Thank you to Mark Baker with Cardinal Financial sent over a story about dear people who live in fancy tiny houses. An appraiser's nightmare or a Millennial's dream?
I certainly receive my share of mortgage folks writing to ask why the CFPB isn't focused on Realtors or car lenders. We'll skip any judgements based on the strength of the NAR lobbying efforts, but the CFPB has decided it is time to monitor auto loans more closely. Financial institutions are already supervised, but now non-bank auto finance companies are under review. The CFPB just issued a final ruling which will take effect 60 days after being published that will cover 34 non-bank businesses. The CFPB is determined to look into companies that make, acquire or refinance 10,000 or more auto loans and leases a year, so that covers about 90% of non-bank loans and 7mm borrowers per year.
Borrowers took out $101 billion in car loans over the past year, outstripping the pace of growth for other kinds of consumer debt, the data show. By comparison, student loans grew $72 billion while mortgages increased $20 billion. The acceleration comes amid looser credit standards, seen in a rejection rate as low as 3.3 percent, the least since the New York Fed began collecting that data. At least $73 billion of auto loan bonds have been sold this year, according to Bank of America Corp., which expects full- year bond sales from car finance firms to reach $125 billion, compared with $101 billion in 2014. Oh, and Kelley Blue Book thinks U.S. auto sales may top 17 million this year for the first time since 2001.
It is hard enough for folks in lending to keep up on what the CFPB has been up to recently, in addition to Agency news, competitor news, and state-level laws. But let's give it a shot.
As noted in late July, but still generating sophomoric comments, the CFPB announced that Meredith Fuchs, who also serves as the CFPB's General Counsel, has been named Acting Deputy Director. But less humorous was Richard Cordray's recent comments on the CFPB's semi-annual report. The Director noted that during the six month period covered by the report, from October 2014 through March 2015, the CFPB helped obtain more than $19 million in restitution for consumers through enforcement actions, including $2.5 million in relief for service members for illegal debt collection practices, and more than $32 million in civil money penalties. The report noted that during the same six month period CFPB supervisory actions resulted in financial institutions providing more than $114 million in redress to over 700,000 consumers.
The CFPB has issued its 2015 Plain Writing Act Compliance Report. Under the PWA, federal "executive agencies," including the CFPB, are required to use plain language in documents that: are necessary for obtaining information about a federal government benefit or service or filing taxes; provide information about a federal government benefit or service; or explain to the public how to comply with a requirement that the federal government administers or enforces. The CFPB states in the new report that it has adopted plain language "as a core principle" for all of the CFPB's printed and online consumer-facing content. Richard Cordray said that, "The CFPB has done its utmost to impart, through a plethora of announcements eliminating jargon and verbose linguistics, knowledge to the uninformed masses focused on aggregating knowledge and increasing the common grasp of consumer transactions." (Okay, just kidding.)
And you say that you haven't looked for your company's name in the CFPB's July complaint log? Well, here's your chance.
Last week I received this note from the head of wholesale at a well-known lender: "Our biggest concern is the real estate agents understanding the new process. Most of them will be unprepared for these changes." It seems that the CFPB reached out to NAR for help in spreading the word about a new tool addressing questions about what exactly the TILA-RESPA Integrated Disclosure rule will mean for the real estate industry. The CFPB launched "Know Before You Owe: The Real Estate Professional's Guide." The online tool is intended to help industry professionals get up to speed on changes related to TRID that are coming their way. For real estate agents it's another opportunity to brush up on what TRID means for closings and keep clients informed about the road ahead. Those tools went live this week on the CFPB's website.
Law firm Morrison & Foerster sent out a client alert saying, "The CFPB's exercise of its sweeping authority to prohibit unfair, deceptive, and abusive acts or practices (UDAAP) continues to command the attention of financial institutions and financial services companies regulated by the agency. As promised by CFPB Director Richard Cordray, the CFPB has defined UDAAP primarily through enforcement actions, along with a few agency-issued supervisory findings and guidance bulletins. To assist regulated and potentially regulated entities in understanding how the CFPB will exercise its UDAAP authority, we have updated our "Know It When You See It" chart listing the specific acts and practices the CFPB has alleged or identified as UDAAP through the middle of 2015 and our analysis of the CFPB's UDAAP enforcement activities."
Ballard Spahr reports that, "A couple weeks ago the American Bankers Association has sent a letter to the DOJ, Fed, OCC, FDIC, HUD and CFPB requesting confirmation 'in interagency guidance, updated exam procedures, and where appropriate amended regulations that the Agencies' consideration of disparate impact claims in both the supervisory and enforcement context will be governed by standards consistent with the [Supreme] Court's framework [in Inclusive Communities.]' The ABA also urges HUD to review and re-propose its FHA rule to incorporate the Inclusive Communities framework. In Inclusive Communities, a sharply divided U.S. Supreme Court held that disparate impact claims are cognizable under the FHA but described a framework containing limitations on disparate impact liability that 'are necessary to protect potential defendants against abusive disparate impact claims.' The decision did not resolve the question of whether disparate impact claims are cognizable under the ECOA."
As mentioned in this commentary, earlier in August the CFPB issued Compliance Bulletin 2015-03, addressing the cancellation and termination requirements for private mortgage insurance (PMI) under the Homeowners Protection Act of 1998 (HPA). The Bulletin covers the following topics: (1) borrower-requested cancellation of PMI; (2) automatic termination of PMI; (3) final, mid-amortization termination of PMI; (4) PMI refunds; (5) annual PMI disclosures; and (6) investor guidelines.
