October 2013 – Consumer Financial Services Watch

Affiliated Business Arrangements Remain a Target for the CFPB under RESPA

Oct 30 2013

After announcing two RESPA consent orders in June 2013 targeting affiliated business arrangements (“AfBAs”), the CFPB is again taking aim at AfBAs. In a lawsuit filed in federal district court in Kentucky, the CFPB alleges that a law firm and three of its attorney principals gave impermissible referral fees to owners and managers of real estate and mortgage brokerage companies through profit distributions made by title insurance AfBAs owned by the attorneys and the real estate and mortgage brokerage companies. Because the CFPB alleges these AfBAs were not structured according to RESPA’s requirements, the CFPB is seeking to disgorge all monies received by the attorneys related to settlement services provided in connection with referrals, including profit distributions from the AfBAs. Read More

Federal Regulators Alleviate Fair Lending Concerns Regarding QM Origination

Oct 23 2013

By: Stephanie C. Robinson, Andrew L. Caplan

Recognizing that many creditors will be inclined to originate only “qualified mortgages” (“QM loans”) when the CFPB’s ability-to-repay rule takes effect in January, five federal regulators yesterday announced that a creditor’s decision to offer only QM loans will not elevate the creditor’s fair lending risk, absent other factors. Read More

Mortgage Servicers: Don’t Forget ECOA’s Valuation Rule

Oct 21 2013

By: Nanci L. Weissgold, Kerri M. Smith

Mortgage loan servicers are toiling away at executing all the new servicing requirements in the CFPB’s Regulation Z and Regulation X amendments by the January 10, 2014 deadline. Given this overwhelming task, it is understandable that some servicers may not be as familiar with the CFPB’s ECOA Valuation Rule amending Regulation B. The Rule, which imposes an obligation to furnish a copy of valuations to borrowers of first-lien loans and to provide notice to borrowers of this right, may apply to a servicer’s loss mitigation efforts.

HUD Issues QM Proposal for Comment: There is a “There” There

Oct 07 2013

By: Phillip L. Schulman, Jonathan D. Jaffe, Krista Cooley, Andrew L. Caplan

This week, the United States Department of Housing and Urban Development (“HUD”) weighed in on its proposed version of a Federal Housing Administration (“FHA”) Qualified Mortgage (“QM”). Although the Consumer Financial Protection Bureau (“CFPB”) rules gave FHA-insured loans QM status on a temporary basis until 2021 (subject to certain conditions, discussed below), it looks like HUD wanted to get its version finalized by January 2014, when the CFPB’s QM rules take effect. As discussed more fully in this alert, HUD’s proposed QM Rule (the “HUD Proposed Rule”) would give QM status to all single family, forward FHA-insured loans. Title II insured loans, however, would be required to meet the CFPB’s 3% limit for points and fees.

In an attempt to expedite synchronization of the HUD QM definition with implementation of the CFPB Final Rule, HUD shortened the usual 60-day comment period to 30 days. As such, comments on this proposal are due by Wednesday, October 30, 2013.

To read the full alert, click here.

Report Elder Abuse to Authorities, Federal Regulators Tell Financial Institutions

Oct 01 2013

By: David L. Beam, *Anjali Garg

*Ms. Garg is a law clerk and not admitted to the practice of law.

Federal privacy laws do not prohibit a financial institution from reporting suspected elder abuse to the authorities. That’s the key takeaway from a new interagency guidance issued by seven federal regulatory agencies on September 23. Read More

Archive:October 2013