CFPB Hearing on Discrimination & RESPA TILA Information; State Lawsuit Involving Dodd-Frank
O. writes, "When I saw the title 'Ellie Mae's outage' I thought that
perhaps it involved my beloved Beverly Hillbillies star. That would have
had major implications for many young boys back in the day. Granny
would have had a heart attack, and Uncle Jed's response would of course
be, 'The dickens you say'." I don't know how I let the Elly May pun slip
by me earlier this week, but, joking aside, one veteran compliance
person wrote saying, "Without our LOS, we have blank paper. The 3 day
time clock for initial disclosures doesn't stop ticking because there's a
malicious attack on a vendor. If disclosures don't go out on time, many
investors won't buy the loan. The need for a backup, or entirely
different, plan became crystal clear to senior management." Every system
or counterparty should have a back-up plan in place - easier said than
done. Ellie is not the only one bringing the exciting new buzzword
(DDoS) to our attention. Now we have the FFIEC. And who the heck made it a small "o" in the acronym?
On the jobs front, PHH Home Loans, LLC Midwest is continuing to expand its Retail Division in Chicago and Minneapolis. PHH Home Loan's is in its 24th
year in the MN and IL markets and seeks experienced LO's who are in
need of a broader product menu and dedicated back office support where
they are partnered with loan processors familiar with their predominant
product sets. "PHH Home Loans brings the strength of one of the largest
non-bank mortgage companies through our parent, PHH Mortgage
Corporation and combines it with our local presence, diverse product
menu, management guidance, processing support and technology", remarked
President Mary Baymler who has been with the company since its
inception. PHH is looking to fill Illinois retail positions in its
Lisle, Barrington, and Northbrook locations with Minnesota openings in
Edina, Coon Rapids, and Maplewood. Interested applicants should send
their resume, summary introduction and basic production history via
email to the human resources director at Cathy.Bauman@phhonline. com.
PHH Home Loans is proud to be an EEO/AA employer M/F/D/V and maintains a
drug-free workplace and performs pre-employment substance abuse
And a few thousand miles away, in Southern California, New American Funding is searching for a Chief Servicing Officer.
The candidate will be responsible for planning, directing and
overseeing the build out of a start-up servicing division for a
nationwide mortgage banker in Orange County. The Loan Servicing Division
is comprised of Collections, Default/Foreclosure, Customer Service,
Escrow, Payment Processing/Payoff, and Investor Reporting. He or she
will be required to build, organize, recruit and oversee these
departments as the division is developed. The CSO will work with
Executive Management in adhering to an existing pro-forma. The candidate
will play an integral part in selecting the servicing platform,
negotiating the contract for the platform and launching all automation,
and interacting with all levels of Mortgage Origination management for
Human Resources, LOS interface, IT needs, Accounting functions, and
Legal and Compliance matters. For a complete job description, or to send
a confidential resume, contact Erin Forbes at erin.forbes@nafinc. com.
The Financial Services Committee is the CFPB's biggest fan, right? Snort. Here is the latest.
up to that, according to a Politico report, a CFPB spokesman has said
that the two invited CFPB representatives will not be participating in
the hearing held yesterday by the House Financial Services Committee's Subcommittee on Oversight and Investigations.
"Allegations of Discrimination and Retaliation within the Consumer
Financial Protection Bureau," the hearing included testimony from a CFPB
employee who alleged she experienced gender discrimination and
retaliation for filing an Equal Employment Opportunity complaint with
the CFPB's Human Capital Office. The CFPB's spokesman, Sam Gilford, is
reported to have said that the CFPB's participation in the hearing would
violate employee privacy and due process rights and undermine the
CFPB's Equal Employment Opportunity and labor relations processes. The
two invited CFPB representatives are M. Stacey Bach, Assistant Director
of the CFPB's Office of Equal Opportunity Employment, and Liza Strong,
Director of Employee Relations.
did the CFPB really pay for a "fake" consumer advocate to travel to a
meeting expecting him to publicly support the agency, only to watch him
denounce the CFPB? Stranger than fiction.
On the positive side of things, the CFPB recently issued an 89-page small entity compliance guide
for the TILA-RESPA Integrated Disclosure Rule. Don't forget that the
CFPB issued the final rule in November to integrate the initial and
final mortgage loan disclosures under the Truth in Lending Act and
RESPA. The final rule appeared in the December 31, 2013 Federal
Register, and the rule becomes effective August 1, 2015. Lot of time,
right? But time has a way of passing quickly...so don't waste time in
implementing the changes.
Guide is divided into 17 main sections, and initially provides an
overview of the final rule and its scope. The Guide addresses the
initial disclosure-the Loan Estimate-including the requirements for
delivery, content and revisions, and the limits on the amount charges
disclosed in the Loan Estimate may increase. It also addresses the
final disclosure-the Closing Disclosure-including requirements for
delivery, content and revisions. The Guide makes clear that the
integrated disclosures provided for in the rule may not be implemented
before August 1, 2015. The document includes information about two
separate disclosure requirements-the escrow closing notice for cases in
which a required escrow account will be terminated, and the disclosure
of a lender's applicable policies regarding acceptance of partial
payments that must be included in a mortgage transfer notice.
