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On July 24, the CFPB announced settlements with two mortgage lenders (here and here) for allegedly mailing consumers advertisements for Department of Veterans Affairs (VA) mortgages that allegedly contained misleading statements or lacked required disclosures. According to the Bureau, both lenders offer and provide VA guaranteed mortgage loans, and allegedly disseminated direct-mail advertisements to servicemembers and veterans in violation of the Mortgage Acts and Practices – Advertising Rule (MAP Rule) and Regulation Z. Among other things, the Bureau alleges the advertisements (i) stated credit terms that the lenders were not actually prepared to offer; (ii) described introductory interest rates as “fixed,” when in fact, the rates were adjustable; (iii) gave the false impression the lenders were affiliated with the government; and (iv) used the name of the consumer’s current lender in a misleading way. Both consent orders impose bans on future advertising misrepresentations similar to those identified by the Bureau and require the companies to use a compliance official to review mortgage advertisements for compliance with consumer protection laws. The Bureau imposes a civil penalty of $460,000 against one lender and a civil penalty of $645,000 against the other.
The Federal Housing Administration, the Department of Veterans Affairs, and the Rural Housing Service have jointly issued fact sheets for servicers and for consumers outlining certain requirements and obligations under CARES Act mortgage payment forbearance. The fact sheet for servicers provides guidance for assisting and educating borrowers and explains that loss mitigation options will vary based on the program under which the loan is insured or guaranteed. The fact sheet for consumers provides guidance on requesting forbearance and information on the forbearance program.
On April 29, the Department of Veterans Affairs announced a new reason for default which will assist the VA in identifying borrowers impacted by Covid-19. The VA replaced the reason “Energy/Environmental Cost” with “National Emergency Declaration” in the Electronic Default Notice (EDN). Servicers should use this new reason for default when reporting the EDN. Effective June 1, 2020, this new reason for default will be accepted prior to the 61st day of delinquency.
On April 27, the Department of Veterans Affairs revised Circular 26-20-10, Lending Guidance for Borrowers Affected by Covid-19. The revisions provide that the VA may delegate responsibility to an approved lender to close loans automatically, and that any loan closed under this authority is guaranteed from the date of loan closing. The circular otherwise provides guidance for VA home loan borrowers impacted by Covid-19 and creates temporary measures for loan originating, closing and guarantee. Among other measures, the circular provides that furloughs and other income curtailments as a result of Covid-19 should not be considered a break in employment for underwriting purposes.
On April 10, the Department of Veterans Affairs (VA) issued Circular 26-20-13, which rescinds Circular 26-20-11 and updates guidance and instructions for valuations and appraisals for all VA home loan purposes. In light of the Covid-19 pandemic, valuations may be constituted by an Exterior-Only appraisal with enhanced assignment conditions or in limited instances, a Desktop Appraisal. While broader use of exterior inspections is permitted, appraisals must still follow the same procedures of the VA appraisal process and are still required to meet Uniform Standards of Appraisal Practice and state requirements for delivering an appraisal that meets those qualifications. The circular provides specific guidance on, among other topics, exterior-only appraisals, Reconsideration of Values for certain transactions, the issuance of Memorandums of Values, termite inspections, and the VA’s expectations regarding communication between the Veteran, lender, appraiser, and other stakeholders. Additionally, the circular includes Exhibit A, which contains a modified appraisal report for Desktop Appraisals. The circular is effective for all loans where the application date was made on, or after, the date of the circular and until further notice or the rescission of the circular on April 1, 2021.
On May 8, the VA updated provisions of Circular 26-20-13 to provide further clarification on the effective date of the temporary guidance as well as additional valuation information. As stated, the temporary guidance is "effective for all loans closed on, or after March 13, 2020, and until further notice or the rescission of this Circular."
On April 9, the Department of Veterans Affairs issued Circular 26-20-12 regarding extending relief for VA loans pursuant to the Coronavirus Aid, Relief, and Economic Safety Act (CARES Act). The circular provides information regarding borrower eligibility, offering borrowers forbearance, the accrual of fees, penalties, and interest, credit reporting of a borrower’s account, exiting forbearance, and the foreclosure moratorium. The circular is effective until April 1, 2021, and preempts section 3 of Circular 26-20-7 (“Special Relief for Those Potentially Impacted by COVID-19”).
- Jeffrey P. Naimon to discuss "TRID implications of GSE loan level price adjustment announcement" at a Mortgage Bankers Association webinar
- Buckley Webcast: Going Negative … Legal issues to consider if the U.S. follows Europe into negative-interest territory
- APPROVED Webcast: Remote examinations and complaints — The “new normal”
- Sasha Leonhardt to discuss "Privacy laws clarified" at the National Settlement Services Summit (NS3)
- Amanda R. Lawrence to discuss "New privacy legislation: Preparing for a major source of class action and enforcement activity going forward" at the American Conference Institute Consumer Finance Class Actions, Litigation & Government Enforcement Actions
- Daniel P. Stipano to discuss "Making customers whole: Trends in remediation and restitution expectations" at the American Bar Association Business Law Virtual Section Meeting
- Sherry-Maria Safchuk and Lauren Frank to discuss "New CFPB interpretation on UDAAP" at a California Mortgage Bankers Association Mortgage Quality and Compliance Committee webinar
- Daniel P. Stipano to discuss "High standards: Best practices for banking marijuana-related businesses" at the ACAMS AML & Anti-Financial Crime Conference
- Daniel P. Stipano to discuss "Wait wait ... do tell me! Where the panelists answer to you" at the ACAMS AML & Anti-Financial Crime Conference
- Jonice Gray Tucker to discuss "The future of fair lending" at the Mortgage Bankers Association Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Regulatory Compliance Conference
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute