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Dodd Frank Update Monthly Edition
Dodd Frank Update June 2020
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Servicing industry calm, but waiting for the breach
Posted Date: Tuesday, May 26, 2020
The last time Dodd Frank Update spoke with Ed Delgado was two months ago, in the middle of March, just as the country and industry began to understand the effect the pandemic would have on everyone.
Now, with 4 million borrowers in forbearance, and the unemployment rate near 15 percent, we caught up again with the President and CEO of Five Star Global, LLC, and talked about the work which the COVID-19 Mortgage Industry Task Force has done to prepare for the onslaught.
“I think we’re facing the calm before the storm,” Delgado said. Read on for more from our interview.
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OCC office brings lenders, fintech together on PPP challenges
Posted Date: Tuesday, May 19, 2020
Looking to increase opportunities for banks, the Office of the Comptroller of the Currency’s (OCC) Office of Innovation recently conducted a series of listening sessions about technology and other challenges banks identified in the launch of the Paycheck Protection Program (PPP).
The OCC said the discussions between banks and fintech companies included potential solutions to assist banks in the PPP challenges. Nearly 200 attended the calls.
Read on for details from two of the sessions, regarding back-end processes and payroll determinations.
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Borrowers, lenders get first look at PPP forgiveness process
Posted Date: Tuesday, May 19, 2020
More than 40 days after the launch of the Paycheck Protection Program (PPP), lenders and borrowers finally got their first look at the steps needed to gain forgiveness for some or all of the loans issued by the Small Business Administration (SBA).
SBA and the Treasury Department issued the loan forgiveness application form, used to calculate and determine the amount of forgiveness from each PPP loan.
Read on for details from the application and what new information the regulators included.
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FHFA adds deferral option for borrowers
Posted Date: Tuesday, May 19, 2020
In a new step to help borrowers facing difficulty making their mortgage payments, the Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac will allow a payment deferral option for borrowers who are in forbearance.
The decision will allow borrowers to add missed payments to the end of their mortgage, letting them repay the missed amounts when their home is sold, refinanced, or at maturity.
Read on for more details and industry reaction.
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FSOC talks nonbank servicing liquidity
Posted Date: Tuesday, May 19, 2020
The Financial Stability Oversight Council (FSOC) conducted an executive session by phone May 14, as the council heard an update from the Task Force on Nonbank Mortgage Liquidity.
In a readout from the meeting, the FSOC said task force staff and federal regulators have continue to monitor potential risks, and are coordinating and sharing information among stakeholders.
Read on for more details.
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MBA finds forbearance requests flattening out
Posted Date: Tuesday, May 19, 2020
The latest report from the Mortgage Bankers Association found that forbearance requests from borrowers flattened considerably in the past week.
A total of 8.16 percent of servicers’ portfolios were in forbearance as of May 10, the association reported, up just slightly from 7.91 percent the week before.
Read on for details of the report and why the requests may have slowed.
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Morningstar settles with SEC over conflict of interest charges
Posted Date: Tuesday, May 19, 2020
The Securities and Exchange Commission settled with credit rating agency Morningstar Credit Ratings LLC for violating a conflict of interest rule designed to separate credit ratings and analysis from sales and marketing efforts.
Morningstar agreed to pay $3.5 million to settle the charges, although it did not admit to nor deny the charges.
Read on for details from the enforcement action.
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Regulators discuss CRA, PPP with senators
Posted Date: Friday, May 15, 2020
Federal financial regulators met virtually with the Senate Banking Committee on May 12 to discuss the Paycheck Protection Program (PPP), the Community Reinvestment Act, and the state of their institutions.
The hearing featured representatives from the Federal Deposit Insurance Corp., Federal Reserve, the National Credit Union Administration and the Office of the Comptroller of the Currency.
Read on for details from the hearing, including regulators’ fair lending expectations from PPP lenders.
