Dodd-Frank News Center

GAO issues report on mortgage reform regulations

This story appeared in Bank Digest.

The Government Accountability Office has issued a report entitled "Mortgage Reforms: Actions Needed to Help Assess Effects of New Regulations." Mortgage reform provisions (QM and QRM) were included in the Dodd-Frank Act, and federal agencies have issued regulations relating to these provisions, some of which are yet to take effect. The GAO was asked to review possible effects of these regulations.

The report (GAO-15-185) discusses views on the expected effects of the QM and QRM regulations and examines the extent of agency planning for reviewing the regulations' effects, among its objectives. In the report, the GAO recommends that the Consumer Financial Protection Bureau, the Department of Housing and Urban Development, and the six agencies responsible for the QRM regulations should complete plans to review the QM and QRM regulations, including identifying specific metrics, baselines, and analytical methods.

The GAO said that the CFPB, HUD, and the Federal Deposit Insurance Corporation concurred or agreed with the recommendations.

Treasury and HUD announce enhancements to housing program

This story appeared in Bank Digest.

The Treasury Department and the U.S. Department of Housing and Urban Development (HUD) have announced enhancements to programs under Making Home Affordable (MHA) to better assist struggling homeowners and communities still recovering from the effects of the financial crisis. The enhancements are designed to motivate homeowners in MHA to continue making their mortgage payments on time, strengthen the safety net for those facing continuing financial hardships, and help homeowners in MHA programs build equity in their homes.

"While the housing sector has strengthened in recent years, there are still many homeowners struggling to make their mortgage payments," said Secretary of the Treasury Jacob J. Lew. "The changes we are announcing today offer meaningful incentives for borrowers to stay current in their modifications, increase their opportunity to build equity in their homes, and provide vital safety nets for those facing greater financial strains."

Federal regulators and state attorneys general reach nearly $1 billion agreement with SunTrust

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau, Department of Justice, Department of Housing and Urban Development, and attorneys general in 49 states and the District of Columbia have filed a proposed federal court order requiring SunTrust Mortgage, Inc., to provide $500 million in loss-mitigation relief to underwater borrowers. The order also requires SunTrust to pay $40 million to approximately 48,000 consumers who lost their homes to foreclosure and $10 million to the federal government. The order addresses systemic mortgage servicing misconduct, including robo-signing and illegal foreclosure practices. SunTrust must also pay a $418 million penalty in a parallel mortgage lending filing announced by the DOJ.

"Deceptive and illegal mortgage servicing practices have pushed families into foreclosure and devastated communities across the nation," said CFPB Director Richard Cordray. "Today's action will help homeowners and consumers harmed by SunTrust's unlawful foreclosure practices. The Consumer Bureau will continue to investigate mortgage servicers that mistreat consumers, and we will not hesitate to take action against any company that violates our new servicing rules."

• Press release
• Proposed consent order
• Complaint
• DOJ press release

HUD regulations transferred to Consumer Financial Protection Bureau

This story appeared in Bank Digest.

Under title X of the Dodd-Frank Act, the Department of Housing and Urban Development has transferred its regulations to the Consumer Financial Protection Bureau. The regulations were previously authorized under the Real Estate Settlement Procedures Act of 1974, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, and the Interstate Land Sales Full Disclosure Act. Accordingly, HUD's regulations for these statutes are no longer operative.

Comments sought on proposal to implement credit risk retention of securitized assets

This story appeared in Bank Digest.

The Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation, Securities and Exchange Commission, Federal Housing Finance Agency, and Department of Housing and Urban Development are seeking public input on a proposal that would implement the credit risk retention requirements of section 15G of the Securities Exchange Act, as added by section 941 of the Dodd-Frank Act. The proposal would require sponsors of asset-backed securities to retain at least 5 percent of the credit risk of the assets underlying the securities and would not permit sponsors to transfer or hedge that credit risk. This proposal replaces an earlier proposal published by the agencies on April 29, 2011.

Brown Urges Protection of Ohioans’ Pensions in Robo-Signing Settlement

This story appeared in Bank Digest.

Following the agreement with the nation’s largest banks in response to last year’s robo-signing allegations, Sen. Sherrod Brown, D-Ohio, Chairman of the Senate Subcommittee on Financial Institutions and Consumer Protection, has joined Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee, in urging the administration to “hold banks financially accountable for illegal practices and to protect the pensions of Ohio’s workers.” The federal and multistate settlement would permit servicers to pay the proposed penalty by writing down the value of mortgage-backed securities (MBS) owned by investors, including Ohio pension funds, Brown noted, without requiring servicers to reduce principal on the mortgages and second liens that they own. In a bipartisan letter to Secretary Shaun Donovan of the Department of Housing and Urban Development, Brown argued that “Ohio’s pension funds, retirement systems and universities, all heavily invested in MBS, should have a seat at the table during settlement talks.” Brown said, “Middle-class Ohioans did not cause the foreclosure crisis, and this settlement should not be paid using their money.”

Foreclosure Settlement May Hurt Americans' Retirement Savings: Corker

This story appeared in Bank Digest.

In a letter to Housing and Urban Development Secretary Shaun Donovan, Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee, has requested information regarding how the $26 billion settlement with banks over improper foreclosure practices would impact Americans' retirement savings. Earlier this month, the nation's five largest banks agreed to execute $20 billion in mortgage relief and provide $5 billion in payments to states as restitution for failing to comply with filing regulations when foreclosing on homeowners who were not making their mortgage payments. Investors have warned the mortgage relief will be borne in part by pension and 401k plans invested in mortgage securities that will lose value when banks reduce principal on the underlying home loans.

Obama Urges Congress to Act on Refinancing Proposal

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

President Barack Obama is urging Congress to act on a proposal that would allow homeowners to refinance at historically low rates, with the cost of the $5-10 billion plan fully offset by using a portion of the administration’s proposed fee on the largest financial institutions.

Speaking Feb. 1, 2012, Obama elaborated on the plan he first announced in his State of the Union address last month. The broad-based refinancing plan is expected to save homeowners who are current on their payments an average of $3,000 per month, giving borrowers the chance to rebuild equity in their homes.

Comment Period Extended on Risk Retention Proposed Rulemaking

This story appeared in Bank Digest.

The Fed, Federal Deposit Insurance Corp., Federal Housing Finance Agency, Securities and Exchange Commission, Office of the Comptroller of the Currency and Department of Housing and Urban Development have extended the comment period on a proposed rulemaking to implement the credit risk retention requirements of the Dodd-Frank Act. The comment period was extended to Aug. 1, 2011, to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by June 10, 2011. The proposed rule generally would require sponsors of asset-backed securities to retain at least 5 percent of the credit risk of the assets underlying the securities and would not permit sponsors to transfer or hedge that credit risk.

Cummings Requests Examination of Allegations of Waste in Housing Program

This story appeared in Bank Digest.

Oversight and Government Reform Committee Ranking Member Elijah E. Cummings, D-Md., has sent a letter to Committee Chairman Darrell Issa, R-Calif., requesting an examination of allegations that hundreds of millions of dollars in taxpayer funds may have been squandered in the nation's largest low-income housing construction program, according to the first of a series of reports by the Washington Post. “At a time when so many Americans are struggling to stay in their homes, it would be deeply upsetting if these allegations proved true,” said Cummings. “Our Committee should help ensure that contractors actually do the work they receive taxpayer funds for, and that local and federal agencies properly oversee funds they distribute. We should also correct any deficiencies in the law that prevent agencies from adequately monitoring projects and recouping taxpayer funds if necessary.”