Tag Archives: United States Consumer Financial Protection Bureau

Clarification of Mortgage Rules Comes From CFPB

20 Sep

The Consumer Financial Protection Bureau (CFPB) this month finalized amendments and clarifications to its January 2013 mortgage rules to help the industry comply and to better protect consumers.

In January of this year the CFPB introduced the Ability-to-Repay rule, requiring lenders to make a “reasonable, good-faith determination” that prospective borrowers have the ability to repay their loans.


On June 24, 2013, the CFPB proposed several amendments and clarifications to the mortgage rules adopted in the final rule, which is intended to clarify interpretive issues and facilitate compliance. One of the Bureau’s modifications is to clarify what servicer actives are prohibited in the first 120 days of delinquency. This rule prohibits servicers from making the “first notice or filing” under state law during the first 120 days a borrower is delinquent.


Under the rule, servicers will be allowed to send certain early delinquency notices required under state law to borrowers that may provide beneficial information about legal aid, counseling or other resources.


Another rule the CFPB aims to clarify is the definition of a loan originator.  Under the CFPB’s new rules, persons classified as loan originators are required to meet qualification requirements and are also subject to certain restrictions on compensation practices.


The provisions of the CFPB’s loan originator compensation rules that have not yet gone into effect were scheduled to take effect on January 10, 2014.  The  CFPB has changed the effective date for certain provisions of the rule to January 1, 2014.

“Our mortgage rules were designed to eliminate irresponsible practices and foster a thriving, more sustainable marketplace,” said CFPB Director Richard Cordray. “Today’s rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers.”

CFPB Reports on Reverse Mortgages

29 Jun

As required by the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) has issued its report to Congress on Reverse Mortgages.  It was not far from what industry experts might have expected:  it highlighted the number of defaulted loans, talked about transparency and disclosure, and stressed the vulnerability of seniors as possible victims of scams.

The key findings reported that (1) reverse mortgages may be difficult to understand, (2)borrowers are using reverse mortgage products in different ways than they used to, starting at a younger age, (3) some product features are “risky”, (4) counseling should be improved, and (4) lastly that further regulation may be required as well as continuing supervision and enforcement of current regulation.

There was note of the increased use of reverse mortgages as a means to refinance traditional mortgages:  not surprising in the wake of the bad mortgages issued in the past decade.  Also the fact that a majority of borrowers tend to choose fixed rate products; again, not surprising considering their suspicion regarding variable rate products due to past experience.  The CFPB seems to believe that choosing the fixed rate product makes borrowers more susceptible to scams.

As a result, the CFPB will likely rewrite some important loan disclosure documents to better inform consumers.  They may also impose further regulation where they see necessary.

The report contains detailed information about the HECM product and its development, information about borrowers and their motivations for choosing a reverse mortgage, market and pricing, and current and proposed regulation.  You can see the entire report here:


It is worth taking a look at.

More from National Mortgage News on LO Comp

1 Jun

Will the CFPB Delay the LO Comp Rule Too?

by Paul Muolo MAY 31, 2012 12:01pm in National Mortgage News

The Consumer Financial Protection Bureau this week decided to delay the issuance of a final “qualified mortgage” rule until after the Nov. 6 elections. The scoop was first reported by National Mortgage News on its website Thursday. This new development has prompted many loan officers and nonbank lenders to speculate that maybe (just maybe) the CFPB will delay its compensation proposals until well into next year. Of course, final proposed regulations have not been written yet. And what’s been unveiled to this industry thus far has caused much anger and resentment toward the young agency. There is much confusion over the idea of ‘flat fee’ compensation, but a close reading of the rule suggests that LOs can continue to earn percentage-based commissions depending on how a loan is funded. But there is one piece of good news in the CFPB proposal: it opens the door to allowing mortgage brokers to eat unanticipated increases in third-party costs, passing that savings onto applicants and using it as a competitive advantage against bank LOs. Then again, the CFPB also has concerns about allowing such practices.

Proposed LO Compensation?

31 May

from National Mortgage News MAY 25, 2012 by Paul Muolo

CFPB to Industry: Here’s the Compensation Proposal. Tough Luck

Roughly 18 representatives of the residential lending industry sat around a table this past Wednesday at the Treasury Department in Washington with various members of the Consumer Financial Protection Bureau. According to those in attendance, the messages delivered by the CFPB were loud and clear: (*)Flat fee compensation is a done deal. Deal with it. (*)CFPB wants licensing and regulatory parity for banks and nonbanks alike. (*)If you have payments made to affiliates your life will be more complicated and difficult. (*)The CFPB doesn’t care that its mortgage compensation proposal will destroy the lending industry and hand the business over to the nation’s largest banks…

A few other notes about the meeting: no representatives from trade organizations were allowed to sit at the U-shaped table with the CFPB officials. Trade reps were relegated to the audience. Trade groups, however, were permitted to submit the names of five people who would sit at the table. CFPB chief Richard Cordray was not there in person and instead phoned it in and then departed after five or ten minutes. Another CFPB forum for large banks and wholesalers was being held down in North Carolina, Go figure…

Of course, all the sentiments you read in this blog might be exaggerated. Believe what you want. Talk to people who were there. Next week National Mortgage News will be writing more about the meeting. Maybe it will all turn out rosy in the end…

Have any more insights on the meeting? Drop me a line at: Paul.Muolo@SourceMedia.com

Oh, and one another thing: mortgage bankers are being told to get ready for CFPB examinations of their shops. Here’s the good news: the big banks get audited first for mortgage compliance. Then the agency will get around to everyone else. If your firm is listed on the NMLS you will face an audit at some time in your lifetime. If you have a phone, you have a lawyer…

As for who we can blame for this potential nightmare: the list is long but starts on Wall Street and shoots out to Orange County, Calif., where mortgage geniuses the likes of Roland Arnall and others plied their trade during the go-go years and said President (George W.) Bush forced them to make loans to poor people as part of the ‘Great Ownership Society.’ For the complete list read “Chain of Blame…”

If you want to fight the power (the CFPB/Dodd-Frank) check out this petition: http://www.change.org/petitions/petition-to-amend-the-dodd-frank-act

MORTGAGE DATA STUFF: There are $9.1 trillion of outstanding home mortgages (servicing rights) in the U.S. Don’t believe the other general media. If you need complete channel breakdowns, top wholesalers, correspondent, servicers and much more order the Quarterly Data Report and/or MortgageStats.com. Discounts are available to National Mortgage News advertisers. For more info, email: Deartra.Todd@SourceMedia.com.

MORTGAGE PEOPLE: Ken Ferrari recently left Carrington Mortgage Services where he served as vice president, Eastern division. One source said his job was eliminated as part of a restructuring.

READING MATTER: When will REITs start buying MSRs? See the Monday paper edition of National Mortgage News. Don’t subscribe? Call: (800)221-1809. A paid sub gets you all of our web content totally free…