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CFPB Announces Proposed Steering Settlement

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WASHINGTON (11/8/13)--A multi-million-dollar action is being sought against a Utah-based mortgage company for allegedly steering consumers into costlier mortgages, the Consumer Financial Protection Bureau (CFPB) announced Thursday.
 
In January, the bureau announced rules designed to prevent unscrupulous mortgage loan originators from generating higher compensation for themselves by steering borrowers into risky and high-cost loans.
 
According the CFPB, it has asked a federal court to approve a consent order that would provide more than $9 million restitution for consumers from Castle & Cooke Mortgage, LLC, of Salt Lake City. Another $4 million would be obtained in civil money penalties against Castle & Cooke and two of its officers for allegedly paying loan officers illegal bonuses.
 
The CFPB also said, in a release, that the mortgage company maintains 45 branches and does business in 22 states, including Arizona, California, Colorado, Florida, Hawaii, Iowa, Idaho, Nebraska, New Mexico, Nevada, Texas, and Utah.
 

CUNA Calls On FFIEC To Delay Mortgage Reg Sanctions, Legal Liability

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WASHINGTON (11/8/13)--Federal financial regulators should work with the Consumer Financial Protection Bureau to provide a short-term reprieve, until September, from examiner sanctions for noncompliance that might be imposed on regulated financial institutions that are making good faith efforts to comply with upcoming mortgage regulations, Credit Union National Association President/CEO Bill Cheney urged today in a letter to the Federal Financial Institutions Examination Council (FFIEC).

CUNA has called for a delay in possible sanctions and legal liability under the mortgage rules in several forums in recent days: For instance, Chief Economist Bill Hampel sought short-term reprieves or an outright delay of the mortgage regulations in Senate Banking Committee testimony delivered this week. Cheney also argued for a delay in an American Banker op-ed piece published Thursday.

In a letter to the leaders of the FFIEC, CUNA urged the regulators to work with Congress to delay legal liability under the new rules, again until September. The FFIEC was formed in 1978 to promote uniformity in financial institution regulation. It includes the heads of the Federal Reserve Board, the National Credit Union Administration, and the Federal Deposit Insurance Corp., as well as the Comptroller of the Currency and the director of the Consumer Financial Protection Bureau.

"We believe these requests are reasonable and if implemented, would be enormously useful to smaller creditors as they work to meet their responsibilities under these rules," CUNA wrote in the letter. "This approach, to delay examiner sanctions and legal liability only for a short but reasonable time, will ultimately support full compliance--in the best interests of consumers, creditors, servicers, and regulators," CUNA added.

Delaying compliance with upcoming mortgage rules would also "provide welcome, although temporary, relief particularly for smaller creditors and servicers, such as credit unions," CUNA wrote. However, CUNA in the letter recognized that the CFPB has said a full delay is not be possible because of the implementation directive in the Dodd-Frank Act.

The letter also calls on the regulators to do more to address concerns about the risk of disparate impact discrimination that could result because of the focus on qualified mortgages (QMs). The concern is that examiners and the secondary market could favor QMs, which require the borrower to have no more than a 43% debt to income ratio. Other borrowers that have higher ratios that still could be good mortgage credit risks might not be able to obtain a mortgage or have to pay more for one.

American Banker Features CUNA Arguments For Delay In CU Liability Under Mortgage Rules

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WASHINGTON (11/8/13)--A short, reasonable delay in enforcement and legal liability of new mortgage rules required under the Dodd-Frank Act would prove enormously useful to creditors as they work to meet their responsibilities, wrote Credit Union National Association President/CEO Bill Cheney in an op-ed piece in American Banker Thursday.

Importantly, he added, consumers would not be measurably affected by these delays, particularly if institutions establish benchmarks toward full compliance.

The Credit Union National Association has been taking every opportunity to articulate to members of the U.S. Congress and to federal regulators credit unions' compliance concerns related to Consumer Financial Protection Bureau's new mortgage rules.

In the op-ed, Cheney wrote that while there are a number of exemptions from the rules, lenders that originate or service loans above the exemption levels are "feeling the pain of the compliance countdown, particularly in light of concerns about their vendors' readiness."

Cheney acknowledged that the CFPB has made it clear compliance deadlines will not be moved given its mandate from Congress. (See related story: Cordray Seems Firm On Mortgage Rule Compliance Dates.) But, he said, that does not mean relief is "off the table" if federal regulators and lawmakers act quickly to make it happen.

The op-ed noted two significant, recent events: CFPB Director Richard Cordray has indicated that good faith efforts of financial institutions to comply should be recognized, and: a letter circulating Capitol Hill letter urging a one-year delay of these new mortgage rules has already attracted 118 lawmakers.

"That is why we believe the prudential regulators should issue a public statement very soon indicating that examiners will generally not write creditors up or subject them to sanctions for violations until, say, September 2014," Cheney recommended.

He added that while enforcement relief is critical, a short delay before private rights of action may accrue could be very helpful to creditors as they work to meet their responsibilities under the rules. 
"No one knows for sure the extent to which creditors will or will not be sued for noncompliance, but the uncertainty is unnerving, given the possibility that trial lawyers are trolling for cases," Cheney said.

