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RESPA News Monthly <br> January 2012

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RESPA News Monthly
January 2012
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This month, the parties in the case of Freeman v. Quicken Loans Inc. filed their merit briefs, explaining their arguments to the Court. A group of industry associations also filed amicus briefs in the case. Also this month, President Obama created a controversy when he appointed Richard Cordray as the Consumer Financial Protection Bureau director during a short Senate recess. RESPA News reports on a CFPB investigation of a possible RESPA violation this month. We also took a look at the bureau’s new examination procedures for lenders and brokers. In addition, RESPA News reviews multiple RESPA-related lawsuits, and we provide you with informative RESPA tips. Be sure to check out the January 2012 issue for these articles and more. 



 
Poll respondents vote on Cordray appointment
Posted Date: Wednesday, February 1, 2012
RESPA News ran a poll in January asking readers if they thought President Barack Obama's appointment of Richard Cordray as the first Consumer Financial Protection Bureau director was unconstitutional. Read on to find out what voters decided.

 
Industry associations request interactive rulemaking process
Posted Date: Sunday, January 29, 2012
A group of industry associations asked the Consumer Financial Protection Bureau to use an interactive process leading up to a proposed rulemaking regarding the new mortgage disclosure forms. The groups said this specific process will provide better guidance and allow for more feedback from the public. Read on to find out exactly what the groups are requesting.

 
October Research launches industry awards program - Free Article
Posted Date: Wednesday, January 25, 2012
October Research, publisher of The Title Report, The Legal Description, Valuation Review, RESPA News and Dodd Frank Update, announced that it is launching an awards program to honor men and women in the mortgage and settlement services industries for exemplary accomplishment in the areas of leadership, innovation and philanthropy.

 
Cordray says small business panels are coming
Posted Date: Wednesday, January 25, 2012
Richard Cordray told a House Subcommittee that a proposed rule is coming for the mortgage disclosure forms the Consumer Financial Protection Bureau is drafting. He also assured the subcommittee that the bureau would meet with small business panels to review the forms. Read on to find out what else he told the subcommittee about the CFPB's other accomplishments and goals.

 
Borrowers use RESPA in breach of contract complaint
Posted Date: Wednesday, January 25, 2012
Borrowers filed a lawsuit against their lender alleging a breach of contract. As part of their claim, the borrowers argued that the lender violated RESPA. Read on to find out the borrowers' arguments and the court's decision.

 
CFPB releases new prototypes, sends confusing message
Posted Date: Wednesday, January 25, 2012
Amidst some confusing language, the Consumer Financial Protection Bureau released its newest settlement disclosure prototypes. The prototypes combine the HUD-1 Settlement Statement and final Truth in Lending disclosure in an attempt to provide consumers with a clear and concise settlement disclosure form.

 
Borrowers say lender tricked them
Posted Date: Sunday, January 22, 2012
Residential mortgage loan borrowers claimed that their lender and servicers violated RESPA by charging an unlawful yield spread premium and failing to notify them when their loan servicer changed. Read on to find out what the defendants said and how the court decided.

 
RESPA suit turns on specific language
Posted Date: Sunday, January 22, 2012
Two borrowers sued their mortgage loan servicer for violations of RESPA. In their complaint, the borrowers failed to plead that their loan was a federally related mortgage loan. Read on to find out what the court had to say about the borrowers' mistake.

 
NAMB to Obama: Leave mortgage brokers alone
Posted Date: Sunday, January 22, 2012
The National Association of Mortgage Brokers recently sent a letter to President Barack Obama requesting that he stop singling out mortgage brokers, explaining that mortgage brokers were not the cause of the economic downturn.

 
Are you prepared for the new mortgage disclosure forms?
Posted Date: Sunday, January 22, 2012
If you have any connection with mortgage lending then you know that the Dodd-Frank Wall Street Reform and Consumer Protection Act required the Consumer Financial Protection Bureau to draft new mortgage disclosures. The bureau has the responsibility of combining RESPA's Good Faith Estimate and the Truth in Lending initial disclosures. Now, with a director in place at the CFPB, it's possible we will be seeing new mortgage disclosure forms this year. Are you prepared for the changes ahead? Read on to find out what two industry experts think about the changes that could be coming later this year.

 
Summit keynotes to explore state of housing, secret to success - Free Article
Posted Date: Sunday, January 22, 2012
October Research is pleased to announce it has selected two very prominent figures to deliver the keynote addresses at the 2012 National Settlement Services and Compliance Summit, to be held in Cleveland, Ohio, June 12-13 at the downtown Cleveland Marriott at Key Center.

 
Closer's duties complicated by legal difficulties of 2011 - Free Article
Posted Date: Wednesday, January 18, 2012
The closers' duties are truly a balancing act, as they are always walking that fine line to keep the lender, underwriter and borrower at ease through various points of the transaction. And many factors can play into how a closer fulfills its obligations. Read on for information about important title agent requirements and how to better fulfill your obligations as a closer.

