5 December 2011 – Consumer Financial Services Watch

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

CFPB and Other Federal Banking Agencies Issue Joint Supervisory Statement Clarifying $10 Billion Asset Determination: Regulatory Uncertainty Remains

Dec 05 2011

By: Andrew Caplan* and Stephanie C. Robinson
*Mr. Caplan is not yet admitted to practice; admission to the NY Bar pending.

The Dodd-Frank Act gives the CFPB exclusive supervisory authority and primary enforcement authority of federal consumer financial protection laws over depository institutions with total assets greater than $10 billion and their affiliates (“Large Institutions”). Under Dodd-Frank, the federal banking agencies maintain supervisory and enforcement authority over other institutions with respect to federal consumer financial protection laws. On November 17, 2011, the federal banking agencies and the CFPB issued a joint supervisory statement delineating how and when these Agencies will determine the total assets of an insured depository institution or an insured credit union for purposes of their supervisory and enforcement responsibilities. This is because sections 1025 and 1026 Dodd-Frank, which establish the basic threshold regarding who will regulate whom, do not specify how and when an institution’s assets are assessed for purposes of determining “Large Institution” status. That task was left to the Agencies themselves to determine.

Archive:5 December 2011