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Bureau hands down enforcement to servicer
Posted Date: Friday, May 15, 2020
The Consumer Financial Protection Bureau continued its enforcement work despite the business disruption today, announcing it had reached a consent order with Specialized Loan Servicing, LLC (SLS), a mortgage servicer in Colorado, over allegations of violations of RESPA’s mortgage servicing rules.
The bureau charged that SLS took foreclosure actions against borrowers who were entitled to foreclosure protection, and failed to send, or timely send, evaluation notices to borrowers who were entitled to them.
Read on for more details from the bureau’s latest enforcement action.
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Guidance: All PPP loans under $2 million in good faith
Posted Date: Friday, May 15, 2020
Forty days since the launch of the Paycheck Protection Program, the Small Business Administration and Treasury Department issued guidance on borrowers’ good-faith certifications.
The biggest news is that the regulators said all loans of less than $2 million would be considered having been certified in good faith.
Read on for details on how that affects lenders’ loan guarantees, and what the guidance means for loans of more than $2 million.
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Months later, Montgomery finally gets Senate confirmation
Posted Date: Friday, May 15, 2020
If there’s one thing Brian Montgomery has learned in his second time around at the Department of Housing and Urban Development (HUD), it is patience.
Montgomery, who had been acting deputy secretary for 16 months, was confirmed by the Senate as the deputy secretary May 12 by a 61-32 vote.
Read on for more details of the process, along with reaction from HUD Secretary Ben Carson and the Mortgage Bankers Association.
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Powell highlights relief work to help economy
Posted Date: Friday, May 15, 2020
Federal Reserve Chairman Jay Powell talked via webcast with the Peterson Institute for International Economics on May 13, updating the state of the economy today.
His focus was on the burden which has fallen “most heavily” on those who are least able to bear it.
Read on for details from the report, including highlights from a supplemental survey the Fed conducted on the state of the economy.
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Celebrity charged with PPP fraud
Posted Date: Thursday, May 14, 2020
A reality TV personality has been arrested and charged with fraud in connection with the Paycheck Protection Program (PPP) loan he obtained for a trucking company.
The celebrity is alleged to have used the PPP funds to buy jewelry and pay child support, among other things.
Read on for more details from the Justice Department’s second announced PPP fraud case.
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Advantage Systems’ AMB 7 Sierra software named Innovations Award winner
Posted Date: Thursday, May 14, 2020
Advantage Systems, a provider of accounting and financial management tools for the mortgage industry, announced today that its browser-based AMB 7 Sierra software was named as a “Top Innovation” in PROGRESS in Lending Association’s 10th annual Innovations Awards.
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ARMCO launches ACESXPRESS for early payment defaults
Posted Date: Wednesday, May 13, 2020
ACES Risk Management (ARMCO), the leading provider of enterprise quality management and control software for the lending industry, announced the release of ACESXPRESS for Early Payment Defaults (EPDs) to bolster lenders’ existing audit programs in light of the recent increases in required monthly EPD audit volume.
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Cherry Creek Mortgage adds Yext Answers
Posted Date: Wednesday, May 13, 2020
Yext, Inc., the Search Experience Cloud company, announced its continued work with Cherry Creek Mortgage Company to enhance the company’s website with Yext Answers.
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Plaza Home Mortgage names senior VP, chief underwriter
Posted Date: Wednesday, May 13, 2020
Plaza Home Mortgage, Inc., one of the nation’s leading wholesale and correspondent mortgage lenders, announced that Kelley Tillinghast has joined the company as Senior Vice President, Chief Underwriter.
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Federal Reserve shifts supervision
Posted Date: Tuesday, May 12, 2020
In its annual report released this month, the Federal Reserve announced that it is responding to its supervisory work in new ways during the pandemic.
The Fed said that in many ways, the short-term supervisory response to the containment measures echoes the response to a natural disaster, such as a hurricane or flood, except that the response has been nationwide.