I've been telling groups that once TRID is over with IT folks around the country will turn their collective attention to e-projects: e-signatures, e-mortgages, and so on. So the CFPB's take on eClosings is garnering some attention, and it recently released a report on the project. The participants in the pilot project included seven lenders (Blanco National Bank, Boeing Employees Credit Union, Franklin First Financial, Ltd, Flagstar Bank, Mountain America Credit Union, Sierra Pacific Mortgage, and Universal American Mortgage Company), technology companies (Accenture Mortgage Cadence, DocMagic, Inc., eLynx, Pavaso, Inc., and PeirsonPatterson, LLP), many settlement agents and real estate professionals and consumers with over 3,292 loans. The borrowers who participated in the project were invited to complete a follow-up survey, and 1,254 surveys were completed.
The CFPB advised that the study showed a 7% positive difference in perceived understanding for borrowers using eClosing as compared to borrowers using paper documents. It also showed a 15% positive difference in the scores on consumer empowerment-or a feeling of control over the process-for eClosing borrowers as compared to borrowers using paper documents, and a 17% positive difference in scores on efficiency for eClosing borrowers as compared to borrowers using paper documents.
Come October 3 consumers must have the Closing Disclosure in hand not less than three business days before consummation, and the disclosure can be delivered in paper form or, with consumer consent, electronically. Certain borrowers in the pilot project not only received disclosures electronically before closing but also received the entire closing package electronically. The TRID rule will not require early delivery of the entire closing package. Currently under the E-Sign Act, a creditor can deliver documents to obtain consumer consent to electronic disclosures along with the electronic disclosures. However, the TRID rule requires that the creditor first complete the consent process under the E-Sign Act and then deliver the electronic disclosures. Although in adopting the TRID rule the CFPB asserted that it did not believe that this extra step would pose a burden on the industry, industry members have found the extra step does creates a burden in the implementation of the TRID rule and the loan process. Stay tuned...
The markets are easier to track: it's pretty easy to remember 2.20%. That was the yield on the 10-yr risk-free T-note Friday when folks went home. Recall that we learned that producer prices rose 0.2% in July after increasing 0.4% in June, roughly as expected - inflation has not been a worry in decades. The gain in industrial production was the largest in 9 months - mostly due to vehicle sales, while Capacity Utilization held steady at 78.0% in July, in line with expectations. But the University of Michigan's Consumer Sentiment Index fell to 92.9 in the preliminary August reading from 93.1 in July.
That was so...then. We have plenty of U.S. news this week while one never knows what will come to us from overseas. Today is the August Empire Manufacturing Index and August NAHB Housing Market Index (10AM EDT). Tomorrow is the July Housing Starts & Building Permits duo. Wednesday we can look forward to the MBA Mortgage Index, July CPI and Core CPI, and FOMC Minutes for the July meeting. Thursday we have Initial Jobless Claims, July Existing Home Sales, the August Philadelphia Fed number, and July Leading Indicators. Friday is...zip.
Jobs and Announcements
Bay Equity's wholesale platform, the Private Client Group (PCG,) is growing and looking to add experienced wholesale government underwriters. "Our underwriters are key members of our OPS TEAM - responsible for timely review of FHA and VA loan files - and for communicating loan decisions to our broker partners. We offer competitive compensation, a TEAM atmosphere, and remote work opportunities. PCG's platform is "different by design" in that its clients are an exclusive collection of likeminded mortgage professionals who strive to provide an elite customer service experience every day. If you're interested in learning more about this opportunity please email us at pcgrecruit@bayeq. com."
And on the production side, in the Midwest Illinois' Inland Home Mortgage is searching for experienced commissioned loan officers in several counties in Illinois including Cook, Dupage, Lake, Will, and Kane, as well as CRA loan officers. Inland Home Mortgage is a division of Inland Bank and Trust and does business as a correspondent lender. "We lend nationally, work with over 16 investors as well as sell directly to Freddie and the Federal Home Loan Bank. We offer a wide variety of products and programs including IHDA DPA programs. Inlanta has an aggressive pricing and incentive program. For CRA LOs there is a base salary with loan incentive to work in the bank's low to moderate income communities - salary commensurate with experience and contacts within the market." Contact President Frank Binetti with confidential inquiries (630.463.7820).
A quick congratulations to Susan Tobin. The STRATMOR Group just added her as a Senior Associate; she will be focused on mortgage risk and compliance for STRATMOR's clients. Susan brings 30 years of executive experience in mortgage banking and consulting.
Here's a quick reminder that plenty of residential lender names sound the same. The industry knows that First Mortgage Corp. was purchased by Freedom Mortgage. Note that the First Mortgage Company is a different organization than First Mortgage Corp. First Mortgage Company was NOT merged into Freedom Mortgage - it remains independent & functioning.
Keeping with company news, AmeriSave Mortgage Corporation, NMLS ID #1168, announced today its transaction with Discover Home Loans, to take over its Louisville loan origination center, is complete. Over 130 mortgage professionals formally began working for AmeriSave on Friday, August 7th. Discover has exited the mortgage origination business.
And Finance of America Holdings LLC, a Blackstone portfolio company, announced that it has completed a series of acquisitions including Gateway Funding Diversified Mortgage Services Inc., Pinnacle Capital Mortgage LLC and certain assets and operations of PMAC Lending Services, Inc. Finance of America Holdings LLC also owns Urban Financial of America, LLC, one of the nation's largest reverse mortgage lenders. "As a result of these acquisitions, Finance of America through its operating subsidiaries will rank among the largest non-bank originators in the United States and will be licensed in over 45 states. It will operate in each of the retail, wholesale and correspondent channels and have its own servicing capabilities. More specifically it will operate approximately 300 retail lending branches, 5 wholesale and correspondent centers and employ over 3,000 professionals, of which over 1,400 are licensed loan officers."