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News By Edition
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RESPA News Monthly Edition
RESPA News Monthly March 2014
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CFPB takes enforcement to a new level
Posted Date: Thursday, February 13, 2014
What we’ve learned over the past couple of years is that the Consumer Financial Protection Bureau (CFPB) is taking its enforcement role seriously. If it believes a company has violated consumer financial laws, it will take action. The penalties the bureau seeks are extensive and in some cases are so high they could put a company out of business. Enforcement actions under the CFPB are of a different breed than those that came from the U.S. Department of Housing and Urban Development (HUD) when it regulated RESPA. RESPA News spoke to Gary Cunningham, the former Deputy Assistant Secretary at HUD, about what is different now that the bureau has RESPA enforcement authority.
On its website, the CFPB provides access to its administrative adjudication docket, which lists some of the enforcement actions the bureau has taken since it opened its doors in 2011. In addition to those actions, the CFPB filed complaints in federal district courts in relation to captive reinsurance, RESPA Section 8 violations (specifically alleged sham affiliated business arrangements (AfBAs)), unfair, deceptive or abusive acts or practices, loan originator compensation, payday lending and mortgage servicing.
The bureau has extensive enforcement authority. It has the ability to file its own civil suits. It has a plethora of penalties available to it that include limiting the future actions of companies or individuals, disgorgement of funds and civil money penalties that could reach up to $1 million a day. Its powers are much broader than those that HUD has, and the bureau is using them to their fullest extent.
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Integrated mortgage disclosures rule: Proposals that didn’t make the cut
Posted Date: Monday, February 17, 2014
When the Consumer Financial Protection Bureau (CFPB) released its 1,110-page proposed RESPA/Truth in Lending Act (TILA) integrated mortgage disclosures rule in July 2012 there were concerns about the significant changes the bureau was suggesting. The CFPB released its final rule in November 2013, and a review of the regulation showed that some of the proposals that the industry was worried about did not make the cut.
During Part 1 of October Research’s mortgage disclosure forms training webinar series, Holly Spencer Bunting, a partner with K&L Gates LLP, told listeners about three proposals that were not adopted in the final RESPA/TILA integrated mortgage disclosure form rule
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Average charges: What you need to know – Part 2
Posted Date: Monday, February 10, 2014
In part one of this two-part series, RESPA News reviewed the history of average charges and the current law. In part two we discuss the average charge requirements contained in the Consumer Financial Protection Bureau’s (CFPB) final integrated RESPA/Truth in Lending Act (TILA) mortgage disclosure rule and state law concerns.
CFPB final rule
When the CFPB released its final RESPA/TILA integrated mortgage disclosure rule in November 2013, it retained the U.S. Department of Housing and Urban Development’s (HUD) average charge exception.
The bureau said it does not expect lenders or settlement service providers to engage in a cumbersome statistical analysis when determining whether the transaction class is based on an appropriate geographic area and loan type. However, the agency did not believe it to be unreasonably burdensome for lenders or providers to assess whether a geographic area or loan type are defined using a subgroup with distinct cost characteristics.
“The average cost pricing rules are not requirements, but are intended to provide creditors flexibility from the general requirement that the actual amount imposed on the consumer may not exceed the amount received by the settlement service provider,” the bureau said.
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Mortgage servicing issues highlighted in CFPB report
Posted Date: Thursday, February 6, 2014
The Consumer Financial Protection Bureau issued a report highlighting problems in the mortgage servicing market uncovered through the agency’s supervision program in 2013. The report also notes that, between July and October 2013, consumers received $2.6 million as a result of overall non-public supervisory activities at the banks and nonbanks the CFPB oversees.
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Bureau wants to change information reported under HMDA
Posted Date: Monday, February 10, 2014
The Consumer Financial Protection Bureau said on Feb. 7 that it is taking steps to improve information reported about the residential mortgage market to help better understand borrowers’ access to credit. As a first step in the rulemaking process, the CFPB is convening a panel of small businesses to provide feedback on potential changes to mortgage information reported under the Home Mortgage Disclosure Act. The bureau also unveiled an online tool that makes it easier to navigate the publicly available HMDA data.
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Trade associations back bill to restructure CFPB
Posted Date: Thursday, February 13, 2014
The American Bankers Association and the National Association of Federal Credit Unions wrote letters to the U.S. House of Representatives touting the benefits of HR 3193, known as the Consumer Financial Freedom and Washington Accountability Act. The bill was introduced in the House in September 2013. It contains the text of several bills that were passed out of the Financial Services Committee in November 2013 and would replace the director position with a five-member commission.
