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RESPA News Monthly <br> February 2012

RESPA News Monthly Edition
RESPA News Monthly
February 2012
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This month, the parties in the case of Freeman v. Quicken Loans Inc. presented their arguments to the U.S. Supreme Court. A consumer group initiated a campaign to extend RESPA’s statute of limitations. Also this month, the Consumer Financial Protection Bureau released its final round of prototypes, and some in the industry questioned why appraisal and AMC fees are not separated. In February, RESPA News reported on upcoming changes to RESPA’s qualified written request provisions and what you need to know about QWR violations. We also took a look at the bureau’s new mortgage statement form. In addition, RESPA News reviewed multiple RESPA-related lawsuits, and we provided you with informative RESPA tips. Be sure to check out the February 2012 issue for these articles and more.



 
Supreme Court asks tough questions in RESPA case
Posted Date: Thursday, March 15, 2012
The U.S. Supreme Courts listened to arguments regarding an issue that caused a split between the circuit courts. Specifically, the Court was asked to determine whether RESPA Section 8(b) prohibits unearned, undivided fees. Read on to find out what tough questions the Court had for the attorneys on each side and what one side admitted would lose the case for them.

 
Quicken Loans says claims in Freeman are meritless
Posted Date: Tuesday, February 28, 2012
Oral arguments in Freeman v. Quicken Loans Inc. were heard by the U.S. Supreme Court on Feb. 21. It’s now up to the Court to determine the issue in the case, whether a fee must be split in order to constitute a RESPA Section 8 violation. Quicken Loans released a statement soon after the arguments concluded, announcing that the bank did not charge unearned fees and that the claims were meritless. Read on to find out what else the bank had to say about the case.

 
Regulators, lawmakers weigh in on bank exam issue
Posted Date: Sunday, February 26, 2012
A battle may be brewing as lawmakers on both sides of the aisle signal support for community bankers who say they find it increasingly difficult to thrive in the face of increased regulation under the Dodd-Frank Act and heightened supervisory expectations. The pushback has led some regulators to re-examine their supervision procedures while others have staunchly defended their practices.

 
Last chance to comment on the mortgage disclosure prototypes
Posted Date: Friday, February 24, 2012
The Consumer Financial Protection Bureau is conducting its final round of testing of the integrated mortgage disclosure forms. Once this round is complete, the bureau plans to start working on the highly anticipated rules that will implement the forms. Read on to find out about the final round of prototypes and the CFPB’s next steps.

 
Supreme Court asks tough questions in RESPA case
Posted Date: Friday, February 24, 2012
The U.S. Supreme Courts listened to arguments regarding an issue that caused a split between the circuit courts. Specifically, the Court was asked to determine whether RESPA Section 8(b) prohibits unearned, undivided fees. Read on to find out what tough questions the Court had for the attorneys on each side and what one side admitted would lose the case for them.

 
CFPB asks public to help streamline regulations
Posted Date: Sunday, February 19, 2012
The Consumer Financial Protection Bureau inherited a multitude of regulations from seven federal agencies, and it is looking to the public for help identifying ways to streamline the regulations to make the process easier for the industry to follow them. Read on to find out about the CFPB's new web-based tool and what Director Richard Cordray had to say about its latest method for gathering input.

 
Title company owner may have falsified HUD-1 statements
Posted Date: Sunday, February 19, 2012
The owner of a Florida title company was charged with wire fraud for her participation in an alleged mortgage fraud scheme. According to the federal complaint, part of the multi-million dollar scheme involved the preparation of false HUD-1 Settlement Statements. Read on to find out more about the charges.

 
Title company owner may have falsified HUD-1 statements
Posted Date: Sunday, February 19, 2012
The owner of a Florida title company was charged with wire fraud for her participation in an alleged mortgage fraud scheme. According to the federal complaint, part of the multi-million dollar scheme involved the preparation of false HUD-1 Settlement Statements. Read on to find out more about the charges.

 
Association worried CFPB has too much on its plate
Posted Date: Sunday, February 19, 2012
An industry association recently released a letter it wrote to the Consumer Financial Protection Bureau, stating it is concerned about the number of mortgage-related rulemakings the bureau will need to make soon and asked that the CFPB set up a strategy regarding how it intends to proceed in a way that is helpful to the industry.

 
Consumer organization challenges RESPA's statute of limitations
Posted Date: Sunday, February 19, 2012
A national consumer organization is arguing that RESPA's one-year statute of limitations is too short and should be extended in order to have more meaningful enforcement. Read on to find out why the organization is calling for change and what the group's executive director has to say about a petition that the group wants industry members to sign.