for folks who like to follow the numerous lawsuits in residential
lending, Alan Kaplinsky, the author of the CFPB Monitor, writes, "In
what appears to be the first lawsuit by a state attorney general of its
Illinois AG recently filed a state court lawsuit against a small loan
lender alleging violations of the Dodd-Frank prohibition of unfair,
deceptive or abusive acts or practices in addition to violations of
state law. Section 1042 of Dodd-Frank (12 U.S.C. 5552) authorizes
state AGs to bring civil actions in the name of the state against
state-licensed entities to enforce provisions of Dodd-Frank. According
to the complaint,
the lender (which was licensed under Illinois law) offered lines of
credit on which it charged a stated annual interest rate ranging from
18% to 24%. It alleges that to evade the state law 36% annual interest
rate cap, the lender charged borrowers a mandatory 'account protection
fee' ranging from $10-$15 for every $50 of the borrower's outstanding
balance which was payable every two weeks in addition to accrued daily
interest. The complaint charges that the fee was 'nothing more than
undisclosed interest, resulting in an actual interest rate between 350%
and 500%. It also alleges that the lender instructed borrowers to make a
monthly minimum payment, but did not apply any of the minimum payment
toward principal. In addition to alleging that the lender
misrepresented the true cost of its loans, the complaint alleges that
the lender's loan product was "structurally unfair" because the account
protection fee resulted in "an endless cycle of debt."
endless question: who assumes the risk? Forget Amelia Earhart, and
where DB Cooper ended up (although I'm pretty sure I met him at an MBA
conference once in '99). If we could answer that one question, while
still insuring liquidity in the marketplace, and maybe in the process
mitigate the tax payer from future exposure, we'd have really made a
difference. I continue to be asked about it, and I was reminded that Ed
Pinto, who is one never to shy away from agency talk, especially with
respect to FHA reform, wrote an interesting article, Creating a Straight, Broad Highway to Debt-Free Ownership.
Contained within the pages of "Housing Risk Watch" (formerly known as,
"FHA Watch"), Mr. Pinto argues in favor of a reduced role by the FHA,
and a return to business practices which were once in practice at the
agency. He writes, "The solution is to create a straight, broad highway
to debt-free ownership for working-class families who have the desire
and discipline to become homeowners. This would involve: Developing a
risk grid for the FHA that balances credit history, down payment, loan
term, and debt-to-income ratio/residual income test. No FHA-insured home
buyer should be given a mortgage with a default rating under stress of
greater than 10 percent." The article does a fine job of examining where
FHA practices were, where they are, and where they should be. Also
contained in that month's newsletter is an article entitled, Spotlight
on Mortgage Risk: Fannie Leads Freddie in Year-over-Year Increase in
Risk, which is worth a read.
So what's going on over in the commercial real estate market?
According to Lawrence Yun, the National Association of Realtors (NAR)
Chief Economist, "Growth in commercial real estate sectors continues at a
moderate pace from a very slow pace of absorption, despite job
additions to the economy. Companies appear hesitant to add new space."
Office demand, according to Mr. Yun is expected to see a slow and
gradual improvement, and the demand for retail space is benefiting from
improved household wealth, while industrial real estate is stable with
increasing international trade, which requires warehouse space.
Published in late February, NAR's latest Commercial Real Estate Outlook
offers overall projections for four major commercial sectors and
analyzes quarterly data in the office, industrial, retail and
For a smidgeon of vendor and training news...
(a data intelligence and risk analytics company) announced its
partnership with RFIB Group Ltd. and certain underwriters at Lloyd's of
London to offer a new product that will insure lenders utilizing SSI's
ClosingGuard service against losses arising at the closing table.
"Endorsing the effectiveness of SSI's suite of online risk management
products for the vetting of closing agents, the group of insurance
professionals is launching the Mortgage Settlement Insurance (MSITM)
Policy in support of the SSI program. The
MSI Policy is designed to protect retail mortgage lenders that utilize
SSI's ClosingGuard closing agent vetting product against losses arising
at the closing table from such perils as fraud, theft and documentation
extends to warehouse banks and secondary market investors including
GSEs, and may be available as well to consumers who are indemnified for
losses at the closing table."
And anyone near New York in mid-May and wanting to learn how to value a bank might want to check out Fundamentals of Bank Valuation put on by SNL. "This in-depth program features up to date case studies that will provide essential, real-world context. What you'll learn: navigating
bank financial statements, identifying key operating levers and
evaluating earnings quality, the fundamental ratios necessary to
successfully analyze banks, discounted cash flow modeling,
capacity-to-pay/earnings dilution analysis, dissecting and interpreting a
fairness opinion, best practices for the effective use of peer
comparables, transaction premium and discounted cash flow valuation
approaches. To register, or learn more about the program, please click here."
announced a bit of a management shakeup. NSM announced the appointment
of a new CFO and a new Chief Strategy and External Affairs Officer.
David Hisey, the current CFO, will move into the newly created role of
CSO and Chief External Affairs Officer, while Robert Stiles, currently
the CFO of Solutionstar, will become the new CFO of Nationstar.
to the markets, the stock market is sniffing at an improving economy,
and the bond market might be doing the same. The reason du jour was the
ADP employment report: while March was in line with expectations at
+191k in jobs created, revisions to January and February netted out to
+33k. Although rates went higher, agency MBS prices worse by about .250)
did better than Treasury prices due to the perceived lack of
applications and volume (remember those supply & demand curves from
"big daddy" of U.S. economic news comes out tomorrow, but today we'll
have Initial Claims, expected higher to 316k from 311k, and February
International Trade (-$38.5 billion projected). ISM non-manufacturing
(Mar) will be released at 10AM EST and is predicted lower to 52.0 from
53.5., and an hour later is a Treasury announcement detailing next
week's auctions of 3- and 10-year notes and 30-year bonds (estimated
unchanged at $64 billion). We're basically unchanged from Wednesday afternoon at 2.80%.