InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
OCC Supports Independent Foreclosure Review Program with Public Service Adds
On January 4, the OCC announced that it placed print and radio public service advertisements to inform mortgage borrowers of the Independent Foreclosure Review program launched by the OCC in November 2011. The print feature explains that borrowers foreclosed upon between January 1, 2009 and December 31, 2010 are eligible to have their foreclosures independently reviewed to determine if the borrowers suffered financial injury as a result of any errors by certain large, federally regulated mortgage servicers. The ads will run in Spanish and English in 7,000 small newspapers and on 6,500 small radio stations.
Fannie Mae and Freddie Mac Announce Guaranty Fee Increase
On December 30, Fannie Mae and Freddie Mac announced a 10 basis point increase of the guaranty fee charged for all mortgages delivered for securitization on or after April 1, 2012. The credit fee on whole loans will also increase by the same amount. The increases are required by the Temporary Payroll Tax Cut Continuation Act enacted on December 23, 2011, and a subsequent directive from the Federal Housing Finance Agency. The Act uses the increase in fees to cover fiscal costs associated with a two-month extension of a payroll tax reduction.
Click here for a copy of the Freddie Mac announcement; click here for the Fannie Mae announcement.
Freddie Mac Revises Guide to Reflect Changes to Relief Refinance Mortgage Requirements
On January 5, Freddie Mac issued Bulletin 2012-1, which revises the Freddie Mac Relief Refinance Mortgage - Same Servicer program requirements for mortgages with loan-to-value (LTV) ratios less than or equal to 80 percent. Effective immediately, the minimum Indicator Score requirement for such loans is eliminated, provided the principal and interest payment does not increase by more than 20 percent. Freddie Mac also eliminated the maximum total LTV and Home Equity Line of Credit total LTV ratio requirement of 105 percent for Relief Refinance Mortgages - Same Servicer and Relief Refinance Mortgages - Open Access with LTV ratios of less than or equal to 80 percent.
SEC Announces Change to Settlement Policy in Securities Fraud Cases
On January 6, multiple media outlets reported that the Securities and Exchange Commission (SEC) announced a policy change related to settlement of securities fraud cases. Under the new policy, settling defendants no longer will be permitted to neither admit nor deny civil liability, while concurrently being convicted of, or admitting guilt with regard to, criminal charges. The policy change also will apply to civil cases in which a defendant has entered into a deferred or non-prosecution agreement in a parallel criminal matter. Under the traditional SEC approach, a defendant found guilty of criminal conduct still could settle civil claims brought by the SEC without admitting or denying those civil charges. Going forward, in cases with parallel criminal actions, the SEC will (i) remove the "neither admit nor deny" language from its settlement agreements, (ii) recite the fact and nature of the criminal conviction, and (iii) allow staff to determine whether to include in the settlement facts obtained from the criminal conviction. The SEC's current prohibition on defendants denying the SEC's allegations or making statements those allegations are without merit will be retained. The new policy will not alter the "neither admit nor deny" approach used when settling cases that involve neither a criminal conviction nor allegations of criminal law violations.
FFIEC Approves Revised Regulation Z Interagency Examination Procedures
In late December, The Federal Financial Institutions Examination Council's (FFIEC) Consumer Compliance Task Force approved revised interagency examination procedures for Regulation Z, Truth in Lending. The new procedures reflect changes to rules implementing the Credit Card Accountability Responsibility and Disclosure Act, as well as revisions required by the Dodd-Frank Act, including an increased threshold for exempt consumer credit transactions.
Michigan Enacts Several Foreclosure-Related Bills
In late December, Michigan enacted several bills related to certain of the state's foreclosure rules. HB 4542 and 4543 alter and extend through the end of 2012 Michigan's pre-foreclosure notice and mediation procedures. Among the changes is a shift from mandatory to optional filing of a one-time pre-foreclosure notice publication. The new laws also (i) make clear that a borrower's housing counselor may initiate a pre-foreclosure mediation on the borrower's behalf, (ii) extend to thirty days the time for a borrower or housing counselor to respond to a pre-foreclosure notice, and (iii) allow foreclosure by advertisement before the end of the 90-day stay period if a borrower fails to return a completed financial package within sixty days of the pre-foreclosure notice. Additionally, pre-foreclosure notices mailed on or after February 1, 2012 must (i) provide certain detailed contact information related to scheduling mediation, (ii) state the length of the redemption period, and (iii) include certain statements regarding responsibility for property damaged during the redemption period. Finally, HB 4544, among other things, reduces to six months the redemption period on non-agricultural properties over three acres when the amount claimed due exceeds two-thirds of the original mortgage balance.
New York Limits Exemptions for Mortgage Licensing and Registration Requirements
On January 4, the New York Department of Financial Services (DFS) published a final rule eliminating certain exemptions to the state's mortgage licensing and registration requirements. The rule narrows the definition of "exempt organization" by excluding nonbanking subsidiaries of bank holding companies, including, for example, subsidiaries acting as insurance, escrow, or title companies. Such subsidiaries now will be required to either register or become licensed with the DFS before soliciting, negotiating, placing, processing or making mortgage loans. Newly covered entities must file an application for licensure or registration by April 3, 2012 and complete such processes by July 2, 2012. The rule allows the DFS Superintendent to adjust the compliance dates.
Texas Finance Commission Adopts New Rules Regarding Mortgages and Consumer Credit
On December 30, the Finance Commission of Texas published two sets of rules impacting (i) mortgage lenders and servicers, (ii) credit access businesses, and (iii) debt management companies. The first set of rules reorganizes mortgage-related regulations to republish as Chapter 76 all regulations previously published as Chapter 79 of the Texas Administrative Code. This set of rules also establishes certain new regulations as Chapter 79 to implement SB 17 regarding residential mortgage loan servicers. Among the new rules are those to establish registration and bonding requirements for servicers.
The second set of rules includes two that implement HB 2594 and HB 2592, which require the Commission to establish licensing for credit access businesses that provide payday loans or title loans, and to design new consumer notice disclosure and notice requirements for such firms. These regulations, among other things, set up a process for provisional licenses and a transition period to allow businesses to continue operating while obtaining a full license. Another rule sets new requirements related to standard payoff statement forms for mortgage servicers responding to requests from title insurance companies. Finally, this set of rules revises credit counseling standards for debt management service providers to remove certain obsolete language.
For a copy of the rules as proposed, click here.
FTC Obtains Agreement from Payment Processor to Prohibit Use of New Payment Method
On January 5, the FTC announced a settlement with a payment processor and two of its principals that will prohibit the company from using a new payment method, through which accounts were debited without account-holder consent. The FTC alleged that the company actively promoted the method as a way to avoid scrutiny associated with other payment methods, and ignored red flags - such as payment-rejection rates exceeding 80 percent - that its merchant customers were seeking to defraud account-holders. As a result, according to the FTC, consumers incurred significant costs, including for overdraft fees. In addition to banning the use of this payment process, the settlement requires, among other things, that the company monitor client return rates and investigate rates exceeding 2.5 percent.
Final FCPA Enforcement Action for 2011 Provides Useful Benchmarks for Anti-corruption Compliance Program Reviews
On December 29, Deutsche Telecom and Magyar Telekom settled FCPA enforcement matters with the US DOJ and SEC for a combined sanction exceeding $95 million. Part of the resolution recited specified minimum compliance program elements that Magyar Telekom is required to institute. BuckleySandler's most recent FCPA Update describes the settlement fully and links to a list of these anti-corruption program elements, which are useful for counsel structuring a corruption risk assessment or compliance program review.