 
Borrowers sue for RESPA violation, show actual damages
Posted Date: Wednesday, February 15, 2012
A federal district court found that two mortgage loan borrowers' qualified written request claim successfully survived a motion to dismiss because the borrowers showed actual damages that flowed from the servicer's alleged violation. Read on to find out more about the case.

 
Mortgage statement form draws questions
Posted Date: Wednesday, February 15, 2012
The Consumer Financial Protection Bureau announced on Feb. 13 that it is seeking input on a draft monthly mortgage statement. Attorney Howard Lax had a chance to review the form, and he offered RESPA News a detailed analysis of the form and some critical insight on the bureau's efforts so far and where it can improve.

 
Mortgage statement form draws questions
Posted Date: Wednesday, February 15, 2012
The Consumer Financial Protection Bureau announced on Feb. 13 that it is seeking input on a draft monthly mortgage statement. Attorney Howard Lax had a chance to review the form, and he offered RESPA News a detailed analysis of the form and some critical insight on the bureau's efforts so far and where it can improve.

 
Court certifies class in RESPA suit
Posted Date: Wednesday, February 15, 2012
A group of plaintiffs requested that a U.S. district court grant them class certification in a lawsuit, alleging that the defendants formed a sham affiliated business arrangement in violation of RESPA. Read on to find out who is included in the class and what the court decided.

 
Borrower sued servicer, believed it had something to hide
Posted Date: Sunday, February 12, 2012
A mortgage loan borrower sued his loan servicer after he allegedly mailed a qualified written request to it contending that recent news regarding predatory lending left him feeling that there was something the servicer was trying to hide. The borrower claimed in his suit, that his servicer failed to respond to his QWR in violation of RESPA.

 
CFPB starts work on model mortgage statement
Posted Date: Sunday, February 12, 2012
The Consumer Financial Protection Bureau announced that it is working on a model mortgage statement that, under the Dodd-Frank Act, creditors and services are required to provide to borrowers periodically.

 
What you need to know about QWR violations
Posted Date: Sunday, February 12, 2012
Lawsuits are filed against mortgage loan servicers for alleged qualified written request violations practically every day. If you are a servicer then you probably already know that there is a risk of being sued, even if you complied with RESPA. QWRs can be tricky and it's important to know when you are required to respond and when you're not. It's also helpful to know what facts the plaintiff must show to prove a RESPA violation has occurred. Read on to get some helpful QWR compliance tips.

 
Court reviews bankruptcy legal fee, actual damages
Posted Date: Sunday, February 12, 2012
The court in a RESPA lawsuit determined the plaintiff's contention that he incurred legal fees as damages when his mortgage loan servicer failed to respond to his qualified written request was not adequate for a RESPA violation. The court found no merit in the plaintiff's argument that he would not have incurred the fees if the servicer had replied to his QWR. Read on to find out the facts in the case.

 
Mortgage form software could cost millions
Posted Date: Wednesday, February 8, 2012
The American Land Title Association asked two software providers to review the second round of settlement disclosure forms to determine how much changing to the new forms would cost and how long it would take software providers to develop the necessary software. Read on to learn what they found out and what they shared with the Consumer Financial Protection Bureau.

 
Court to borrower: QWR doesn't cut it
Posted Date: Wednesday, February 8, 2012
A borrower sued her mortgage loan servicer alleging the servicer failed to respond to her qualified written request in violation of RESPA. The court found that her letter provided her loan information and referenced servicing, but did not qualify as a QWR. Read on to find out the facts of the case.

 
Don't let new QWR provisions sneak up on you
Posted Date: Wednesday, February 8, 2012
Recognizing a qualified written request and knowing what to do with it can be tricky for a mortgage loan servicer. The Dodd-Frank Act has made this process even more complex by shortening response time requirements, mandating changes to other laws that will affect servicing and setting up a new government agency to take control of consumer protection laws. Read on to find out more about changes to the QWR provisions and the Consumer Financial Protection Bureau's mortgage loan complaint process.

 
Hawaii introduces new bill affecting mortgage servicers
Posted Date: Sunday, February 5, 2012
The Hawaii State Legislature introduced a new bill that, if passed, will require some licensed mortgage servicers to also be licensed as a mortgage loan originator. Read on to find out more about this legislation.

 
Senators support court challenge to Cordray appointment
Posted Date: Sunday, February 5, 2012
A group of Republican Senators recently announced their intent to file an amicus brief to challenge President Barack Obama's recess appointments of Richard Cordray as director of the Consumer Financial Protection Bureau and three members of the National Labor Relations Board. Read on to find out what the Senators said in a recent letter.

 
Old Republic slammed with RESPA class action
Posted Date: Sunday, February 5, 2012
A class action lawsuit claiming violations of RESPA was recently filed against Old Republic and several of its subsidiaries. The suit alleges that Old Republic paid kickbacks to real estate agents in exchange for referrals of business. Read on to find out more about the lawsuit.

 
Sixth Circuit reviews settlement services language
Posted Date: Sunday, February 5, 2012
When two residential mortgage borrowers were charged fees for paying off their loan early, they sued their loan servicer, alleging that the fees violated RESPA. Read on to find out more about the case and what the court decided.

 
Class actions allege illegal captive reinsurance schemes
Posted Date: Wednesday, February 1, 2012
Two similar class action lawsuits were recently filed against a group of large lenders and mortgage insurers. The suits allege that the defendants set up captive reinsurance schemes that violated RESPA Section 8. Read on to find out more about the lawsuits and who is being sued.

 
Possible RESPA investigation underway
Posted Date: Wednesday, February 1, 2012
There have been some recent indications that the Consumer Financial Protection Bureau has opened an extensive investigation into possible RESPA violations. Though the bureau itself has not made its investigation public, recent reports suggest that the investigation is currently underway. It also appears that the CFPB isn't the only government agency snooping around.

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12 USC Section 2605 or Section 6 is titled Servicing of mortgage loans and administration of escrow accounts. It pertains to qualified written requests, notices of transfer of servicing and the administration of escrow accounts.
An arrangement that involves a person who is in a position to refer business as part of a real estate settlement service and who has an interest in a settlement services provider.

In the arrangement, the person, who has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in a settlement services provider, directly or indirectly refers business to that provider or influences a consumer to select that provider.
An arrangement that involves a person who is in a position to refer business as part of a real estate settlement service and who has an interest in a settlement services provider.

In the arrangement, the person, who has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in a settlement services provider, directly or indirectly refers business to that provider or influences a consumer to select that provider.
A mortgage disclosure that lists all estimated charges and fees associated with your loan. In addition to fees and charges, it will list your loan amount, mortgage rate, loan term and estimated monthly payment. Your escrows due at closing for insurance and taxes will also be outlined. Mortgage lenders are legally required to provide a GFE within three days of receiving your application.
A mortgage disclosure that lists all estimated charges and fees associated with your loan. In addition to fees and charges, it will list your loan amount, mortgage rate, loan term and estimated monthly payment. Your escrows due at closing for insurance and taxes will also be outlined. Mortgage lenders are legally required to provide a GFE within three days of receiving your application.
Under RESPA Section 2605(e)(1)(B), a qualified written request is a written correspondence that includes: 1) the name and account of the borrower, or has enough information to allow the servicer identify that information; and 2) a statement of the reasons for the belief of the borrower that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

A QWR cannot be written on a payment coupon or other payment medium supplied by the servicer.
Under RESPA Section 2605(e)(1)(B), a qualified written request is a written correspondence that includes: 1) the name and account of the borrower, or has enough information to allow the servicer identify that information; and 2) a statement of the reasons for the belief of the borrower that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

A QWR cannot be written on a payment coupon or other payment medium supplied by the servicer.
12 USC Section 2609 or Section 10 is titled Limitation on requirement of advance deposits in escrow accounts. It governs escrow accounts including notifications and statements to borrowers. Section 10 also sets out penalties for those who violate the section.
RESPA Section 3 provides that a thing of value includes any payment, advance, funds, loan, service or other consideration

Regulation X says thing of value includes: monies, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise royalties, credits representing monies that may be paid at a future date, the opportunity to participate in a money-making program, retained or increased earnings, increased equity in a parent or subsidiary entity, special bank deposits or accounts, special or unusual banking terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental payments based in whole or in part on the amount of business referred, trips and payment of another person’s expenses or reduction in credit against an existing obligation.
A form used by a settlement or closing agent itemizing all charges imposed on a borrower and seller in a real estate transaction. This form represents the closing transaction and provides each party with a complete list of incoming and outgoing funds. RESPA requires the HUD-1 to be used as the standard real estate settlement form in all transactions in the U.S. involving federally related mortgage loans.
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