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CFPB To Host Forum On Access To Checking Accounts
On October 8, the CFPB will host a forum to discuss checking account screening policies and practices and how they will affect consumers. Specifically, the event will focus on how the screening system works and its potential to “improve the availability of information and products for consumers.” Director Cordray will speak at the event, in addition to consumer groups, federal and local government officials, and industry representatives.
Federal Housing Administration Posts Draft Servicing Section of its Single Family Housing Policy Handbook
On September 11, as part of its initiative to develop a single authoritative source for Federal Housing Administration (“FHA”) Single Family Policy, the FHA posted a draft of the servicing section of its Single Family Housing Policy Handbook. The draft servicing section covers post endorsement to the end of the mortgage insurance contract and provides specific guidance on the following: (i) general servicing requirements for FHA-insured mortgages; (ii) servicing of performing mortgages; (iii) default servicing, including HUD’s Loss Mitigation Program and conveyance standards; (iv) loss mitigation performance; and (v) special mortgage program servicing for active and inactive programs. On September 18, 2014, the FHA will host an industry briefing call to go over the organization and structure of the draft servicing section. The FHA is accepting comments on the draft servicing section through October 17, 2014.
FFIEC Announces Cybersecurity Preparedness Efforts
The Federal Financial Institutions Examination Council (FFIEC) recently announced a series of initiatives aimed at promoting cybersecurity preparedness for community financial institutions throughout the country. One such initiative is the creation of the Cybersecurity and Critical Infrastructure Working Group, which was launched in June 2013 in order to enhance communication among the FFIEC member agencies and build on existing efforts to strengthen the activities of other interagency and private sector groups. This announcement follows the FFIEC’s May 2013 press release that highlighted an emphasis on cybersecurity awareness. The FFIEC press release described a webinar that the FFIEC provided to 5,000 chief executive officers and senior managers from community financial institutions to raise awareness about the pervasiveness of cyber threats, and introduce new vulnerability and risk-mitigation assessments and regulatory self-assessments of supervisory policies and processes.
Attorney General Holder Comments on Financial Fraud and the DOJ's Concern for Action
On September 17, Attorney General Holder commented on the DOJ’s efforts to pursue criminal activity against corporate financial fraud. Specifically, Holder argued for Congress to modify the FIRREA whistleblower provision by increasing the $1.6 million cap on awards, possibly to False Claims Act levels, so that there is greater “individual cooperation.” Currently, under the False Claims Act, an individual whistleblower can receive up to 30 percent of a sanction. In addition to Holder’s focus on increasing the award whistleblowers are given, he referenced the significance the DOJ places on investigating the individual executives at financial firms for criminal activity, stating that the department “recognizes the inherent value of bringing enforcement actions against individuals, as opposed to simply the companies that employ them.” Holder identified the following three main reasons for its continued efforts in pursuing both the individuals and the companies: (i) accountability – the department is focused on identifying the “decision-makers at the company who ought to be held responsible” for corporate misconduct; (ii) fairness – the company should not solely endure the punishment when “the misconduct is the work of a known bad actor, or a handful of known bad actors”; and (iii) the deterrent effect – while an individual person found guilty of a fraud crime will likely go to prison, there are few things that discourage a company from performing illegal activity.
Congress Passes Nonbank Examination Bill
On September 18, the Senate passedby voice vote H.R. 5062, a bipartisan bill that will amend the Consumer Financial Protection Act with respect to the supervision of nondepository institutions to require the CFPB to coordinate its supervisory activities with state regulatory agencies that license, supervise, or examine the offering of consumer financial products or services. The bill declares that the sharing of information with such state entities does not waive any privilege claimed by nondepository institutions under federal or state law regarding such information as to any person or entity other than the CFPB or the state agency. The bill was passed by the U.S. Housein late July, and will take effect on the same day it is signed by President Obama and becomes law.