 
Large RESPA class action survives motion to dismiss
Posted Date: Wednesday, January 18, 2012
A federal district court in Georgia recently determined that a large class action RESPA suit should survive the group of defendants' motion to dismiss. Marx Sterbcow, the managing attorney of the Sterbcow Law Group and an attorney on the case, spoke to RESPA News about the court's decision. Read on to find out more about the case and what the court had to say about affiliated business arrangements.

 
Legislators try to limit Cordray's power
Posted Date: Wednesday, January 18, 2012
A bill was recently introduced in the U.S. House of Representatives that seeks to limit the power of the individuals put in place during President Barack Obama's recent recess appointments.

 
CFPB publishes examination procedures for lenders, brokers
Posted Date: Sunday, January 15, 2012
The Consumer Financial Protection Bureau recently released its mortgage origination examination procedures. Now that the CFPB has a director in place, it can begin supervising nonbanks involved in the mortgage industry. Read on to find out more about the examination procedures.

 
Industry associations file briefs with the Supreme Court
Posted Date: Sunday, January 15, 2012
A group of industry associations recently filed a joint amicus brief with the U.S. Supreme Court in the case of Freeman v. Quicken Loans. On the same day, the National Association of Realtors also filed a brief. Read on to find out which way the associations think the Court should decide and what Ken Trepeta, director of real estate services at NAR had to say about the case.

 
Court identifies 'worrisome' RESPA issue
Posted Date: Sunday, January 15, 2012
While deciding a RESPA lawsuit, a federal district court judge said he noticed a relationship between RESPA Section 6 and another statute that he found worrisome. Read on to find out the facts of the case and what the judge found troubling.

 
Borrower says lender failed to disclose loan application
Posted Date: Sunday, January 15, 2012
A mortgage loan borrower alleged that her lender violated RESPA by failing to provide her with an initial or final loan application. The defendants argued that RESPA does not require disclosures with regard to loan applications. Read on to find out more about the case and what the court decided.

 
CFPB investigates possible RESPA violation
Posted Date: Wednesday, January 11, 2012
There has been some question in the industry as to whether the Consumer Financial Protection Bureau planned to make RESPA enforcement one of its current top priorities. After a recent Securities and Exchange Commission filing, the one thing the industry knows for sure is that the bureau has already opened at least one RESPA investigation this year. Read on to find out who the CFPB is investigating and why.

 
DOJ: President's recess appointments constitutional
Posted Date: Wednesday, January 11, 2012

In a recent opinion, the U.S. Department of Justice affirmed that it believes President Barack Obama's move to make four recess appointments was constitutional. Read on to find out what the DOJ had to say and to view its full opinion.


 
House Republicans: Advice and consent of Senate erased from appointment clause
Posted Date: Wednesday, January 11, 2012
In a scathing letter to President Barack Obama, a group of 96 U.S. House Republicans admonished the president for his decision to make four recess appointments during the first week in January. The letter said the president's "attempt to override legislative power effectively erases the advice and consent of the Senate from the appointment's clause."

 
Borrowers should discover Section 8 violations within a year of closing
Posted Date: Wednesday, January 11, 2012
A U.S. District Court in California determined that two mortgage loan borrower's RESPA Section 8 claims failed because they could not prove that they had a legitimate reason for not discovering the alleged violations before the one year statute of limitations was up. Read on to find out more about the case.

 
Does the Cordray appointment mean final disclosure forms are on the way?
Posted Date: Sunday, January 8, 2012
Many have called into question President Barack Obama's choice to appoint Richard Cordray as the first director of the Consumer Financial Protection Bureau while the Senate was in recess. Even as the constitutionality of the appointment hangs in the balance, the bureau is continuing to work on RESPA regulation and the new RESPA/Truth in Lending mortgage disclosure forms. Read on to find out what industry members are saying about Cordray's appointment and the new disclosures.

 
Constitutionality of Cordray appointment questioned
Posted Date: Sunday, January 8, 2012
Some are questioning whether President Barack Obama's appointment of Richard Cordray as the first director of the Consumer Financial Protection Bureau was constitutional and whether the CFPB is entitled to its full powers. Read on to find out why the president's actions are in question and could lead to legal trouble for the bureau.

 
Borrower sues lender for transferring mortgage without notice
Posted Date: Sunday, January 8, 2012
A residential mortgage loan borrower claimed his lender committed multiple violations of RESPA including failing to respond to his qualified written request and failing to send him notification of the transfer of his mortgage note. Read on for the facts of the case and the court's decision.

 
CFPB begins overseeing mortgage companies
Posted Date: Sunday, January 8, 2012
With a director currently in place, the Consumer Financial Protection Bureau will now begin overseeing certain nonbank businesses, regardless of size. Those the bureau will now supervise include mortgage companies including originators, brokers and servicers.

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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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