CFPB Developments Including Targeting Provident for Broker Business Done Years Ago
When I grow up I want to be wealthy. And thanks to this list of the wealthiest zip codes in America,
I know just where to move. (Interesting to compare those versus states
with no state income tax.) Unfortunately it doesn't measure wealth based
on friends and family and the chance to work in this business - many of
us would be plenty rich.
Remember when Wells exited wholesale? The rumor was that basically that it couldn't guarantee all of its brokers complied with the avalanche of lender-accountable rules and regulations coming into the industry? Last week word broke that Provident Funding could be fined for exactly the same thing.
And this was back between 2006 and 2011! "Federal regulators on
Thursday sued a major mortgage lender, alleging that the company
discriminated against African-American and Hispanic borrowers by
overcharging them hundreds of dollars in broker fees."
Yes,
the Consumer Financial Protection Bureau and the Justice Department
have asked a federal judge to approve a $9 million settlement fund to
compensate borrowers. The lender, Provident Funding Associates, says it
complied with fair lending laws, but has agreed to settle the case and
pay the amount. The
announcement reminded many wholesalers that unfortunately the industry
is being governed, to a great degree, by enforcement actions rather than
actual regulations.
(Like motorists knowing the speed limit from the citations given rather
than the posted limit.) And critics pointed out that what is
particularly bad about this is that the period covered was several years
ago - pretty much prior to the CFPB even being in existence.
While we're on the CFPB, the president of the American Land Title Association, Diane Evans, testified before Congress regarding the upcoming TRID changes.
Evans testimony highlights two ways the CFPB can help title companies
implement TRID which include, allowing the title and settlement industry
to disclose the price of title insurance accurately to consumers on the
new Closing Disclosure and the CFPB should develop and publicize a way
to offer implementation support during a hold-harmless period from
August 1st
through the end of the year. Evans stated that "complying with this
regulation will require more than simply updating our systems for two
new disclosure forms. Getting this rule correct requires a paradigm
shift in the way real estate settlements occur in this country." To read
the testimony, click here.
As a reminder recently the CFPB issued a final interpretive rule on how to provide mortgage applicants with a list of local homeownership counseling organizations.
The interpretive rule restates guidance the CFPB issued in 2013, and
provides further guidance for lenders who are building their own lists
of housing counselors. The rule also includes guidance on the
qualifications for providing high-cost mortgage counseling and for
lender participation in such counseling.
Director
Richard Cordray states in his introductory letter, "Buying a home is
often the largest financial decision in a consumer's lifetime, and we
want to ensure that consumers can access the independent and informed
advice they deserve before making that decision." "Housing counselors are a crucial source of that helpful advice. We will continue to work to improve the home-buying experience for consumers, and the April 15th interpretive rule will help industry comply with these important protections."
Housing
counselors can provide advice on buying a home, renting, defaults,
foreclosures, and credit issues. Advice from housing counselors can be
provided at little or no cost to consumers. The Dodd-Frank Wall Street
Reform and Consumer Protection Act included a requirement that mortgage
lenders provide applicants with a list of local housing counselors.
Consumers will receive the list shortly after they apply for a mortgage
so they know where to get help when deciding what loan is best for them.
Lenders may fulfill the requirement by using CFPB-developed housing
counseling lists, which are available through an online tool the Bureau
created in 2013, or by generating their own lists using the same
Department of Housing and Urban Development (HUD) data that the CFPB
uses to build its lists.
Lenders
choosing to build their own lists can look to the interpretive rule for
instructions. The interpretive rule restates the detailed guidance from
2013. It also includes new instructions about: how to provide
applicants abroad with homeownership counseling lists; permissible
geolocation tools; combining the homeownership counseling list with
other disclosures; use of a consumer's mailing address to provide the
list; and high-cost mortgage counseling qualifications and lender
participation in such counseling. The online tool can be accessed here.
Moving on, The CFPB's release of these chapters signals that it has begun, or will shortly begin, intensive examiner training on the rule. (No, no sign of a delay, or grace period afterward, at this point.) The narrative portion of the new TILA chapter
specific to the TRID rule runs from page 35 through page 50, and the
TILA examination procedures specific to the TRID rule run from page 4
through page 42. The narrative portion of the new RESPA chapter
specific to the TRID rule is on page 5, and, as discussed above, the
RESPA examination procedures include no instructions specific to the
TRID rule.
And
then a few weeks ago we had the new toolkit that guides consumers
through the process of shopping for a mortgage and buying a house.