Cordray Seems Firm On Mortgage Rule Compliance Dates

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WASHINGTON (11/8/13)--While he said he would consider recent congressional calls for a one-year mortgage regulation delay, Consumer Financial Protection Bureau Director Richard Cordray seemed resolute that those rules would become effective in January, as planned.

The CFPB Director made his remarks during a Thursday Morning Money Breakfast Briefing presented by Politico.

More than 100 U.S. House members this week urged the bureau to "defer implementation" of pending mortgage rules until Jan. 1, 2015 "in order to ensure financial institutions are able to transition their systems to be in full compliance with the rules." (See News Now Nov. 7: CUNA QM Concerns Reflected In Congressional CFPB Letter.)

The Credit Union National Association is urging the CFPB and prudential regulators, such as the National Credit Union Administration, to issue a joint statement that examiners will give covered financial institutions working in good faith to comply generally until September before they cite them for violations under these rules. CUNA is also urging the agencies to work with Congress to support a statutory delay, also until September, in the ability of consumers to sue covered institutions for alleged violations.
 
CUNA Deputy General Counsel Mary Dunn said this approach is reasonable, and will aid credit unions and others as they continue their efforts to be ready for the rules. "Also, it will not require the agency to move the compliance dates. This is important since a delay in the effective dates does not seem likely given the fact that the Dodd-Frank Act sets the time frame for compliance," Dunn added.
 
Cordray on Thursday said the CFPB's qualified mortgage (QM) regulation has already been delayed by one year beyond the Dodd-Frank Act's mandated due date, and the vast majority of institutions are ready to comply with the regulations. The longer the QM regulation is delayed, the longer other related rules such as qualified residential mortgage regulations will also be delayed, he said.

Examiners will give institutions some leeway in the early days after the QM regulation is implemented, he said. The bureau will not be looking for compliance perfection, but for a good faith effort from lenders, Cordray added.

Institutions that are making good loans should continue to make those loans whether they are QM or not, Cordray said. He noted that the pending mortgage regulations simply codify good common sense principles that many lenders have already followed for years, and that the risk difference between a QM loan and a non-QM loan is typically small.

Cordray said there is no question the mortgage market will work better once the new rules take effect. However, he said, the CFPB does not want to rest on its laurels once a rule is issued. He said the CFPB encourages the industry and individuals to provide details on how new regulations are actually impacting markets.

If rules do not work as intended the CFPB will reexamine them and attempt to fix what is wrong, he emphasized. The object is not to write a rule and defend it because the agency wrote it…The goal is to help the markets function correctly, he said.

Access to credit is an emerging issue in mortgage and other markets and access to credit will inform the way the CFPB writes rules. Overall, he said, regulations are good, but the CFPB will need to strike a balance to ensure they are not going to dry up sources of available credit.

Sen. Banking Considers Affordable Housing In Finance Reform Hearing

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WASHINGTON (11/8/13)--The Senate Banking Committee Thursday continued its series of hearings on housing finance reform, this time focusing on "Essential Elements to Provide Affordable Options for Housing."
 
The witness panel featured Hilary O. Shelton, Washington bureau director and senior vice president for policy and advocacy of the NAACP; Rick Judson, chairman, National Association of Home Builders; Dr. Sheila Crowley, president/CEO, National Low Income Housing Coalition; Dr. Douglas Holtz-Eakin, president, American Action Forum; and Ethan Handelman, vice president for policy and advocacy, National Housing Conference.
 
In broad terms, the witnesses added their voices to the call for necessary reforms to the current housing finance system to ensure equitable access to mortgages in an affordable, safe, and sound way. For instance, Holtz-Eakin of the American Action Forum, called reform "long overdue" and encouraged federal lawmakers to "push (reforms) over the finish line" and enact legislation.
 
The hearing followed by two days the committee's study of how best to protect small lender access to the secondary mortgage market, at which the Credit Union National Association testified.
 
Witness Bill Hampel, CUNA chief economist, told the Senate panel that qualifying credit union members need to be able to buy or finance their homes in a stable mortgage market and emphasized that standardization at all steps in the mortgage process is important to credit unions. He also shared CUNA's recommendations for the development of a mutual organization to protect secondary market access. (Use the resource link to read CUNA's complete testimony.)
 
CUNA also testified in July at the Senate's first hearing of the year on housing finance reform held by the Senate Banking subcommittee on securities, insurance and investment.
 

NCUA Offers Compliance Webinars On New Remittance, Mortgage Rules

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ALEXANDRIA, VA (11/8/13)--The National Credit Union Administration (NCUA) will host two free webinars on the Dodd-Frank remittances and mortgage lending rules on Nov. 18 and Dec.18 beginning at 2 p.m. (ET).
 
NCUA's Office of Consumer Protection will host the webinars and will provide credit unions with two high-level overviews on the new Dodd-Frank rules and how they will affect credit unions.
 
