Dodd-Frank News Center

CFPB and FHFA announce Borrower Protection Program

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau and Federal Housing Finance Agency have announced the Borrower Protection Program, a new joint initiative that enables the CFPB and FHFA to share servicing information to protect borrowers during the coronavirus national emergency. Under the program, the CFPB will make complaint information and analytical tools available to the FHFA via a secure electronic interface, and the FHFA will make available to the Bureau information about forbearances, modifications, and other loss mitigation initiatives undertaken by Fannie Mae and Freddie Mac.

Democrats urge CFPB to continue to collect all HMDA data points

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) and several other committee Democrats have sent a letter to Consumer Financial Protection Bureau Director Kathleen Kraninger requesting that the Bureau continue to collect all Home Mortgage Disclosure Act data points added in the CFPB's 2015 final rule.

According to the senators, "Since HMDA was enacted in 1975, Congress and regulators have repeatedly updated the HMDA statute and regulation to ensure that the data helps fulfill HMDA's stated purposes of determining whether financial institutions are serving the housing needs of their communities; assisting in distributing public-sector investment; and identifying possible discriminatory lending and enforcing antidiscrimination laws."

They went on to say, "We are deeply troubled that the CFPB announced that it would reopen the 2015 HMDA rule before the new data points had even been collected. We urge you to follow the intent of Congress and maintain collection of all data points added by the 2015 final rule."

CFPB issues reference chart for reporting 2019 HMDA data

This story appeared in Bank Digest.

The CFPB has issued a reference chart regarding data required to be collected in 2019 under the Home Mortgage Disclosure Act, which is implemented by Regulation C. Specifically, the chart is intended to be used as a reference tool for data points required to be collected, recorded, and reported under Reg. C, as amended by the HMDA Rules issued on Oct. 15, 2015, and Aug. 24, 2017, and by Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act, as implemented and clarified by the interpretive and procedural rule issued on Aug. 31, 2018.

CFPB substantially strengthens mortgage borrower consumer protections

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has adopted a final rule that provides new measures intended to ensure that homeowners and struggling borrowers are treated fairly by mortgage servicers. The final rule is the result of a November 2014 proposed rulemaking that addressed nine major mortgage-related topics.

The new protections provided to consumers include requiring servicers to provide foreclosure protections for borrowers who have brought their loans current at any time since submitting the prior complete loss mitigation application. Other provisions include expanding consumer protections to surviving family members and other homeowners by establishing a broad definition of "successor in interest" and providing borrowers in bankruptcy periodic statements with specific information tailored for bankruptcy, as well as a modified written early intervention notice to let those borrowers know about loss mitigation options.

California man sentenced to prison over mortgage loan modification scheme

This story appeared in Bank Digest.

Aria Maleki, of Santa Ana, Calif., has been sentenced to nine years and four months in federal prison, followed by three years of supervised release, for heading a mortgage loan modification scheme that defrauded more than 1,000 struggling homeowners across the United States, SIGTARP has reported.

According to SIGTARP's release, court documents and statements made in court showed that Maleki and others jointly operated a series of California-based companies that falsely purported to provide home mortgage loan modifications and other consumer debt relief services to numerous homeowners in exchange for upfront fees, but few homeowners received any mortgage loan modifications through these companies, and few received refunds of their fees.

FHFA Refinance Report filed

This story appeared in Bank Digest.

The Federal Housing Finance Agency has released its May Refinance Report, which shows that Fannie Mae and Freddie Mac loans refinanced through the Home Affordable Refinance Program accounted for 4 percent of all refinancings in May. According to the FHFA, borrowers completed 6,091 refinances in May through HARP, bringing total refinances from the inception of the program to 3,412,982.

In addition, total refinance volume increased in May 2016, and mortgage rates decreased, with the average interest rate on a 30‐year fixed rate mortgage falling to 3.60 percent from a 3.61 percent rate in April.

ATR/QM Small Entity Compliance Guide updated

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has updated its Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule to incorporate clarifications and amendments to the rules issued by the CFPB on May 29, 2013, and July 10, 2013. Among other things, the updated guide discusses: the types of creditors and loan programs that are exempt from the ability-to-repay requirements; how debt and income will be determined under appendix Q for the purpose of meeting the 43 percent debt-to-income requirement under the general QM provision; and the factors that make a QM loan "higher-priced." 

Four sentenced to prison for California-based mortgage modification scheme

This story appeared in Bank Digest.

The Office of the Special Inspector General for the Troubled Asset Relief Program announced that on July 29, four California men were sentenced for defrauding hundreds of victims in a real estate scam that included fraudulently collecting upfront fees for loan modification services and sending fake letters with mortgage servicer logos offering home loan modification assistance. Victim losses in the case are estimated to be in excess of $130,000.

Ability to Repay Rule Finalized

By John M. Pachkowski, J.D., Editor, CCH Federal Banking Law Reporter, Coordinating Editor, Bank Digest; Author, Anti-Money Laundering and Bank Secrecy: Compliance and the USA PATRIOT Act; co-Author CCH Financial Privacy Law Guide and Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis

The Consumer Financial Protection Bureau has announced the release of a final rule to implement the provisions of the Dodd-Frank Act requiring mortgage lenders to consider consumers’ ability to repay home loans before extending them credit. The rule will take effect on Jan. 10, 2014.

With adoption of the final rule, the CFPB noted that “Lenders can no longer offer no-doc, low-doc loans, otherwise known as ‘Alt-A’ loans, where some lenders made quick sales by not requiring documentation, then offloaded these risky mortgages by selling them to investors.”

The CFPB’s final rule is similar to a 2008 final rule issued by the Federal Reserve Board which prohibited creditors from making “higher-price mortgage loans” without assessing consumers’ ability to repay the loans; however, the CFPB final rule covers the entire mortgage market.

Significant Mortgage Loan Origination Rule Changes Proposed

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide, Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

The Consumer Financial Protection Bureau has proposed changes to the rules governing mortgage loan origination practices that would affect the terms that can be offered to consumers and the ways in which loan originators can be compensated. Among the provisions in the proposed amendments to Reg. Z—Truth in Lending (12 CFR 1026) is a requirement that loan originators make available a no-point, no-fee loan option. The rule also would adopt uniform qualification and fitness standards for loan originators.

In announcing the proposed rulemaking, CFPB Director Richard Cordray noted, “Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees. We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them.”