News By Edition

Fair lending risk is among the most prominent concerns for mortgage lenders, in large part because of uncertainty about what constitutes a discriminatory practice and the fact that factors underlying such risks can crop up in the least likely of places – such as a congressional hearing, for example.

Fair Lending Diversity Inc.’s Tammy Butler explained how comments regarding Consumer Financial Protection Bureau Director Kathy Kraninger’s religious affiliation during her recent report to Congress could be considered a violation fair lending law, if it was said by a lender to a borrower.

Learn what fair lending lesson snuck by Kraninger and members of the House.

A shortage of affordable housing has caused mortgage industry participants to seriously consider various solutions for consumers looking to buy a home or those who already own a home.

 Jonathan Lawless, Fannie Mae’s vice president of product development and affordable housing, told Dodd Frank Update that his organization is focused on developing and expanding programs designed to increase access to affordable housing - including manufactured housing and renovation loans.

Learn more details about the company’s goals with both programs.

The Federal Housing Finance Agency (FHFA) took another step toward its goal of ending the conservatorship of Fannie Mae and Freddie Mac with Mark Calabria’s announcement that such a goal was built into the agency’s newly finalized 2020 Scorecard and Strategic Plan for the government-sponsored enterprises (GSEs) at the Mortgage Bankers Association’s 2019 Annual Convention.

Stressing how critical raising capital is to releasing the GSEs from conservatorship and that FHFA is not forecasting a downturn, he explained that time is of the essence to get that done before the economy becomes less favorable. 

Learn more details revealed by the director during the event.

The Mortgage Bankers Association’s (MBA) market outlook for 2020 revealed that following positive gains in mortgage origination revenues in 2019, economic growth is expected to slow over the next year.

MBA economists detailed how reduced growth and other considerations might impact mortgage rates, originations and refinance activity during MBA's 2019 Annual Convention and Expo in Austin, Texas.

Learn more details revealed during the convention.

As part of another flurry of announcements tied to the Mortgage Bankers Association annual convention, Ellie Mae announced it had acquired Capsilon, an AI-powered mortgage automation software for lenders, investors and servicers.

The company said the acquisition of Capsilon, a partner already integrated with Ellie Mae, means customers immediately will be able to gain the benefits of Capsilon technology leveraged with Ellie Mae.

Read on to learn more details about the acquisition. 

In an effort to address confusion over the “valid-when-made” doctrine, which prevents loan interest rates from being altered after changing hands, the Office of the Comptroller of the Currency (OCC) is seeking industry input on a proposed rule on the matter.

With the proposed rule, OCC hopes to clarify that when a national bank or savings association sells, assigns, or otherwise transfers a loan, the interest rate deemed permissible prior to the transfer of the loan remains permissible after the transfer is complete.

Learn more about the proposal and the uncertainty regarding the doctrine at its center.

In its 2019 Fall Unified Agenda, the Consumer Financial Protection Bureau (CFPB) moved the needle on some long-awaited rulemaking activities. Though some were, not all those moves were in a forward direction.

The bureau plans to issue two final rules in 2020 – one regulating the payday lending industry and the other providing certain exemptions to threshold limits connected to Home Mortgage Disclosure Act requirements. The new agenda also added a pair of potentially impactful “long-term” rulemaking items.

Find out more details about the bureau’s foreseeable rulemaking plans.

The five federal financial regulatory agencies recently issued a joint statement on the use of alternative data in underwriting by banks, credit unions and non-bank financial firms. The agencies sought to call out the consumer benefits of using alternative data in terms of credit availability.

The agencies described how a well-designed compliance management program can enable companies to account for relevant consumer protection laws and regulations to ensure all opportunities, risks and compliance requirements when using alternative date in credit decisions.

Get more details about the statement.

Vendorly recently launched a third-party originator (TPO) oversight program for mortgage lenders to streamline the broker vetting process and create a central repository for due diligence documentation.

To assess how credit reporting accuracy has been affected by legal and technological developments in recent years, the Consumer Financial Protection Bureau is hosting a workshop Tuesday alongside the Federal Trade Commission.

Among the new developments to be discussed are the use of machine learning and alternative data in making eligibility determinations.

Find out more information about what is on the docket for the event.

With the Request for Information, HUD said it hopes to identify specific laws, regulations and requirements that can unnecessarily impede housing supply.

Find out more about the how to comment.

FHA Commissioner Brian Montgomery recently addressed attendees at the Mortgage Bankers Association Annual Convention with more details on the news of an agreement between the Department of Housing and Urban Development and the Justice Department concerning the use of the False Claims Act in determining violations by FHA lenders.

Montgomery also touched on the impact of the GSE Patch expiration, progress on modernizing the agency’s technology, and a new social media way to connect with FHA.

Read on for more details from the commissioner’s presentation.

At least two federal banking agencies are close to finalizing an overhaul of Community Reinvestment Act (CRA) requirements.

Comptroller Joseph Otting confirmed in a statement obtained by Dodd Frank Update that he believes the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. will have a joint proposal for banks to review by the end of the year.