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Industry groups urge CFPB to hold off on closing changes
Posted Date: Thursday, February 13, 2014
The CFPB requested public comment regarding improvements to the closing process. The comment period ended on Feb. 7, and the bureau received approximately 466 comments containing a variety of suggestions about how closing can be improved. Some trade associations, however, are concerned with implementing changes to the closing process so soon after the CFPB’s RESPA-TILA final integrated disclosure rule was released.
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Groups urge Congress to oppose changes to the CFPB
Posted Date: Wednesday, February 19, 2014
In a Feb. 11 letter to the U.S. House of Representatives, Americans for Financial Reform (AFR), along with the group’s partners and other consumer groups, urged Congress to oppose HR 3193, a bill that calls for significant changes to the Consumer Financial Protection Bureau (CFPB), including eliminating the director position in favor of a bi-partisan commission to lead the agency.
Along with changing the leadership of the CFPB, HR 3193, named the “Consumer Financial Freedom and Washington Accountability Act,” seeks to subject the bureau to the appropriations process, allow for an easier procedure for setting aside the agency’s regulations and restrict the collection of consumer information.
Trade associations such as the American Bankers Association and the National Association of Federal Credit Unions have asked Congressional representatives to support the bill, looking to for increased transparency and accountability.
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Weiner Brodsky Kider offers CFPB examination readiness program
Posted Date: Wednesday, February 19, 2014
Weiner Brodsky Kider PC, a Washington, D.C.-based law firm focused on compliance, regulatory, transactional and litigation legal services for financial services companies, announced on Feb. 18 that it has selected Clayton Holdings LLC to assist in its program to help mortgage originators and servicers prepare for Consumer Financial Protection Bureau examinations. Clayton is a provider of loan due diligence and consulting services to the mortgage industry.
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Captive reinsurance case against M&T continues despite request for stay
Posted Date: Thursday, January 23, 2014
In a class action suit against M&T Bank Corp., a group of plaintiffs alleged the bank used a captive reinsurance scheme to violate RESPA. M&T Bank filed a motion with the court to stay the action until a case with similar facts could be decided by the 3rd U.S. Circuit Court of Appeals. The district court denied the motion, ordering the parties to continue with discovery.
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RESPA kickback case against Creig Northrop Team survives motion to dismiss
Posted Date: Monday, February 10, 2014
In a class action RESPA kickback case that contains facts similar to First American v. Edwards, a district court has certified a class and denied some of the defendants’ motions to dismiss, allowing the case to continue to trial. Read on to find out about the allegations in the case and how it relates to the Edwards case.
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Plaintiffs allege RESPA violation, no mortgage
Posted Date: Thursday, January 23, 2014
Two plaintiffs filed a lawsuit against a group of defendants, claiming that their home was foreclosed upon even though they did not have a mortgage. They alleged violations of RESPA and the Truth in Lending Act. The court determined, however, that there could be no violation of either of those statutes because the plaintiffs did not have a mortgage.
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House committee wants to know how the CFPB has impacted your business
Posted Date: Thursday, January 30, 2014
The House Financial Services Committee says it wants to hold the Consumer Financial Protection Bureau accountable, so it’s asking those who have been impacted by the bureau’s work to come forward and tell their story. The committee is offering a web form individuals can fill out, explaining how the bureau has impacted them as consumers or as business owners.
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PHH Corp. hit with enforcement action for illegal kickbacks
Posted Date: Thursday, January 30, 2014
The Consumer Financial Protection Bureau initiated an administrative proceeding against PHH Corp. and its affiliates, alleging PHH harmed consumers through a mortgage insurance kickback scheme that started as early as 1995. The CFPB is seeking a civil fine, a permanent injunction to prevent future violations and victim restitution. This investigation came to light in January 2012 when PHH Corp. made a Securities and Exchange Commission filing indicating that the company was under investigation by the CFPB regarding their captive mortgage reinsurance practices. PHH is also being sued in federal court for alleged RESPA violations. The company said it complied with RESPA and is disappointed with the enforcement action.
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Wells Fargo backs ALTA Best Practices
Posted Date: Tuesday, March 11, 2014
Wells Fargo announced it supports the American Land Title Association’s Best Practices. The lender said they are guidelines for sound business practices that should ideally already be in place for businesses that provide title and closing services. Read on for the details.
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Attorney admits to role in mortgage fraud scheme
Posted Date: Monday, February 24, 2014
The U.S. Attorney for the District of Connecticut announced that Christopher Brecciano of Stamford waived his right to indictment and pleaded guilty in Bridgeport federal court to conspiring to defraud financial institutions through an extensive mortgage fraud scheme that involved dozens of properties in Fairfield County.
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