Read on for more details about how the Fed expects to supervise large and small organizations for the rest of the year.
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OIG says SBA should issue PPP guidance
Posted Date: Tuesday, May 12, 2020
The Office of the Inspector General (OIG) of the Small Business Administration (SBA) has produced a flash report on the implementation of the Paycheck Protection Program (PPP).
The OIG report found that interim final rules issued by SBA, as well as the FAQs it issued, “mostly aligned” with the CARES Act which created the program. However, there were some areas the OIG found which did not fully align with the act’s provisions.
Read on for details from the office’s first look at PPP implementation.
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CFPB finalizes remittances transfers rule
Posted Date: Tuesday, May 12, 2020
The Consumer Financial Protection Bureau (CFPB) issued a final rule covering remittances transfers which makes permanent an exception to estimating fees and raises the threshold for institutions to be subject to the rule.
The changes affect the rule, originally issued in 2012, largely as proposed in 2019.
Read on for more details about the new exception and threshold amounts the CFPB has finalized.
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Moody’s: Bank credit strength strong but could be reduced
Posted Date: Tuesday, May 12, 2020
Analysts from Moody’s said that the credit strength of the banking industry was shown as the beginning of the coronavirus shock to the industry hit, but as the pandemic continues, the shock could increase vulnerabilities to banks’ credit.
Moody’s said that its baseline economic scenario assumes disruption of economic activity through the second quarter, followed by a modest recovery in the second half of 2020. But the potential for a prolonged downturn is increasing, analysts said.
Read on for more details from the report.
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More forbearance could mean billions in servicer advances
Posted Date: Tuesday, May 12, 2020
A pair of reports show that the pace of forbearance requests continued to rise in the past week, albeit at slower rates.
However, the impact of those continued additional requests could cost services at least $8 billion in advances before they are able to gain regulatory relief.
Read on for more details of the latest forbearance reports from the Mortgage Bankers Association and Black Knight Inc.
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Financial Services Committee leaders push for change
Posted Date: Tuesday, May 12, 2020
Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) and Chairwoman Maxine Waters (D-Calif.) have been busy engaging with regulators and industry members on issues around the financial services industry.
McHenry sent letters to a number of federal regulators, asking for work on outstanding rules, while Waters led efforts to engage with mortgage servicers about their work on communication during the pandemic.
Read on for more details from the committee leaders.
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Has PPP helped?
Posted Date: Friday, May 8, 2020
The National Bureau of Economic Research recently released a working paper meant to examine the early effects of the Paycheck Protection Program (PPP) on the small businesses it was meant to support.
The paper – titled “Did the Paycheck Protection Program Hit the Target?” – looked at the first $336 billion of approvals from the Small Business Administration to determine whether PPP hit the mark.
Read on for the results of their research.
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PPP pace slows, some guidance offered
Posted Date: Friday, May 8, 2020
Although the pace of Paycheck Protection Program (PPP) application approvals has slowed to a relative crawl, there’s plenty of news surrounding the program.
That includes extended and new guidance from the Small Business Administration (SBA) and Treasury Department, guidance from the Consumer Financial Protection Bureau, requests for more guidance, and a public acknowledgement of regulatory inquiries surrounding PPP loans made.
Read on for all the latest on PPP.
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Justice Department files first PPP fraud charges
Posted Date: Friday, May 8, 2020
The Justice Department on Tuesday filed fraud charges against two businessmen in Rhode Island for allegedly trying to access Paycheck Protection Program (PPP) funds despite not having any employees.
The two men are charged with conspiring to seek forgivable loans guaranteed by the SBA, claiming to have dozens of employees earning wages at four different business entities when, in fact, there were no employees working for any of the businesses.
Read on for more details about the first individuals in the nation charged with allegedly defrauding the PPP.
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Standardized closing instructions released
Posted Date: Friday, May 8, 2020
MISMO announced the issuance of standardized closing instructions.