Developed as part of the CFPB's, "Know Before You Owe" mortgage
initiative, the toolkit was designed to help consumers take full
advantage of the new Loan Estimate and Closing Disclosure forms that
lenders are required to begin providing in August. Creditors must provide the toolkit to mortgage applicants starting August 1 as a part of the application process, and
other industry participants, including real estate professionals, are
encouraged to provide it to potential homebuyers. The toolkit is
designed to replace HUD's existing booklet that creditors currently must
provide to mortgage applicants.
The
toolkit provides a step-by-step guide to help consumers understand the
nature and costs of real estate settlement services, define what
affordable means to them, and find their best mortgage. The toolkit
features interactive worksheets and checklists, conversation starters
for discussions between consumers and lenders, and research tips to help
consumers seek out and find important information.
The CFPB is also providing an electronic version
complete with fillable text fields and interactive check boxes so that
consumers can save and print their progress as they work through the
toolkit. The electronic version meets federal accessibility standards to
ensure that all consumers, including those with disabilities, can use
the resource. The CFPB encourages lenders to keep this level of
accessibility when delivering the PDF to consumers.
Of course lenders and investors must react. For example, Plaza has introduced the new TILA-RESPA resource page
on its website which can be located under "Tools" in the right-hand
navigation bar. You will find a helpful "Old/New Comparison" document
that clearly outlines the changes ahead, as well as CFPB resources and
other tools and information. As training materials are developed
continued information will be added.
The National Association of Mortgage Bankers (NAMB)
endorsed the Medical Debt Relief Act of 2015, which has been recently
introduced by two congressmen. This bill would modify the Fair Debt
Collection Practices Act to allow relief for patients and consumers and
protect them from unfair credit reporting practices due to medical
bills. To read the Medical Debt Relief Act of 2015 endorsement letter,
click here.
The U.S. Mortgage Insurers (USMI)
wrote a letter to members of the Senate Banking Committee which
welcomed efforts to increase the dependence on private capital in
housing finance and supports Section 706, which asks for the GSEs to
take part in risk sharing transactions. Section 706 should lower the
exposure and costs for enterprises and taxpayer, as well as borrowers.
The promotion of greater up front risk sharing will allow for a more
stable housing finance system. Click here to read the letter.
The American Land Title Association (ALTA) submitted
a letter to the New York Times Editorial Board to respond to an article
that did not inform readers about the benefits of title insurance. In
the letter, ALTA called out that title insurance protects the
homeowner's financial investment in their property if a claim arises and
the costs for protection are minimal. For example, an owner's title
insurance policy for a $500,000 home is about $2,000, so over the
average time of home ownership, this equates to $154 annually or $13 per
month. The cost for title insurance has decreased 6.2 percent since
2003.The title process has resulted in many agents collecting $4.8
billion in back income taxes and recuperating $325 million in unpaid
child support every year.
And
don't forget that in late April Federal agencies have promulgated a
final rule of 128 pages that implements minimum requirements for state
registration and supervision of appraisal management companies (AMCs).
The rule permits states to elect to register and supervise AMCs, as
defined under the rule but does not require states to institute an AMC
registration and supervision program. Any non-federally regulated AMC is
barred from providing appraisal management services for federally
related transactions in states that do not create a regulatory structure
after 36 months from the effective date of the final rule. The rule
will mandate states to apply certain minimum requirements in the
registration and supervision of AMCs. The effective date for the rule
will be 60 days after it's published in the Federal Register.
Yes,
another week of news is ahead of us. The fun never ends! We're off to a
roaring start today with Personal Income and Consumption (+.4%,
spending was unchanged), a series of PCE inflation numbers (Personal
Consumption Expenditures) showed inflation is tame with core year over
year inflation only +1.3%; later is Construction Spending, and some
Institute of Supply Management (ISM) figures. Tomorrow we have the
second-tier Factory Orders number. Wednesday is some ADP figures
measuring private payrolls, as well as the Trade Balance numbers. (Trade
"imbalance" is more appropriate.) We also have the Federal Reserve
releasing its Beige Book. On the 4th
will be Nonfarm Productivity, Unit Labor Costs, and Initial Jobless
Claims. Friday we'll have the numbers that seem to captivate the press:
Nonfarm Payrolls, the Unemployment Rate, the Underemployment Rate, and
Hourly Earnings - that kind of thing.
For anyone wondering if they should have locked, or sold that pool of loans, Friday, we closed the 10-year at 2.10% and this morning we're sitting around 2.11% with agency MBS prices worse a tad.
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