Learn more details about the likelihood of Otting’s prediction coming to fruition.

Saying that the Consumer Financial Protection Bureau’s (CFPB) Consumer Complaint Database is not the “end-all be-all” for spotting certain trends in the financial marketplace, Director Kathy Kraninger recently explained to Yahoo Finance why she believes the database’s role has been overstated.

Kraninger asserted that the database should be viewed as a “later resort” for consumers after they have exhausted other avenues for resolving complaints directly with the companies with whom they’ve done business.

Get more details about Kraninger’s comments regarding the database.

The Senate voted 74-20 to approve a short-term spending bill with a provision extending the Small Business Administration 7(a) guaranteed lending program.

The vote came hours before the deadline for President Donald Trump to sign the bill into law and prevent a stoppage in funding for the program. The bill authorizes funding for the program through Dec. 20.

Read on to find out more details.

Responding to the trade group’s petition opposing the agency’s field-of-membership rule filed in federal court, the National Credit Union Administration argued that a banking trade group did not present a an adequate argument for rehearing court decision on the rule’s validity.

A three-judge panel ruled in August that NCUA could define a “local community” as a combined statistical area inhabited by up to 2.5 million people or define an entire state as a “rural district.”

Learn more details about the arguments presented and the agency’s proposed rule amendments.

The Independent Community Bankers of America (ICBA) recently selected Adlumin, an alumnus of the ICBA ThinkTECH Accelerator program, to be its newest preferred service provider. Adlumin offers security incident and event management (SIEM) solutions to assist community banks in managing evolving threats and cybersecurity compliance requirements, according to a press release.

Fannie Mae recently approved Origence’s mortgage lending platform for its Day 1 Certainty program.

The Office of the Inspector General (IG) for the National Credit Union Administration (NCUA) stated that it is conducting an audit of the agency’s examination processes in its latest semiannual report to Congress with relation to assessing third-party risks.

Notably, NCUA is the only federal prudential financial agency that lacks examination authority over third-party vendors used by the entities it supervises – a fact a piece of draft legislation seeks to change.

Learn more about the audit and what it says about the perceived importance of third-party oversight at credit unions.

In light of newly agreed upon plans to recapitalize Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA) is going back to the drawing board with capital requirements for the government-sponsored enterprises (GSEs).

The agency announced that it will scrap its 2018 capital rule proposal and issue a new one at some point in 2020.

Learn more details about the agency’s reasoning in taking such a step.

Sitting in the crosshairs of the Consumer Financial Protection Bureau’s (CFPB) five-year look-back agenda is the TILA-RESPA Integrated Disclosure (TRID) rule.

That fact theoretically could lead to changes to TRID provisions.

Get more information about what the bureau is hoping to learn about the rule’s impact.

The National Credit Union Administration board unanimously approved a proposed rule increasing the current residential real estate appraisal threshold to equal that set by banking regulators.

The agency also approved a measure to add a new, age-based filing exception to its Interpretive Ruling and Policy Statement.

Read on to learn more about the implications of the changes.

A favorable trend for small mortgage servicers drew the spotlight in the Consumer Financial Protection Bureau’s (CFPB) recent report titled “Data Point: Servicer Size in the Mortgage Market.”

The report indicated that mortgage loans serviced by smaller service providers are generally less likely to become delinquent and more likely to be held in portfolio by the institution doing the servicing.

Find out more findings details in the report.

Revealing that the agency’s Mutual Mortgage Insurance Fund reached a 12-year high for Fiscal Year 2019, the Federal Housing Administration instilled optimism in the mortgage industry with its Annual Report to Congress.

The report also highlights continued improvements in the struggling reverse mortgage marketplace and an increase in the small percentage of mortgages with multiple “extreme risk” factors.  

Find out what regulatory and trade leaders are saying about the report’s findings.

The five federal financial regulatory agencies recently published a final rule intended to simplify implementing regulations of Section 13 of the Bank Holding Company (BHC) Act, commonly known as the Volcker Rule.

The final rule revises numerous provisions of the Volcker Rule, intended to provide clarity and streamline compliance obligations based on trading assets and liabilities.

Learn more about changes enacted by the rule.

Newly introduced Senate legislation would exempt loans to veteran-owned businesses from the member business lending (MBL) cap, which limits the amount of total assets credit unions can devote to business lending.

The bipartisan measure bears the same name as its House counterpart and, likewise, has received strong support from the credit union industry.

Learn more about the aim of the legislation.

For financial institutions that employ loan originators with temporary origination authority, the Consumer Financial Protection Bureau (CFPB) published a new interpretive rule regarding applicable screening and training requirements.

The rule is intended to clarify provisions of an amendment to the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, as amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Find out more about the new interpretive rule. 

A coalition of 11 states urged the Supreme Court to rule that the Consumer Financial Protection Bureau’s (CFPB) single-director structure is unconstitutional and to consider the authority states have to enforce consumer protection laws.