MISMO’s closing instructions are templates that lenders can use to communicate with settlement agents. The templates create a common format for closing instructions and are intended to improve communications between lenders and settlement agents, thereby reducing closing errors.
Read on for more details about the instructions.
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Rates continue to spur strong mortgage activity
Posted Date: Friday, May 8, 2020
Mortgage rates have continued to drop to record or near-record lows, leading to increases in mortgage applications.
Reports from the Mortgage Bankers Association and Freddie Mac showed rates spurring activity in the market, while Gateway Mortgage Group released details to support their data’s implications.
Read on for more details of the mortgage market’s strength.
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MBA: Forbearance growth slows again
Posted Date: Friday, May 8, 2020
In the final week before the beginning of May, and a new set of deadlines for borrowers to make mortgage payments, the Mortgage Bankers Association (MBA) found that the pace of new forbearance loans slowed for the second consecutive week.
In the MBA’s latest Forbearance and Call Volume Survey, the association found that an estimated 3.8 million borrowers are in forbearance, up from 3.5 million a week earlier.
Read on for the latest details from MBA.
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Black Knight launches daily home price chart
Posted Date: Friday, May 8, 2020
Black Knight, Inc. announced the launch of its new Daily Home Price Flash, featuring home price and other housing metrics that are updated each day for single-family residential real estate transactions in nearly all states and more than 200 top U.S. metros.
Black Knight said its Daily Home Price Flash would provide a way for market participants that are active in the residential real estate market or that have exposure to residential property risk to view home price movement within days so the most current data can be used to make more informed business decisions.
Read on for more details about the release.
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PPP: Funding updates, more guidance issued
Posted Date: Tuesday, May 5, 2020
After silence from the Small Business Administration and Treasury Department for more than three days, the agencies on Sunday finally announced the progress of Paycheck Protection Program (PPP) funding in the second round.
In addition to providing updates on how much money still was available in the PPP fund, the agencies issued more guidance in updated FAQs and an interim final rule.
Read on for all the latest on the PPP.
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Lenders asked to bear more risk
Posted Date: Monday, May 4, 2020
The Federal Reserve announced it would expand the Main Street Lending Program to lower the minimum amount for certain loans and expand the pool of borrowers eligible for loans.
Importantly, though, by making the changes to the program, the Fed is asking lenders making the loans to bear more risk.
Read on for details of the Fed’s new options, and how much of the risk the regulator is requiring lenders to bear.
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Covius expands compliance regulatory monitoring
Posted Date: Friday, May 1, 2020
Covius announced that its Compliance Solutions group has significantly expanded compliance monitoring efforts to help lenders and servicers track the legislative and regulatory developments in response to the COVID-19 pandemic.
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Pennsylvania Housing Finance Agency recognizes Barilar
Posted Date: Friday, May 1, 2020
Bruce Barilar, a loan officer with Mortgage Network, Inc., one of the largest independent mortgage lenders in the eastern U.S., has been recognized as a top originator of affordable loan programs by the Pennsylvania Housing Finance Agency (PHFA).
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ABA, NBA announce strategic partnership
Posted Date: Friday, May 1, 2020
The American Bankers Association (ABA) and the National Bankers Association (NBA) announced that the organizations have joined together in a strategic partnership to promote the health and well-being of minority depository institutions (MDIs).
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NewDay USA names SVP of operations and finance
Posted Date: Friday, May 1, 2020
NewDay USA announced Eugene Mizin as senior vice president of operations and finance. NewDay USA has built a leadership team to achieve its mission to serve 1 million veteran families.
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FormFree, Ocrolus partner on income verification program
Posted Date: Friday, May 1, 2020
FormFree, a leading fintech provider of credit decisioning services, announced a partnership with Ocrolus, a leading fintech infrastructure company that transforms documents into actionable data with over 99 percent accuracy.
