Links in “Mortgage Lending”

Recap of the CFPB's fourth webinar on the new closing disclosure. [11/24/14]

The proposal would require servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan, to put in place additional servicing transfer protections, and to take steps to protect borrowers from a wrongful foreclosure sale. The proposal would also help ensure that surviving family members and others who inherit or receive property have the same protections under the CFPB’s mortgage servicing rules as the original borrower. [11/21/14]

It first surfaced in 2006, but it appears to be back. Fraudsters are initiating wire transfers from HELOCs to construction companies after searching public records of new mortgage transactions to discover consumers with home equity lines of credit.  In some cases, the construction companies are shams; in other cases the companies are legitimate but are being used as “money mules.” Here are the common footprints to look for. [11/20/14]

Here are a few key takeaways for mortgage lenders from the CFPB's recent action against Franklin Loan Corporation for its loan originator compensation practices, which were based on interest rates charged. [11/17/14]

The CFPB ordered Franklin Loan Corporation (18 locations in Southern California and one in Chicago) to pay $730,000 for giving its employees illegal bonuses for steering consumers into loans with higher interest rates and is seeking injunctions to have the company end the practice and provide compensation to the potential 1,400 harmed consumers. [11/14/14]

CFPB orders Franklin to pay $730,000 for a compensation system that rewarded loan officers for steering consumers to higher-rate loans. On the other hand, between 2011 and 2013, Franklin Loan originated $887 million in loans. [11/14/14]

The United States District Court for the District of Columbia removed support of HUD’s Disparate Impact Rule under the Fair Housing Act (FHA). Although the ruling does not affect ECOA (Regulation B), it potentially weakens the use of the rule which allowed liability under FHA based on a practice’s discriminatory effect even if the practice was not motivated by a discriminatory intent. The ruling emphasizes that FHA "unambiguously prohibits only intentional discrimination." [11/5/14]

The practice of compensating loan officers based on loan revenue targets, such as higher interest rates and discretionary fees, rather than a fixed percentage of the loan amount, is receiving closer scrutiny from regulators, who see a greater risk of disparate impact on minority neighborhoods. [11/3/14]

The CFPB's fifth edition of Supervisory Highlights was released Tuesday, providing general insight into recent illegal actions pertaining to mortgage and student loan servicing practices. Director Cordray, consistent with recent remarks, indicated that servicers of student loan debt will be "[held] accountable for how they treat borrowers." Find out how to safeguard your institution from protections placed on student lenders. [10/29/14]

More on the six federal agencies' adoption of the final Credit Risk Retention Rule, often called the "skin in the game" rule, because it requires sponsors of securitizations to retain an economic interest in the assets they sell. [10/27/14]