Federal Agencies

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January 11, 2018 - Inside Mortgage Finance

House Panel Considers HMDA, CFPB Legislation, Industry Awaits Final Senate Action on Other Bills

Members of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit convened early this week to consider legislation that would affect Home Mortgage Disclosure Act enforcement and certain institutions regulated by the Consumer Financial Protection Bureau – mostly smaller players.

January 11, 2018 - Inside Mortgage Finance

Sen. Warren Questions Whether CFPB AD Mulvaney Data Collection Shut Down is Impeding Examiners

Sen. Elizabeth Warren, D-MA, has questioned whether Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, inappropriately capitalized on some Inspector General con-cerns about the agency’s data security to unjustifiably freeze the bureau’s collection of consumer per-sonal information, thereby compromising examiner oversight functions.

January 8, 2018 - Inside the CFPB

Other News in Brief: New CFPB Chief of Staff; English Investigated; Mortgage Legislation

New Chief of Staff at CFPB was Staff Director of the House Financial Services Committee. The CFPB named a new chief of staff Jan. 5: Kristen Sutton Mork, who’s leaving her post as staff director of the House Financial Services Committee. The announcement did not come from the CFPB – it came from Rep. Jeb Hensarling, R-TX, chairman of the HFSC, who mentioned it in an email sent to members of the media.... Republican Senator Wants Leandra English Investigated. Sen. Ron Johnson, R-WI, reportedly has asked the U.S. Office of Special Counsel to probe Leandra English’s move to “burrow” into a “career position” at the CFPB. One major broadcast news organization, citing a letter from Johnson, reported last week that Johnson asserted her move was “hastily approved” as part of “a flawed vetting process” in the wake of President Trump’s election. The report could not be immediately confirmed.

January 8, 2018 - Inside the CFPB

Complaints About Student Loans, Credit Reports Surged Last Year

Consumer complaints overall continued their downward trajectory in the fourth quarter, but it was a different story when it came to areas such as student loans and credit reports, both of which shot upwards on an annual basis. Overall, total gripes from end users of the financial system fell 24.1 percent year over year and 23.1 percent from the third quarter of 2017 to the fourth. But criticisms about student loans surged 109.9 percent on an annual basis, despite a drop of 30.1 percent from 3Q17 to 4Q17. Credit reports were similarly slammed, with a 99.8 percent leap in complaints year over year, a 32.2 percent fall off quarter to quarter notwithstanding. On the other hand [includes exclusive data chart] ...

January 8, 2018 - Inside the CFPB

Senate Democrats Seek to Further Empower State Attorneys General

Democrat Sens. Dianne Feinstein and Kamala Harris of California, Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut recently introduced legislation to allow state attorneys general and other state law enforcers to issue subpoenas during the course of investigations regarding compliance with state law by national banks. The Accountability for Wall Street Executives Act of 2017 would clarify that state attorneys general have authority to conduct visitorial oversight of federally-chartered national banks. It also would revise language in the National Bank Act that the Supreme Court interpreted as limiting the visitorial powers of state law enforcers when addressing compliance with state law by national banks. Additionally, the measure would permit subpoenas for suspected violations of real estate lending laws. “With ...

January 8, 2018 - Inside the CFPB

How Should Lenders Cope With English v. Mulvaney?

Regardless of the outcome of the struggle for control over the CFPB in the wake of former Director Richard Cordray’s departure, lenders are being conservatively advised to maintain compliance practices that can withstand the ebb and flow of political appointees, according to one top compliance attorney. “While the Trump administration is pushing for deregulation and removing the independence of the CFPB, if it is successful, it may be risky and costly for the financial industry to abandon all of the concepts of fairness to consumers that have been embodied in the CFPB’s actions,” Maria Macoubrie, of counsel in the Kansas City, MO, office of the Stinson Leonard Street law firm, said in a recent online blog. She conceded that less ...

January 8, 2018 - Inside the CFPB

No Court Ruling Yet in CFPB’s English v. Mulvaney Dispute

Judge Timothy Kelly of the U.S. District Court for the District of Columbia circuit heard oral arguments Dec. 22 in the dispute between CFPB Deputy Director Leandra English and the Trump administration over the appointment of Mick Mulvaney as acting director of the bureau. However, he has yet to issue any ruling and did not indicate when one could be expected. Attorney Theodore Flo, an associate with the Ballard Spahr law firm in Washington, DC, who attended the oral arguments, noted in a blog post, “Based on the judge’s denial of English’s request for a temporary restraining order and his questions and observations at the hearing, it seems likely that he will deny her preliminary injunction motion as well. English ...