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Roostify appoints Lowman to board of directors
Posted Date: Friday, May 1, 2020
The nation’s most trusted digital lending platform, Roostify, announced the appointment of David Lowman to the Board of Directors effective March 10, 2020.
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Ellie Mae adds ratings, reviews
Posted Date: Friday, May 1, 2020
Ellie Mae announced the addition of ratings and reviews to the Ellie Mae Marketplace, the one-stop shop designed to make it easy for lenders to find, engage, and connect directly with the industry’s largest partner network.
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ICBA: PPP window for small lenders was ‘very helpful’
Posted Date: Friday, May 1, 2020
For the first time since the Paycheck Protection Program (PPP) launched April 3, the Small Business Administration set aside the “first come, first served” notion to provide an eight-hour window for lenders with $1 billion or fewer in assets to process applications.
Early reports are that the technology system, which had so many glitches and crashes in the first round of applications and starting the second round, finally had been freed up.
Dodd Frank Update talked with Paul Merski of the Independent Community Bankers of America to get more details.
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AICPA tackles PPP loan forgiveness
Posted Date: Friday, May 1, 2020
The American Institute of CPAs (AICPA) released recommendations on the appropriate documents and calculations that small businesses should use to qualify for loan forgiveness under the CARES Act’s Paycheck Protection Program (PPP).
“Loan forgiveness is a key element of the Paycheck Protection Program, and the steps for qualification should be simple, straightforward and designed to help small businesses succeed,” said Mark Koziel, the AICPA’s executive vice president for firm services.
Read on for details of the group’s recommendations.
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CFPB allows TRID timing changes
Posted Date: Friday, May 1, 2020
In offering regulatory relief to the industry in a time of business disruption, the Consumer Financial Protection Bureau (CFPB) added a new changed circumstance to the TRID rule, which would allow borrowers and lenders to make changes to TRID compliance.
“The steps we are taking today will help consumers facing financial emergencies obtain access to mortgage credit faster,” CFPB Director Kathy Kraninger said in a release.
Read on for details of what the bureau now considers a changed circumstance.
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Groups challenge SEC ‘regulation by enforcement’ tactics
Posted Date: Friday, May 1, 2020
A group of industry organizations say the Securities and Exchange Commission has spent the past year using its enforcement authority to change longstanding, and previously uncontroversial, business practices in the mutual fund space.
The groups have filed a petition for a rulemaking that would seek to end the agency’s regulation by enforcement tactics.
“This is not how the rule of law is supposed to work,” the groups said.
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MISMO bringing standards to loan modifications
Posted Date: Friday, May 1, 2020
MISMO, the mortgage industry’s standards organization, announced that it is seeking industry participants to join its initiative of applying digital mortgage standards, guidelines, and best practices to the loan modification process.
MISMO’s Digital Loan Modifications Development Work Group will bring together digital mortgage, servicing and loan workout professionals to review current loan modification processes.
Read on for details of the announcement.
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CFPB COO leaves for FHFA
Posted Date: Friday, May 1, 2020
After seven years at the Consumer Financial Protection Bureau, Kate Fulton is headed to a different building in Washington.
Fulton, who was the chief operating officer at the bureau since 2018, has been named the chief operating officer for the Federal Housing Finance Agency (FHFA). She will start at FHFA on May 26.
Read on for more details and the new role for FHFA’s current acting chief operating officer.
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New phase, same problems
Posted Date: Tuesday, April 28, 2020
There might have been a fresh infusion of funding into the Small Business Administration’s (SBA) account for its Paycheck Protection Program (PPP), but as the application process restarted this week, the same problems from round one were back again for round two.
Less than five minutes into the restart of PPP applications, lenders around the country reported of problems with SBA’s E-TRAN system, ranging from slow and unresponsive pages to an inability to even log onto the system.
Read on for more details of the first days of the PPP restart.
