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Inside the CFPB

January 20, 2014

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Industry Reps Rattle Off Many Suggested Changes to ATR Rule

With the mortgage industry having failed to delay implementation of the CFPB’s ability-to-repay rule/qualified mortgage standard, industry representatives have shifted gears and are now pressing for numerous alterations to the bureau’s controversial rule, which took effect Jan. 10. During a hearing last week before the House Subcommittee on Financial Institutions and Consumer Credit, the Mortgage Bankers Association had a number of recommendations, including abandoning the “rebuttable presumption” level of legal... Read More

Mortgage Tech Vendors Watch, Wait as Host of Rules Take Effect

It’s too early to say how the January effective dates for a handful of game-changing rules from the CFPB are going to affect mortgage lenders and servicers. The real test will be what happens when the CFPB shows up at the door and wants to sit down and have a look around. The short-term implications of the bureau’s new rules likely won’t be any big deal, according to Scott Stucky, chief operating officer of DocuTech Corp., a provider of compliance and document technology... Read More

Bank of the West Swims Against QM Tide to Offer IO Mortgages

While most mortgage lenders continue to insist they won’t originate new loans that fall outside the CFPB’s “qualified mortgage” parameters, one notable exception is San Francisco-based Bank of the West, which recently announced it will continue to offer interest-only mortgages, despite the fact such loans do not qualify for QM status. “We extensively reviewed the CFPB’s rules and found them broadly consistent with how Bank of the West has always done business,” said Paul Wible, senior executive vice president and head of the bank’s... Read More

More Mortgage Rules in the CFPB Pipeline, Regulatory Agenda Shows

The CFPB’s recently released semiannual regulatory agenda indicates the bureau plans to remain on a robust mortgage-related rulemaking schedule, although not at the blistering pace seen one year ago when it issued a handful of game-changing rules for the mortgage lending and servicing sectors. The CFPB said it is “continuing rulemaking activities to assist in the full implementation of, and facilitate compliance with, various mortgage-related final rules issued by the bureau in January 2013, strengthening consumer protections involving... Read More

Bureau Orders Missouri Lender To Pay $81K for Kickback Scheme

Last week, the CFPB ordered a Missouri mortgage lender, Fidelity Mortgage Corp., and its former owner and current president, Mark Figert, to pay $81,076 to settle allegations it funneled “illegal kickbacks” to a bank in exchange for loan referrals. The bureau charged that Fidelity, a St. Louis-based non-depository mortgage lender, entered into an agreement with an unnamed bank in which the bank referred potential borrowers to Fidelity in exchange for kickbacks. The kickbacks were disguised as inflated lease payments... Read More

CA Fed Court Rejects Morgan Drexen Challenge to CFPB

The U.S. District Court for the Central District of California has rejected a legal challenge to the constitutionality of the CFPB that was brought by debt relief firm Morgan Drexen, which became the subject of a bureau enforcement action after the filing. Back in July, Morgan Drexen sued the bureau in federal district court in Washington, DC, challenging the constitutionality of the agency, as well as accusing it of “data mining” and attempting to obtain sensitive bankruptcy information protected by attorney-client privilege... Read More

Consumer Complaints About Mortgages Jump 25 Percent

Consumer complaints to the CFPB about their mortgages again dropped off during the fourth quarter of the calendar, but were still up 25.2 percent for the 12-month period ending Dec. 31, 2013, versus one year prior, a new analysis by Inside the CFPB shows. One pattern that has emerged over the last nine quarters is that mortgage gripes have been comparatively low during the fourth quarter, only to surge during the next three quarters, and then fall off again in the next three-month period. During the most recent cycle, that has translated into a 33.3... Read More

Handling Consumer Confusion Requires Sophisticated Triage

The CFPB’s emphasis on consumer complaints has injected a whole new compliance dynamic for lenders of all types and sizes. And in order to successfully manage what is likely the most problematic complaint – confusion – lenders are going to need a more sophisticated triage process. “In an environment in which regulators cite customer confusion as a primary rationale for actions on everything from advertising and sales practices to rewards programs to arbitration clauses, establishing a high threshold for a matter to qualify as a... Read More

Private Student-Loan Lenders Pushed to Promote Refinances

With more than 850,000 private student loans in default, and even more in delinquency, loan lenders and servicers have been made keenly aware that regulators think they need to do more to help struggling borrowers refinance their student loan debt. Earlier this month, CFPB Director Richard Cordray, Education Secretary Arne Duncan, and Acting Deputy Treasury Secretary Mary Miller convened a meeting with the nation’s largest private student lenders and servicers to review the situation and to drum up solutions. One of the big problems, according... Read More

New Servicing Rules Will Squeeze Smaller RMBS Servicers, Fitch Says

Smaller residential mortgage servicers are going to be challenged by the increased costs of new servicing requirements from the CFPB as they seek to opportunistically grow through strategic acquisitions, according to analysts at Fitch Ratings. “Many U.S. residential mortgage servicers have been working diligently to meet the new servicing requirements,” the Fitch crew said in a recent analysis. “Many large servicers have already made significant progress towards meeting the Jan. 10, 2014, deadline, in particular those servicers... Read More

Bureau’s Own DFA Compliance Among Audits Planned by OIG

The Office of the Inspector General of the Federal Reserve Board plans to complete several audits and evaluations of the CFPB, including one on the CFPB’s own compliance with the Dodd-Frank Act, which requires the bureau to describe the impact of any proposed rule on the cost of credit for small entities. Also on tap is an evaluation of the CFPB’s supervision program for large banks and nonbanks, and a third on the bureau’s hiring process. Also, the OIG will join its counterparts at the Federal Deposit Insurance Corp., the National Credit Union... Read More

CFPB Updates Exam Procedures For Mortgage Orig., Servicing

The CFPB has released updates to its mortgage origination examination procedures and its mortgage servicing exam procedures. “These updates harmonize existing procedures for handling mortgage origination and mortgage servicing examinations with the revised interagency procedures that address the new mortgage regulations issued in January 2013, which have now taken effect,” the bureau said. The exam procedures for both mortgage origination and mortgage servicing now cover final rules issued by CFPB through November 2013. These... Read More

Worth Noting/Looking Ahead/ICYMI

Warner Introduces Prepaid Card Fee Legislation. Sen. Mark Warner, D‐VA, recently introduced legislation that would require new disclosures of prepaid card fees. Under Warner’s bill, the CFPB would be required to standardize the required disclosures. Under S. 1903, the Prepaid Card Disclosure Act of 2014, the bureau would be required to issue rules to establish the format for the fee disclosures. Also, the CFPB would have the authority to require an electronic link to the disclosures in the form of a quick response code, barcode or similar... Read More

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