January 8, 2018 - Inside the CFPB

HMDA Requirements a Top Bank Compliance Concern

Banks are increasingly worried about staying compliant with all the recent regulations they’re contending with – and the new Home Mortgage Disclosure Act requirements are still one of the biggest concerns. A new regulatory and risk management survey from Wolters Kluwer based on 2017 data registered a 3 percent increase over 2016. “The ability to maintain compliance in an environment of heightened regulatory oversight – highlighted by a spike in the number of major new regulations – remained the biggest overall compliance concern, as cited by 67 percent of respondents,” the report stated. Concerns over fair lending regulatory examinations increased by 5 percent to 46 percent, and concerns jumped 13 percent in measuring the ability to manage risk across all lines of business ...

January 8, 2018 - Inside the CFPB

Bureau to Take Another Look At New HMDA Requirements

In conjunction with the interagency regulatory pledge to pursue a “good faith efforts” approach to the enforcement of new reporting requirements under the Home Mortgage Disclosure Act, the CFPB also announced it plans to initiate a rulemaking to reconsider various aspects of the 2015 HMDA rule – most notably on issues such as the institutional and transactional coverage tests and the rule’s discretionary data points. “More specifically, the rulemaking may re-examine lending-activity criteria that determine whether institutions are required to report mortgage data,” it said. Other revisions might be made to the new requirements to report certain types of transactions. The bureau also is likely to re-assess the additional information that its HMDA rule requires beyond the new data points specified ...

January 8, 2018 - Inside the CFPB

CFPB, Other Feds, to Cut Lenders Some ‘Good Faith’ Slack on HMDA

As 2017 came to an end, the CFPB and other federal prudential regulators informed the industry they would implement a “good faith efforts” enforcement philosophy toward lender compliance with the new requirements under the Home Mortgage Disclosure Act that took effect Jan. 1. The CFPB in 2015 put out its rule under which financial institutions were required to collect and report new mortgage data points for loans made after Jan. 1, 2018. This past August, the bureau released a final rule that clarified some reporting requirements, increased the threshold for collecting and reporting data on home equity lines of credit for two years, and made various technical corrections. “The bureau recognizes the significant systems and operational challenges needed to meet ...

January 8, 2018 - Inside the CFPB

Speculation Swirls Around NCUA Chief as Possible CFPB Head

While most of the universe of CFPB watchers were focusing on the legal struggle between Acting Director Mick Mulvaney and Deputy Director Leandra English or the possibility that President Trump might name another fierce critic of the CFPB, such as Rep. Jeb Hensarling, R-TX, to head up the agency, it looks like a stealth candidate has entered the game. National Credit Union Administration Chairman Mark McWatters is that person. McWatters’ name has suddenly been floated by various industry observers and insiders as being on the short list of possible nominees for the consumer bureau. Nominated by President Obama to both the NCUA board and then to head the Export-Import Bank (the latter nomination being blocked by Sen. Richard Shelby, R-AL) ...

January 8, 2018 - Inside the CFPB

What to Expect Under Mulvaney: Maybe Significant Rule Changes?

It’s possible that mortgage lenders and servicers will see the CFPB during the tenure of Acting Director Mick Mulvaney use the five-year “look back” the bureau is required to perform to make significant changes to a pair of major rulemakings: the Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure rule (TRID) and the ability-to-repay rule. Donald Lampe, a partner with Morrison & Foerster law firm in Washington, DC, explained, “In Dodd-Frank, there’s a five-year required regulatory review, and there are two of those regulatory reviews that are still under advisement: one for TRID and the other for the ATR/qualified mortgage rule. “If I’m thinking about 2018, I feel pretty confident to say that those processes bear careful attention ...

January 8, 2018 - Inside the CFPB

What to Expect Under Mulvaney: Less Hostility Toward Industry

CFPB Acting Director Mick Mulvaney has less than 200 calendar days left to occupy the director’s chair, so industry officials have been wondering what they can expect from the bureau as long as he’s in charge. According to some top compliance attorneys, the CFPB will be far less aggressive towards the industry, but hardly provide the corporate love-fest opponents of the AD fear. Laurence Platt, a partner with the Mayer Brown law firm in Washington, DC, told Inside the CFPB, “Like former Sen. George Romney’s famous prediction about the U.S. getting out of Vietnam, I expect a ‘phased withdrawal.’” The CFPB “will continue to supervise ‘covered persons,’ but, whether it is supervision or enforcement, I expect the CFPB’s use of ...

December 18, 2017 - Inside the CFPB

Other News in Brief/It’s Official: Cordray is Running for Governor in Ohio

It’s Official: Cordray is Running for Governor in Ohio. After months of rumors and speculation, former CFPB Director Richard Cordray recently declared his candidacy for governor in his home state of Ohio. Although he faces at least four rivals for the Democrat nomination, at least one observer in the state considers him the instant favorite.... Mulvaney, Trump and Wells Fargo. Since Mick Mulvaney assumed the directorship of the CFPB, he has imposed a 30-day freeze on all new bureau regulations, and reportedly stopped all new contracting and all new lawsuits, has installed his aides into important positions at the agency, and temporarily froze all payments from the bureau’s civil penalty fund....

