclosure Project

The Consumer Financial Protection Bureau might be less than a month away from issuing its proposed rule and forms related to its project to combine and harmonize the disclosures consumer get when they’re wrapping up their mortgage loans. But that didn’t keep industry representatives from making another pitch of their various recommendations for improving the CFPB’s pending rule. Testifying during a hearing of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity last week, Anne Canfield, executive director of the Consumer Mortgage Coalition,... Read More

Groups Take on CFPB Over Legality Of Obama’s Cordray Appointment

The conservative watchdog organization, Judicial Watch, has filed a Freedom of Information Act lawsuit against the Consumer Financial Protection Bureau to obtain records detailing President Obama’s controversial appointment of the agency’s director, Richard Cordray.“Given the Obama administration’s penchant for secrecy, I am not at all surprised we have to file a lawsuit to obtain these records on this scandalous appointment,” said Judicial Watch President Tom Fitton. “The Cordray appointment is an abuse of office that disregards the U.S. Constitution and the U.S. Senate’s role... Read More

60 Percent of Loan Mods Go Delinquent Within 18 Months

Nearly 6 in 10 mortgage modifications went 60 or more days delinquent 18 months following the date of their modification, according to a new study from TransUnion. The study only looked at loan modifiers and non-modifiers, with comparable VantageScore credit scores, who had originally been 120 or more days past due on their mortgage loans. It found the recidivism rate – the rate at which modified mortgages again went 60 or more days past due – was 41.9 percent 12 months after modification. After 18 months, that rate had risen to 59.1 percent. Arizona, California, Florida... Read More

State Roundup

Maryland. Hope LoanPort recently launched the Maryland Mediation Portal, which it said was the first statewide mediation portal in the country. The portal enables all mediation participants, including the mortgage servicer, the state mediator, the housing counselor working with the homeowner, and the servicer’s foreclosure attorney, to more effectively communicate and exchange information required for a successful mediation. The initiative is a joint effort of Hope LoanPort and GMAC Mortgage, as well as Maryland’s Office of Administrative Hearings, the state Department of Labor,... Read More

Federal Roundup

Consumer Financial Protection Bureau.Key Leadership Positions Filled. The Consumer Financial Protection Bureau has filled a number of key leadership positions at the agency.Steven Antonakes, previously the CFPB’s assistant director of large bank supervision, will now serve as the associate director for supervision, enforcement and fair lending. Paul Sanford, who had been serving as chief of staff for large bank supervision, has succeeded Antonakes as acting assistant director. Len Kennedy, formerly general counsel and associate director, has been... Read More

Worth Noting

The Mortgage Bankers Association has been making a concerted push to get members of the U.S. House of Representatives to sign onto a bipartisan “Dear Colleague” letter to the Consumer Financial Protection Bureau that calls for a strong safe harbor in the definition of a qualified mortgage in the pending “ability to repay” rule. The letter is being circulated by Reps. Shelley Moore Capito, R-WV, and Brad Sherman, D-CA. A number of industry groups have asked the Consumer Financial Protection Bureau to formally convene a panel as per the Small Business Regulatory Enforcement Fairness Act... Read More

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