HUD Announces $35,000 Maternity Leave Fair Housing Agreement
On September 12, HUD announced a conciliation agreement with a Tennessee mortgage lender, pursuant to which the lender will pay $35,000 to resolve allegations that it violated the Fair Housing Act when it denied a mortgage loan to a couple because the lender did not consider the couple’s ability to make loan payments during the wife’s maternity leave despite the husband’s salary and the wife’s short-term disability insurance payments. Under the Fair Housing Act, it is unlawful to discriminate in the terms, conditions, or privileges associated with the sale of a dwelling on the basis of sex or familial status, including denying a mortgage loan or mortgage insurance because an applicant is pregnant or on maternity leave. In addition to requiring a payment be made to the couple, the company must adopt a national parental leave policy and receive annual fair housing and fair lending training. HUD has brought similar cases against other mortgage lenders in recent years.
Freddie Mac Updates Single-Family Seller/Servicer Guide
On September 15, Freddie Mac released a bulletin updating portions of Single-Family Seller/Servicer Guide (“Guide”) governing foreclosures and foreclosure alternatives. The updates include changes to the loan modification process that will allow mortgagees reimbursement for a broader scope of fees and costs incurred in any loan modification after March 1, 2015 and extending Trial Period Plan timelines for borrowers in bankruptcy who enter a plan on or after November 1, 2014. The bulletin also revises the amount of fees and costs recoverable in foreclosure for claims submitted to Freddie Mac on or after October 20, 2014 and implements a new web-based system for appealing state foreclosure timeline-related compensatory fees. The new appeals system will be made available on October 27, 2014 and will be mandatory as of January 1, 2015. Other changes to the Guide are more fully described in the complete bulletin.
Mortgage Lead Generator Will Pay $500,000 to Settle FTC Charges about False Ads
On September 12, a mortgage refinancing lead generator, Intermundo Media, LLC (doing business as Delta Prime Refinance), agreed to pay a $500,000 civil penalty, among other things, to settle the FTC’s allegations that the company produced and distributed false advertisements that misrepresented to consumers that they could refinance their mortgages at no cost. The FTC’s complaint alleged that Intermundo’s advertisements violated the Federal Trade Commission Act, the Mortgage Acts and Practices Advertising Rule, or “MAP” Rule, and Regulation N, and the Truth in Lending Act and Regulation Z. The advertisements, which were published on the company’s own website, as well as websites such as Google, Microsoft, AOL, and Yahoo!, allegedly exaggerated the amount that consumers could reduce their payments if they refinanced their mortgages, the amount that their refinanced APR would be, and how easy it would be to qualify for refinancing. Some of the advertisements falsely claimed that there were no fees associated with the refinancing, and other advertisements claimed that fixed interest rates were available, when the rates actually were variable. As part of the settlement, Intermundo will pay a $500,000 civil penalty and will be enjoined from committing further violations and from selling, disclosing or transferring the consumer data obtained through the Delta Prime Refinance lead generation service. The complaint was filed in the U.S. District Court for the District of Colorado, and the proposed consent decree, which contains the terms of the settlement, is subject to court approval.
HUD Plans To Work With The Mortgage Industry To Expand Availability of Home Loans.
On September 16, HUD Secretary Julian Castro spoke at the Bipartisan Policy Center 2014 Housing Summit on the principles his department intends to implement in order to improve the economy. Castro focused on housing reform and referenced the “frustration from lenders when it comes to their FHA business” that the department has seen in the wake of the financial crisis. Castro assured the Summit that his department intends to work with the lenders to better manage their risk, pointing out that “[s]ome believe it was too easy to get a home loan [a few years ago]. Today it’s too hard.” The department’s overhaul of its “Single Family Handbook” will clarify the compliance process, helping lenders “better identify loan defects and determine how serious those loan defects are.”
Senate Democrats Issue Confirmations To Floor
On September 17, the Senate confirmed by a voice vote Laura Werthheiner as Inspector General of FHFA. In addition, Bradford Raymond Hunter was confirmed as the Chief Financial Officer of HUD.