December 2011 – Consumer Financial Services Watch

CFPB Puts Inherited Consumer Financial Protection Regulations on the Table

Dec 23 2011

Adding to its already full plate, the Bureau of Consumer Financial Protection (the “CFPB” or the “Bureau”) recently requested public comment on its review of the various consumer financial protection regulations it has inherited from other agencies. The request signals that the Bureau does not intend for its higher-profile mortgage finance initiatives to overshadow its mandate to update, modify (or even eliminate) outdated, unduly burdensome, or unnecessary existing regulations. It also suggests that the CFPB is contemplating that its initial review of the inherited regulations may extend beyond mere technical corrections to more significant substantive changes.

CFPB Republishes RESPA Regulations

Dec 20 2011

By: Holly Spencer Bunting

While the CFPB took over rulemaking and enforcement authority for RESPA on July 21, 2011, that transfer of authority will soon be reflected in RESPA regulations. On December 20, 2011, the CFPB published an interim final rule in the Federal Register to republish, effective December 30, 2011, HUD’s Regulation X, which implements RESPA. These republished regulations are substantively the same as the current RESPA regulations, but the CFPB makes certain non-substantive, technical, formatting, and stylistic changes to the regulations. The CFPB will accept public comments on the interim final rule until February 21, 2012. Read More

RESPA Investigations Initiated at HUD May Have Been Reassigned to the CFPB

Dec 19 2011

By: Phillip L. Schulman

When HUD transferred RESPA enforcement authority to the CFPB, some RESPA investigations that had been initiated at HUD may have been assigned to the new agency. As a result, some companies may not be out of the woods just yet.

Approximately 10 former HUD RESPA Enforcement Division staffers and counsel transferred to the new CFPB on July 21st, including RESPA Enforcement Division Director Bart Shapiro. About five of those employees ended up being reassigned to the CFPB’s Enforcement Division. Last spring the HUD Unit was busy trying to resolve dozens of RESPA investigations before they turned out the RESPA enforcement lights at HUD. Read More

HAMP Handbook Version 3.4 Arrives Just in Time for the Holidays

Dec 16 2011

By: Kerri M. Smith

Followers of Treasury’s HAMP program will need to update their shortcuts to the latest version of the HAMP Handbook, Version 3.4. Treasury issued the latest HAMP Handbook, the consolidated guidance related to HAMP for non-GSE mortgage loans, on December 15, 2011. Version 3.4 of the Handbook includes all of the prior Supplemental Directives, including those with effective dates after the publication of Version 3.3. In addition to these updates, Treasury announced that Version 3.4 includes certain clarifications addressing: (1) ARM loan eligibility; (2) Timing of response to initial packages; and (3) “Escalated Cases” and pending litigation. We explain these changes below. Read More

Customary and Reasonable Appraisal Rates Rule Faces State Opposition

Dec 15 2011

By: Nanci L. Weissgold and Kerri M. Smith

It is old news that the Dodd-Frank Act sets standards for pricing appraisals and subjects appraisal management companies, known as AMCs, to federal and state oversight. The news for 2012 is that lenders may need to contend with alternate state law requirements addressing the payment of fee appraisers, some of which may be inconsistent with federal law.

AMCs – the business entities that administer networks of independent appraisers to procure real estate appraisal assignments on behalf of lenders – are now subject to supervision by state governments through their appraisal boards. Under the Dodd-Frank Act, the federal banking agencies must jointly by rule establish minimum requirements to be applied by a state, including state registration and supervision of AMCs, and that appraisals be conducted in compliance with Section 129E of TILA. While states have three years from the date the federal agencies finalize their rules establishing minimum requirements, AMC registration laws now exist in 28 states.

FHA Insured Mortgages Require an Appraisal by a State Certified Appraiser

Dec 12 2011

By: Nanci L. Weissgold

Effective December 23, 2011, HUD has finally amended its rules to coincide with its existing practice of allowing only state certified appraisers to conduct appraisals of properties securing an FHA insured mortgage. This means that state licensed appraisers or those with only the certification of a “nationally recognized professional organization” are now permitted on the FHA Appraiser Roster.

CFPB Now Accepting Mortgage Complaints from Consumers

Dec 07 2011

By: Kathryn M. Baugher

On December 1, 2011, the Consumer Financial Protection Bureau began accepting mortgage complaints from consumers through the agency’s home page. This development follows the Bureau’s October announcement that it would be expanding the coverage of its consumer complaint portal to include products such as mortgages and student loans. Consumers have been able to submit credit card complaints through the Bureau’s web site since last July. Read More

The CFPB’s Office of Servicemember Affairs Looks at the Lending Practices of For-Profit Colleges and Their Impact on Military Members

Dec 07 2011

By: Rebecca Lobenherz

When servicemembers are discussed in relation to the consumer credit industry, the discussion usually centers on the protections to military homeowners and credit card holders under the Servicemembers Civil Relief Act (“SCRA”). While SCRA remains a concern of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), recently the Office of Servicemember Affairs has been taking aim at a more unlikely target: student loans. The CFPB is looking into the recruiting practices of for-profit colleges to determine if for-profit colleges are exploiting servicemembers in order to evade a federal financial aid rule.
Read More

FHA: HUD Uses FAQs to Communicate Policy Changes

Dec 05 2011

By: Holly Spencer Bunting

Mortgagee Letters released by the Federal Housing Administration (“FHA”) appear to no longer be the final word on policy changes made by FHA and HUD related to FHA lending. Although FHA has maintained “FHA Frequently Asked Questions” on its website for some time, it only recently began to publish targeted Frequently Asked Questions in response to specific Mortgagee Letters and questions submitted by industry participants. Generally these FAQs reiterate the guidelines stated in Mortgagee Letters and define practical implications of implementation. However, with FHA’s most recent release of FAQs related to Mortgagee Letter 2011-34 and HUD’s October 25, 2011 Industry Call (“FAQs”), HUD has reversed its position on at least one issue (in lenders’ favor) and offered other guidance that is not clear from the plain language of Mortgagee Letter 2011-34.

HUD’s Proposed Fair Lending Rule: Deadline for Comments

Dec 05 2011

By: Melissa S. Malpass

On November 16, 2011 the United States Department of Housing and Urban Development (“HUD”) released a proposed rule to establish that proof of intentional discrimination is not necessary to establish a violation of the Fair Housing Act, and that a violation may be established under a disparate impact approach. HUD’s proposal makes clear the intention of the agency to apply this new approach to lenders. In describing policies “that may have a disparate impact,” the proposal references: “mortgage pricing policies that give lenders or brokers discretion to impose additional charges or higher interest rates unrelated to a borrower’s creditworthiness” and “credit scoring overrides provided by a purchaser of loans.” Read More

Archive:December 2011