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Harper signals caution in real estate portfolio management
Posted Date: Tuesday, April 28, 2020
National Credit Union Administration board member Todd Harper recently spoke, virtually, at the Mountain West America Credit Union’s annual conference, discussing with viewers updates on the agency’s regulatory relief work and encouraging credit unions to continue their outreach with members about the effects of the COVID-19 pandemic.
Harper also discussed economic concerns he and the regulator were watching in terms of residential and commercial real estate portfolios for credit unions.
Read on for details of Harper’s update for the industry.
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Moody’s finds good, bad with FHFA announcements
Posted Date: Tuesday, April 28, 2020
The recent move by the Federal Housing Finance Agency to allow servicers to stop paying principal and interest after four months on Fannie Mae and Freddie Mac loans which are in forbearance drew good and bad notes from Moody’s analysts.
Moody’s said the move was a credit positive for servicers such as Quicken Loans and Freedom Mortgage because it reduced their liquidity needs.
Read on for more details from the analysts’ report.
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Forbearance pace slows in last week
Posted Date: Tuesday, April 28, 2020
The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased about 500,000 from the previous week – half the increase reported a week earlier.
MBA’s survey found 6.99 percent of all servicers’ volume was in forbearance, a total of about 3.5 million loans nationwide.
Read on for more details from MBA and reaction from Chief Economist Mike Fratantoni.
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Consumer group pushes for bank dividend suspension
Posted Date: Tuesday, April 28, 2020
The Americans for Financial Reform called on the industry and regulators to tell big banks they should not be permitted to pay dividends to shareholders during the COVID-19 pandemic and its aftermath.
The consumer group said the industry should make the decision itself, but if it would not, then regulators should step in to suspend dividend payments.
Read on for more details from the group’s position.
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Industry reacts to replenishment of PPP funding
Posted Date: Friday, April 24, 2020
News that Congress officially passed a new round of funding for the Paycheck Protection Program was met with universal praise from throughout the mortgage and real estate industry.
The House passed the latest funding bill Thursday night by a 388-5 margin, sending the bill to the president’s desk with the promise of an additional $310 billion for the program.
Read on for reaction from representatives of credit unions, banks small and large, and Realtors.
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Fed opening PPP buyback facility to all lenders
Posted Date: Friday, April 24, 2020
The Federal Reserve announced that it was working to open access to its Paycheck Protection Program Liquidity Facility for all SBA-qualified lenders as soon as possible.
When the facility was announced, it was open only to depository institutions, with the Fed saying more than 1,000 already have been approved to access the program.
Read on for details of the expansion, as well as other Fed announcements.
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Report finds LO commissions rose as first quarter ended
Posted Date: Friday, April 24, 2020
A new report from LBA Ware shows that mortgage business grew significantly in the first quarter, bringing with it a rise in commission payments for loan officers.
The Q1 LO Comp report from LBA Ware analyzed the company’s CompenSafe ICM platform data to find that commission payouts in March were the highest in the past six months.
Read on for details from the latest report.
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CFPB committees to discuss pandemic effects
Posted Date: Friday, April 24, 2020
The Consumer Financial Protection Bureau announced that it would convene its first meetings of the year for its advisory boards and councils.
The meeting will take place over a conference call, which will be open to the public, and will involve all of the bureau’s advisory boards and councils.
Read on for details of the meeting and how you can reserve a spot to listen.
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NCUA rule adjust risk weight for PPP loans
Posted Date: Friday, April 24, 2020
Following moves by federal banking regulators, the National Credit Union Administration (NCUA) board approved an interim final rule that amends the agency’s capital adequacy and member business loans and commercial lending regulations following the creation of the Small Business Administration’s Paycheck Protection Program (PPP).
Federal legislation required that PPP loans receive a zero-percent risk weighting under the NCUA’s risk-based capital requirements. The interim final rule amends the NCUA’s capital adequacy regulation so that covered PPP loans receive a zero-percent risk weight in the agency’s risk-based net worth requirements.
Read on for more details on the interim final rule.
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