December 18, 2017 - Inside the CFPB

FDIC Examiners Need to Up Their Game in Monitoring Compliance

A new report from the Office of the Inspector General of the Federal Deposit Insurance Corp. found that examiners in the agency’s Division of Depositor and Consumer Protection need to do a better and more consistent job of reviewing lenders’ compliance with the CFPB’s ability-to-repay and loan originator compensation rules. The ATR rule directed most mortgage lenders to make a reasonable and good-faith determination, at or before loan consummation, that a consumer would have a reasonable ability to repay a residential mortgage loan according to its terms. Some lenders and loan programs are exempt from this requirement. The LO comp rule placed limits on loan originator compensation and imposed new requirements on loan originators. Both rules took effect Jan. 10, 2014....

December 18, 2017 - Inside the CFPB

Fixing QM, Other Dodd-Frank Rules Remain on White House Agenda

Speaking during a recent public appearance in Washington, DC, Mark Calabria, chief economist in the Executive Office of the Vice President, discussed the Trump administration’s priorities when it comes to regulatory reform, and the CFPB’s ability-to-repay rule was one of the items on the list. “Looking at the mortgage finance system as a whole is critical, as is reviewing the substantive rule-makings that came out of the Dodd-Frank Act,” said Calabria, former director of financial regulation studies at the libertarian Cato Institute in Washington, DC, and a former Capitol Hill staffer involved in drafting the framework for the conservatorships of government-sponsored enterprises Fannie Mae and Freddie Mac. “We really did expand the regulatory framework with things like the qualified mortgage ...

December 18, 2017 - Inside the CFPB

QM DTI Requirement May Not be That Effective, Research Suggests

If the CFPB thought that mandating a 43 percent debt-to-income ratio requirement for a residential mortgage, as seen in its ability-to-repay rule, would lower the odds of a borrower later going into default, it might want to think again. The JPMorgan Chase Institute recently reviewed more than 400,000 mortgage modifications that received payment reduction, principal reduction, or a combination of the two during the financial crisis, and came to the conclusion that payment reduction did a better job bringing relief to struggling homeowners than principal reduction. “Our data showed that for borrowers who were underwater, payment-focused mortgage debt reduction was more effective at slowing default than principal-focused mortgage debt reduction,” the institute said in a report last week. “In addition, ...

December 18, 2017 - Inside the CFPB

Servicers Shouldn’t Expect That Much Regulatory Relief, S&P Says

Analysts at S&P Global Ratings said that they do not expect mortgage servicers to see much of an impact from ongoing efforts at deregulation. “The recent resignation of the head of the CFPB – a major tenet of Dodd-Frank – the appointment of a new CFPB acting director, and the Trump administration’s focus on rolling back financial regulations suggest more lenient industry standards could be in the future,” they said in a report recently. However, they don’t foresee any major shift in the industry. “For one, no servicer wants to be associated with following questionable strategies or practices,” the ratings service said. “Furthermore, implementing regulatory initiatives in the past 10 years has been costly for servicers. It would be counterproductive for servicers ...

December 18, 2017 - Inside the CFPB

Senate Reg Relief Bill Would Tweak Handful of CFPB Regulations

The Senate Banking, Housing and Urban Affairs Committee recently passed a bipartisan measure that will provide some noteworthy relief from a handful of CFPB regulations, especially for small and regional lenders. Under S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, certain mortgages originated and retained in portfolio by banks and credit unions with less than $10 billion in total assets would be deemed qualified mortgages under the bureau’s ability-to-repay rule. The act also would provide regulatory relief under the Home Mortgage Disclosure Act for small depository institutions that have originated less than 500 closed-end mortgage loans or less than 500 open-end lines of credit in each of the two preceding calendar years. The Government Accountability Office would ...

December 18, 2017 - Inside the CFPB

Another Industry Group Calls for Delay in New HMDA Requirements

The Community Home Lenders Association last week asked CFPB Acting Director Mick Mulvaney to delay implementing the bureau’s pending new data collection and reporting requirements under the Home Mortgage Disclosure Act, which are slated to kick in Jan. 1, 2018. The trade group’s more general concerns are, first, that HMDA requirements should be balanced and tailored to the objectives. “The Trump administration has pledged to address overly burdensome regulations which have a negative impact on the ability of private sector finance providers to make credit available to consumers,” said the CHLA, which represents mostly small, independent mortgage bankers. The industry organization reminded Mulvaney it has issued reports and written letters this year detailing how excessive regulations and the threat of ...

