Mortgage Lending – Page 9 – Consumer Financial Services Watch

U.S. Supreme Court Ends the RESPA Section 8(b) Debate: It Takes Two to Tango

May 25 2012

By: Holly Spencer Bunting, Phillip L. Schulman

The split in the federal Circuit Courts over the interpretation of Section 8(b) of RESPA has been resolved, and the result is that it takes two to tango for a Section 8(b) violation. In a decision made on May 24, 2012 in Freeman v. Quicken Loans, Inc., the U.S. Supreme Court held that a charge for settlement services must be divided between two or more persons to constitute a violation of Section 8(b). This is welcome news for settlement service providers, who can rest assured that their own prices, whether as part of a mark-up of a third-party fee or their own unilateral charges, cannot violate Section 8(b) of RESPA. Read More

CFPB Proposes Strict Controls on Discount Points, Origination Fees, and Broker Compensation

May 16 2012

By: Kris D. Kully

The Consumer Financial Protection Bureau (CFPB) is considering putting strict limits on a creditor’s ability to price its mortgage loans, and on a consumer’s ability to choose among pricing options.

By way of implementing the far-reaching provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is proposing to require that when a creditor pays a mortgage loan originator’s compensation (which includes most mortgage loan transactions), any up-front amounts the consumer pays for the loan must be in the form of bona fide discount points that reduce the interest rate or a flat origination fee that does not vary with the loan amount.

CFPB Issues First “Bulletin” Regarding TILA’s Loan Originator Compensation Rule

Apr 10 2012

By: Jonathan D. Jaffe

The CFPB issued its first pronouncement—which it refers to as a Bulletin—regarding the Truth in Lending Act’s (“TILA”) loan originator compensation rule (the “LO Comp Rule”). The Bulletin is noteworthy for at least two reasons: the CFPB took a practical approach to resolve the issue, and the CFPB announced that it anticipates issuing a proposed rule for public comment in the near future on the loan origination provisions in the Dodd-Frank Act. Read More

New SAFE Act Examination Guidelines for State Regulated Entities: Spring Cleaning May Be Required

Mar 12 2012

By: Nanci L. Weissgold

The Multistate Mortgage Committee’s (“MMC”) new SAFE Act Examination Guidelines (“SEGs” or “Guidelines”) leave little doubt that nondepository institutions should expect more detailed and intrusive examinations of their mortgage loan originator (“MLO”) hires and policies by state regulators. The MMC, a 10 state representative body formed under the CSBS/AARMR Nationwide Cooperative Protocol and Agreement for Mortgage Supervision, is responsible for developing a process for multistate mortgage examinations. Although created under the guise of multistate examinations, the intent of the MMC is to provide state regulators with a uniform examination process to determine SAFE Act compliance and to provide those same tools to in-house compliance and audit departments. Read More

CFPB Plans Small Business Review Panel for Combined RESPA and TILA Disclosures and Hints at Possible Regulatory Changes

Mar 05 2012

By: Holly Spencer Bunting

If you are on the edge of your seat waiting for the combined RESPA/TILA proposed regulations and disclosure forms, we have our first glimpse into the changes being contemplated by the Consumer Financial Protection Bureau (“CFPB” or “Bureau”). On February 21, 2012, the CFPB announced its plan, in accordance with the Small Business Regulatory Enforcement Fairness Act, to solicit feedback from a group of small business mortgage and settlement companies that will be directly impacted by new and combined RESPA and TILA disclosure forms. In addition to describing the purpose and process for a Small Business Review Panel (“Panel”), and publishing a list of questions and issues for small business representatives to discuss at the upcoming Panel, the Bureau released an outline of the proposals currently under consideration for combined RESPA and TILA regulations. At this point, the outline is a list of issues that will allow the CFPB to measure whether the regulations under development could have a significant economic impact on a substantial number of small entities, but it gives us a first glance at the changes that could be coming for mortgage disclosures under RESPA and TILA. Read More

FinCEN Extends Anti-Money Laundering Program and Suspicious Activity Reporting Requirements to Non-Bank Residential Mortgage Lenders and Originators

Feb 29 2012

By: András P. Teleki, Kathryn S. Williams

Residential mortgage lenders and originators (RMLOs — known as “mortgage companies” and “mortgage brokers” but not individual loan originators) now are subject to the Bank Secrecy Act’s (BSA) anti-money laundering regime pursuant to a long expected new regulation published in the Federal Register on February 14, 2012 by FinCEN, a part of Treasury that implements the U.S.’s anti-money laundering regime. Under the new rules, RMLOs are required to develop and implement an anti-money laundering program (AML Program) and begin suspicious activity reporting (SAR Filings) by August 13, 2012. Read More

Freeman v. Quicken Loans to Decide Whether Undivided Unearned Fees Violate RESPA

Feb 24 2012

By: Phillip L. Schulman

To split an unearned fee or not to split an unearned fee in order to violate the Real Estate Settlement Procedures Act (RESPA) – that is the question. Rather, that was the question on February 21, 2012 when the Supreme Court heard oral argument in the case of Freeman v. Quicken Loans, Inc. The case is intended to settle a dispute among the federal circuit courts regarding the statutory interpretation of Section 8(b) of RESPA which prohibits giving or accepting “any portion, split, or percentage” of any charge for settlement services “other than for services actually performed.” Read More

Supreme Court Case on Disparate Impact Voluntarily Dismissed – Parties in Magner v. Gallagher Say Never Mind

Feb 17 2012

By: Melissa S. Malpass

In a rare and unexpected move, the City of St. Paul last Friday agreed to dismiss its appeal to the U.S. Supreme Court challenging whether a violation under the Fair Housing Act may be proved under a disparate impact legal theory, or whether proof of intentional discrimination is required. As we posted previously, the Supreme Court on November 7, 2011 granted certiorari in Magner v. Gallagher to determine that issue. All briefs in the matter had been submitted, and oral argument was set for later this month. Read More

Mortgage Industry Submits Comments on HUD’s Proposed Disparate-Impact Rule under the Fair Housing Act

Feb 01 2012

By: Paul F. Hancock, Andrew C. Glass, Melanie Hibbs Brody, Roger L. Smerage, Melissa S. Malpass, Gregory N. Blase

On January 17, 2012, K&L Gates LLP submitted the comments of six financial services trade associations to the United States Department of Housing and Urban Development (HUD) on the proposed rule to implement a disparate-impact legal standard under the Fair Housing Act. The trade associations on whose behalf we filed the comments are: the American Bankers Association, the American Financial Services Association, the Consumer Bankers Association, the Consumer Mortgage Coalition, the Independent Community Bankers of America, and the Mortgage Bankers Association.

To view the complete alert online, click here.

Freddie Mac’s Refinancing Policy

Feb 01 2012

By: Kerri M. Smith

NPR and ProPublica charged Freddie Mac with investing in securities that would lose value if homeowners refinanced their mortgages. The primary allegation is that such investments undercut Freddie Mac’s public mission and resulted in a more stringent refinancing policy. Read More

Catagory:Mortgage Lending