July 2014 – Consumer Financial Services Watch

CFPB Issues Proposed Rule to Impose Additional Reporting Requirements Under Regulation C

Jul 28 2014

By: Melanie Brody, Stephanie C. Robinson, Jay M. Willis

On Friday, the CFPB released a proposed rule that would significantly expand the scope of financial institutions’ mortgage lending data reporting requirements under the Home Mortgage Disclosure Act, or HMDA.

First enacted in 1975, HMDA was originally intended to allow both regulators and the public at large to examine whether lenders were effectively serving the credit needs of the communities in which those lenders were located. To that end, the Act required covered institutions to collect and publicly disclose data regarding their mortgage lending activities, thus allowing both public officials and the mortgage lending industry the means necessary to respond to areas of need. Subsequent amendments to the Act, designed to assist regulators in monitoring compliance with fair lending laws, required that covered financial institutions also report the race, ethnicity, sex, and annual income of both applicants and borrowers for home mortgage loans (and mortgage loans purchased by the institution). Read More

Mortgage Broker or Mini-Correspondent: CFPB Issues Policy Guidance on Questions for Consideration

Jul 18 2014

By: Holly Spencer Bunting, Anaxet Y. Jones

In response to what the CFPB views as an increasing trend among mortgage brokers shifting to a mini-correspondent lender model, the CFPB recently issued “Policy Guidance on Supervisory and Enforcement Considerations Relevant to Mortgage Brokers Transitioning to Mini-Correspondent Lenders” (“Policy Guidance”) regarding the application of Regulations X (RESPA) and Z (TILA) to transactions involving mini-correspondent lenders. In addition to providing background on the differences between brokers and mini-correspondents and certain requirements of Regulations X and Z, the Policy Guidance identifies questions the CFPB may consider when reviewing mini-correspondent transactions and the relationship between the mini-correspondent lender and the investor as part of CFPB examinations or enforcement actions. The CFPB, however, stops short of drawing any lines in the sand between what it considers to be brokered transactions and bona fide secondary market transactions under the mini-correspondent model. Read More

Agencies Issue Recommendations for Managing Home Equity Lines of Credit Nearing Their End-of-Draw Periods

Jul 11 2014

By: Jonathan D. Jaffe, Jeremy M. McLaughlin

Many mortgage industry pundits have written about an impending home equity line of credit (HELOC) crisis resulting from a significant volume of HELOCs reaching the end of their interest-only draw periods. In fact, the Office of the Comptroller of the Currency (OCC) estimates that $23 billion in HELOCs will reset in 2014 at the largest national banks; $42 billion in 2015; $50 billion in 2016; and $56 billion in 2017. There is a legitimate question whether many of these borrowers will be able or willing to repay the much higher, fully amortizing payments required during the HELOCs’ repayment periods. It is obvious that federal banking regulators share these concerns and have given them a lot of thought. Read More

K&L Gates Webinar: What’s What with Marketing and Services Agreements under RESPA

Jul 08 2014

By: Phillip L. Schulman

Interest in Marketing and Services Agreements (MSAs) has skyrocketed. No doubt, the Qualified Mortgage 3 percent cap calculations have somewhat dampened enthusiasm for affiliated businesses. As a result, real estate brokers and builders see MSAs as a viable option — and that means lenders, title companies, and closing agents have taken notice. While MSAs are lawful, the RESPA requirements for these arrangements, like many aspects of RESPA, are not crystal clear. A HUD Interpretive Rule issued in June 2010 provides some guidance, but until the Consumer Financial Protection Bureau makes its intentions known, settlement service providers must take care to adhere to the exemption standards set forth in Section 8(c)(2) of RESPA. Read More

California Attorney General Offers Online and Mobile “Do Not Track” Privacy Policy Recommendations

Jul 07 2014

By: Jonathan D. Jaffe, Jeremy M. McLaughlin

California Attorney General Kamala Harris recently issued guidance to help companies provide more “meaningful” privacy policies. Entitled “Making Your Privacy Practices Public,” the recommendations consolidate previously issued guidance and provide new information regarding online tracking and Do Not Track (DNT) signals. As the guidance document indicates, the recommendations “are not regulations, mandates or legal opinions” and offer greater protections than those required under existing law. Clearly, though, they reflect the attorney general’s preferences and what she believes are privacy best practices. Read More

Archive:July 2014