December 18, 2017 - Inside the CFPB

Dem State AGs Bash Mulvaney, Threaten Aggressive Enforcement

Democrat state attorneys general from 16 states and the District of Columbia wrote President Trump earlier this month, vowing to ramp up their enforcement efforts if the bureau backs off under Acting Director Mick Mulvaney, and taking issue with his appointment to the position. “As you know, state attorneys general have express statutory authority to enforce federal consumer protection laws, as well as the consumer protection laws of our respective states,” the AGs said. “We will continue to enforce those laws vigorously regardless of changes to CFPB’s leadership or agenda.” They reminded the president that, as attorneys general, they retain broad authority to investigate and prosecute individuals or companies that deceive, scam or otherwise harm consumers. “If incoming CFPB leadership ...

December 18, 2017 - Inside the CFPB

Sen. Warren Inquires About Record-Keeping, Communications

Sen. Elizabeth Warren, D-MA, who recently raised some questions about the ethics standards that apply to CFPB Acting Director Mick Mulvaney and members of his Office of Management and Budget staff who are doing double duty with both agencies, also has some questions about how certain record-keeping and communication requirements are going to be carried out in the unusual set-up. “Given the dual roles for Mr. Mulvaney and his staff, I am also concerned about record-keeping and other procedures in place to ensure that their work remains separate and subject to appropriate Presidential Records Act, Freedom of Information Act, and other recordkeeping and transparency requirements, and is categorized correctly for these purposes,” Warren said. Her concerns were raised in a ...

December 18, 2017 - Inside the CFPB

CFPB Looking Less Like an Adversary, More Like a Partner

When Office of Management and Budget Director Mick Mulvaney assumed control of the CFPB as acting director last month, he suggested he would like to see the bureau be less adversarial towards the financial services industry and be more accommodating. Since then, the bureau under Mulvaney’s directorship has pulled in its claws somewhat in a few enforcement actions, at least one of which is mortgage related. In this particular case, back in the spring of 2015, the CFPB sued Ohio-based Nationwide Biweekly Administration, Loan Payment Administration, and their owner, Daniel Lipsky, in federal district court. The regulator had accused them of misrepresenting the interest savings consumers would achieve through a biweekly mortgage payment program and misleading consumers about its cost....

December 18, 2017 - Inside the CFPB

More Court Action This Week in English vs. Mulvaney Dispute

The legal wheels continue to turn in the personal efforts of CFPB Deputy Director Leandra English to overturn President Trump’s appointment of Office of Management and Budget Director Mick Mulvaney to serve simultaneously as acting director of the bureau. More activity is slated this week before Judge Timothy Kelly, whom Trump appointed to the U.S. District Court for the District of Columbia Circuit earlier this year. Additional legal briefs are due and a hearing has been scheduled. Despite losing in her bid for a temporary restraining order, English has since filed for a preliminary injunction to prevent defendants Trump and Mulvaney from “appointing, causing the appointment of, or recognizing the appointment of an acting director of the Consumer Financial Protection ...

December 15, 2017 - Inside Mortgage Trends

Price-to-Income Ratio Seen as Good Risk Gauge

Mortgages with high home price-to-income ratios tend to perform worse than mortgages with lower PTI ratios, according to economists at the Federal Reserve. The analysts suggest that PTI ratios are a helpful tool for gauging mortgage risk by tracking housing affordability. “Banks that have greater exposure of mortgages to high PTI regions have higher mortgage delinquency and charge-off rates and significantly higher probabilities of failure, even after controlling for ...

December 15, 2017 - Inside MBS & ABS

Janet Yellen’s Last Hurrah: A Final Rate Hike, And Don’t Expect More Info on the Great Unwind

The three most notable aspects of Janet Yellen’s final press conference as the chair of the Federal Re-serve were the expected comments in support of the central bank’s 25 basis point rate increase, positive economic expectations of pending tax reform efforts, and confirmation the Fed is unlikely to provide much information about its balance sheet reduction going forward.

December 14, 2017 - Inside Mortgage Finance

CFPB’s English Files for Preliminary Injunction as Acting Head Mulvaney Pulls Back on Enforcement

There was plenty of activity at the Consumer Financial Protection Bureau over the last week, from continuing legal drama over the leadership of the agency to changes in enforcement activity and a possible regulatory roll-back.

December 7, 2017 - Inside Mortgage Finance

CFPB Seems to Shift in Mortgage Enforcement Case, Judge is Set to Further Consider English Challenge

Under new management, the Consumer Financial Protection Bureau this week took action that may be a harbinger of a more laissez-faire approach to regulatory enforcement.


With originations expected to drop in 2018, will your shop turn to non-QM/non-prime mortgage products as a way to bolster volumes?

Yes, definitely. We’re planning a launch.


No. It’s still difficult compliance/regulatory-wise.


Maybe. It’s under consideration.


Not now. But things could change as 2018 progresses.