The topics for the Nov. 18 webinar include:
  • Remittance transfers;
  • Higher-priced mortgage loan appraisals;
  • Mortgage servicing; and,
  • Higher-priced mortgage loan escrows.
The topics for the Dec. 18 webinar include:
  • Ability-to-Repay and Qualified Mortgage rules;
  • High-cost mortgage and home-ownership counseling;
  • Loan originator compensation; and,
  • Equal Credit Opportunity Act appraisals and valuations.
Credit unions can register for each webinar by using the resource links below. Credit unions will use the same links to view the webinars on Nov. 18 and Dec. 18.

Credit unions are asked to submit their questions prior to each webinar by emailing WebinarQuestions@ncua.gov with the subject line, "Remittance and Mortgage Lending Rules Webinar."
 
The NCUA has also created regulatory alerts and videos for the new regulations, which summarize the new rules, highlight key issues for credit unions and provide information on additional compliance resources for credit unions to use. You can find NCUA's videos on the agency's YouTube channel  and its alerts under the 'Regulations, Publications and Reports' tab on the NCUA website.

Yellen Fed Nomination Hearing Set For Nov. 14

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WASHINGTON (11/8/13)--A Senate Banking Committee hearing on Janet Yellen's nomination to lead the Federal Reserve has been set: The hearing will be held on Nov. 14.

Committee members met with Yellen late last month, and Senate Banking Committee Chairman Tim Johnson (D-S.D.) said their conversation with her "reaffirmed that President Obama has picked an outstanding nominee to serve as the next Federal Reserve Chairman."

If confirmed, Yellen would replace outgoing Fed Chairman Ben Bernanke when his term ends on Jan. 31. She would become the first woman to head the Fed, or any other central bank.

Yellen has served as vice chair of the Board of Governors of the Federal Reserve System since Oct. 4, 2010. Her term ends on Jan. 31, 2024. She also has served as president/CEO of the Twelfth District Federal Reserve Bank, at San Francisco.

CFPB Announces Proposed 'Steering' Settlement

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WASHINGTON (11/8/13)--A multi-million-dollar action is being sought against a Utah-based mortgage company for allegedly steering consumers into costlier mortgages, the Consumer Financial Protection Bureau (CFPB) announced Thursday.
 
In January, the bureau announced rules designed to prevent unscrupulous mortgage loan originators from generating higher compensation for themselves by steering borrowers into risky and high-cost loans.
 
According the CFPB, it has asked a federal court to approve a consent order that would provide more than $9 million restitution for consumers from Castle & Cooke Mortgage, LLC, of Salt Lake City. Another $4 million would be obtained in civil money penalties against Castle & Cooke and two of its officers for allegedly paying loan officers illegal bonuses.
 
The CFPB also said, in a release, that the mortgage company maintains 45 branches and does business in 22 states, including Arizona, California, Colorado, Florida, Hawaii, Iowa, Idaho, Nebraska, New Mexico, Nevada, Texas, and Utah.
 

Auto Lending, Mortgage Discussions Slated By CFPB

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WASHINGTON (11/8/13)--Two items high on the Consumer Financial Protection Bureau's agenda, auto lending and mortgages, will be addressed in a pair of upcoming public events.

The CFPB's auto finance forum event will be held Nov. 14 at 8:45 a.m. (ET) at bureau headquarters in Washington.

A field hearing, entitled "Know Before You Owe: Mortgages," has been scheduled for the following week. The hearing is scheduled to be held on Nov. 20 at 11 a.m. (ET). The bureau plans to release more information on this hearing soon.

CFPB Director Richard Cordray, consumer groups, industry representatives, and members of the public are scheduled to speak during both events.

Both events will be streamed live on the CFPB homepage.

For more on the events, use the resource links.

NCUA Offers Compliance Webinars On New Remittance, Mortgage Rules

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ALEXANDRIA, VA (11/8/13)--The National Credit Union Administration (NCUA) will host two free webinars on the Dodd-Frank remittances and mortgage lending rules on Nov. 18 and Dec.18 beginning at 2 p.m. (ET).
 
NCUA's Office of Consumer Protection will host the webinars and will provide credit unions with two high-level overviews on the new Dodd-Frank rules and how they will affect credit unions.
 
The topics for the Nov. 18 webinar include:
  • Remittance transfers;
  • Higher-priced mortgage loan appraisals;
  • Mortgage servicing; and,
  • Higher-priced mortgage loan escrows.
The topics for the Dec. 18 webinar include:
  • Ability-to-Repay and Qualified Mortgage rules;
  • High-cost mortgage and home-ownership counseling;
  • Loan originator compensation; and,
  • Equal Credit Opportunity Act appraisals and valuations.
Credit unions can register for each webinar by using the resource links below. Credit unions will use the same links to view the webinars on Nov. 18 and Dec. 18.

Credit unions are asked to submit their questions prior to each webinar by emailing WebinarQuestions@ncua.gov with the subject line, "Remittance and Mortgage Lending Rules Webinar."
 
The NCUA has also created regulatory alerts and videos for the new regulations, which summarize the new rules, highlight key issues for credit unions and provide information on additional compliance resources for credit unions to use. You can find NCUA's videos on the agency's YouTube channel  and its alerts under the 'Regulations, Publications and Reports' tab on the NCUA website.