"We're lost, but we're making good time." The CFPB does not seem to be lost, and is certainly feeling its way along. From it we learned that between July 21, 2011 and September 30, 2012, U.S. consumers filed 36,403 mortgage-related complaints against various lenders, banks, servicers, and other mortgage companies. Bank of America accounted for 27% of complaints, the most out of any bank accounted for in CFPB's data - of the 9,930 mortgage complaints filed against Bank of America, 6,430 related to loan modifications, collections and foreclosures. Loan servicing, payments and escrow accounts recorded 2,044 complaints, while complaints regarding application, originator or mortgage broker issues tallied 542. BofA received nearly twice as many complaints as runner up Wells Fargo who recorded 5,051 mortgage-related complaints in the CFPB study's time frame.

Any bank that thinks that the CFPB does not have direct jurisdiction over them is probably right, but...by the way, the CFPB is providing state regulators with complaint listingsMore

Not only that, but we're finding that actions have teeth. The CFPB, Attorneys General from New Mexico, North Carolina, North Dakota, and Wisconsin, and the Hawaii Office of Consumer Protection joined forces to enjoin Payday Loan Debt Solution, Inc. (a debt-relief service provider) from conducting business in violation of federal laws and the laws of the five participating states. These agencies brought suit in U.S. District Court against a Miami-based firm, and, as part of a global settlement, the court entered an order on December 21 permanently enjoining further violations of the FTC's Telemarketing Sales Rule, Title X of the Dodd-Frank Act, and applicable consumer protection laws of the five states. Payday and its principal, Sanjeet Parvani, were found by the court to have advertised widely over the internet, received telephone calls in response to those internet marketing efforts, and collected substantial monies from consumers purportedly to help them settle their payday-loan debts.  A joint investigation by the Bureau and the States found evidence that PLDS routinely charged consumers a fee in advance of actually settling their debts. The court ordered PLDS to make restitution in the amount of $100,000 to consumers who were charged advance fees but received no services.  The court also ordered PLDS to pay a civil money penalty to the Bureau, makes PLDS subject to CFPB supervisory authority for a period of two years, and imposes compliance reporting requirements during that period. Because PLDS cooperated with the investigation and voluntarily agreed to resolution of the matter, the civil money penalty was a modest $5,000.

This CFPB action has attracted a lot of attention for two reasons. First, could this be the shape of things to come for further CFPB actions against participants in the debt-relief industry? And second, the CFPB's publicizing of the settlement would indicate that we can expect more cooperation between the Bureau and State Attorneys General. The term "state partners" was used.

Earlier this week the commentary discussed mortgage bank versus depository originator education and requirements, and I received a few well-received comments from different points of view. "Thank you for addressing the 'disparate treatment' between bank LO's and Banker / Broker LO's. When it comes to mortgages (in general, of course), nowhere do consumers get worse representation at a higher cost with fewer options than their bank (who by the way, they trust completely). It's hard not to take it personally when I'm speaking to someone who is skeptical of my guidance while refinancing a 7% / $96,000 'IO 5 year ARM' that they took out at their bank or credit union where the only question they asked was, 'Where do I sign?'. There must be something about offering checking accounts that turns people into mush. I'd be interested to know what percentage of mortgage originations are still through banks (and scared at what it indicates about our society)."

Pete Mills, the SVP of Residential Policy and Member Services for the MBA wrote, saying, "I have been reading with interest the exchanges on the issue of Loan Officer licensing.  It's important for the industry to view this issue from the consumer's perspective.  This should not be a bank vs. nonbank issue. To be effective, licensing of individuals providing financial or advisory services to consumers must cover all individuals providing those services -- whether it's legal advice, insurance, securities, or mortgages.  We cannot license half an industry and leave it to consumers to figure out which providers have met verified minimum standards of competency and character.  It's not fair to consumers, and it's not a fair burden to impose on half the industry.

"Are non-bank LOs 'better' than bank LOs, as a result of SAFE Act testing?  Certainly that is not the case as there are many very high quality LOs working on both sides of the aisle. However, we can say with certainty that all LOs working in the nonbank sector have met minimum standards of education, testing and regulator-controlled background checks.  We also know that many LOs that failed to pass the test have gone to work for banks, and we know that a number insured depositories have engaged in LO recruiting that specifically touts the fact that there is no pre licensing education, testing or continuing education standards to meet.  We also have spoken to a number of state regulators that have told us of numerous instances in which bank LOs seeking to obtain a license have failed the background check conducted by the state regulator.  This is not a good result for consumers, for banks, nor for the mortgage industry at large.  Consumers and the industry would be best served by a system that holds all LOs to the same education, testing, background and financial fitness standards.

"On a side note, there have some who question the value and the rigor of the SAFE Act testing requirements.  According to the NMLS 2011 Annual Report, in 2010 and 2011, the pass rate for first time test takers was 67%, with an ultimate pass rate of 83% (after re-takes).  While no test is perfect, it is clear that SAFE Act testing sets a strong minimum standard for being a mortgage loan originator -- a standard that all consumers should expect can be met by their LO when applying for a mortgage.  Consumers deserve this, and our industry should support it." Thank you for the note Mr. Mills.

From a different perspective, "While the continuing 'he said/she said' regarding who is better educated in lending is somewhat humorous, it's also off the mark. As a licensed broker who runs a bank's origination channel let me help. Yes broker's must pass the NMLS test and bank LOs do not, but bank LOs typically have 24 lending tests each year that they are required to pass - having done both its a wash.  The focus should be on why so many LOs from all channels do not take advantage of the FREE access to underwriting guidelines that are available!  LOs please go to the agencies and government websites and look them up instead of spending your time forming an argument on why a guideline shouldn't exist. The underwriter must meet the guidelines and the days of a good argument to push the lender in to the loan are over- to many layers behind the underwriter checking their work prior to funding to make this practical anyway."

Looking at the news, it would be difficult to find anyone who will argue that the housing market is improving. Yes, there are pockets still in the doldrums, but the news continues to be good. The latest indication was reported yesterday when we learned that New Home Sales climbed 4.4% in November to a 377,000 annual pace, the most since April 2010, following a revised 361,000 rate in October.  Demand for new houses was up 15.3% from a year ago, and the median price for a new house rose 14.9% in November from the same month a year ago to $246,200. Builders are reporting increased construction costs and higher prices for undeveloped land. But a good housing market does not seem to be making us more confident: the Conference Board Consumer Confidence Index dropped to 65.1 in December from a revised 71.5 in November, first reported as 73.7. The Director was quoted as saying, "The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff. A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions. While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions."

For rates, we actually saw some price improvements come across the screen yesterday from investors who were watching the mortgage-backed security market. At this point the general thinking is that if we go over the fiscal cliff, it will knock GDP down, and usually a slower economy means lower rates. Be careful what you wish for! The 10-yr T-note closed at 1.71%, and with mortgage banker selling (supply) far below average, MBS prices did well. This continues this morning with the 10-yr down to 1.70% & MBS prices nearly unchanged, no announcements from Washington, and only two mid-morning releases: 6:45AM PST's December Chicago PMI and 7AM PST's November Pending Home Sales (seen lower than the previous spike).