A brief filed by the states brought up three arguments familiar to those who have followed legal challenges to the bureau’s structure and one, pertaining to former acting director Mick Mulvaney, which is perhaps less-so.

Find out what arguments the states made in their filing.

New legislation introduced in the Senate aims to address industry concerns about a so-called “loophole” in federal standards that makes fintechs eligible for industrial loan company (ILC) charters.

The bill touches on a long held point of contention for community banking advocates. It proposes to draw a bright line separating banking and commerce in the name of ensuring the safety and soundness of the banking industry.

Learn more about the legislation and the issue it seeks to address.

Less than two months following the end of his tenure as Wells Fargo’s interim president and CEO, C. Allen Parker announced that he will leave the company next year to pursue other business opportunities.

Parker took over as the firm’s chief executive in March after Tim Sloan resigned. Parker had served as Wells Fargo’s general counsel since March 2017 and returned to the position shortly after new CEO Charles Scharf was hired.

Learn more about what Parker’s exit means for Wells Fargo.

The Federal Financial Institutions Examination Council recently issued an updated version of its Business Continuity Management booklet.

The updated manual highlights points of note for regulatory examiners with regard to enterprise-wide approaches that address technology, business operations, testing and communication strategies critical to the continuity of the business, according to a press release.

Find out what changes the council made to the booklet.

Research conducted by the Consumer Financial Protection Bureau (CFPB) to measure the average American’s financial well-being revealed that more than half of adults would struggle to cover an unexpected expense of $2,000 or more.

The CFPB included state-by-state comparisons of financial well-being scores in a report detailing its findings, as well as a breakdown of financial well-being by age.

Learn more about what the report reveals about the majority of Americans.

Framing the move as a step in the right direction for continuing the company’s growth, loanDepot recently announced the addition of mortgage industry veteran Steve Kay to its retail lending channel production leadership team as vice president of strategic alliances.

Financial professionals are accustomed to waiting with bated breath for regulatory action that with sweeping implications for their businesses.

When it comes to the Consumer Financial Protection Bureau’s long-anticipated small business lending rule, lenders have an existing frame of reference for what kinds of fair-lending data collection and reporting requirements to expect.

Learn more about what lenders can infer from existing rules about what theoretically may be in-store.

Leaders of BB&T Corp. and SunTrust Banks Inc. recently received a green light from the Department of Justice (DOJ) to proceed with the largest bank merger since the financial crisis.

The only major caveat is the institutions had to agree to divest 28 branches to resolve antitrust concerns related the transaction – the largest divestiture in a bank merger in more than a decade.

Find out more details about the deal and what reaction it has drawn.

Community banks and credit unions have continued to show strong support for the Federal Reserve’s plans to develop its FedNow payments system – a round-the-clock real-time payment and settlement service designed to support faster payments throughout the country.

Both have requested that the Fed strive to ensure the system’s interoperability and security upon implementation.

Learn more about what some industry representatives believe the Fed should prioritize in FedNow’s development.

Legislation introduced in the House and Senate seeks to protect all consumers from high interest rates often associated with payday and car-title loans.

The Veterans and Consumers Fair Credit Act would extend the Military Lending Act’s 36 percent APR interest rate cap on both loan types to cover all Americans. 

Find out more details about the measure.

The Federal Reserve has proposed adding an 18-month extension to the initial compliance dates for foreign banks subject to its single-counterparty credit limit final rule. The agency is seeking feedback on the proposal, intended to provide more time for foreign jurisdictions’ version of the rule to take effect.

The Fed noted that the extension would apply only to the combined U.S. operations of the foreign banks and not to any U.S. intermediate holding companies of those banks.

Find out more details about the proposal.

New Taxpayer Consent Language issued by MISMO, the mortgage industry’s standards organization, permits lenders to share tax information received from the Internal Revenue Service with other parties involved in a mortgage transaction, the Mortgage Bankers Association announced.

MISMO created its Taxpayer Consent Language to help the mortgage industry consistently comply with the Taxpayer First Act, which passed July 1, and goes into effect Dec. 28.

Read on for more information about the release.

The longer the Consumer Financial Protection Bureau (CFPB) has gone without issuing a statutorily mandated rulemaking on small business lending requirements outlined in Section 1071 of the Dodd-Frank Act, the more anxious many have become in the financial sector.

Numerous experts weighed in on how the agency may approach the matter during the CFPB’s third installment of its symposia series.

Find out what points the panelists and CFPB Director Kathy Kraninger brought up during the symposium.

A federal court recently issued a final judgment on one of three lawsuits federal and state regulators brought against foreclosure relief providers for alleged deceptive debt collection practices more than five years ago. The court’s ruling could offer a glimpse of how the other two lawsuits may pan out.

The Consumer Financial Protection Bureau filed suit against entities involved in the purported illegal activity in conjunction with the Federal Trade Commission in July 2014.

Find out more details about the ruling and the similar cases pending court decisions.

The Federal Housing Finance Agency is seeking public input on practices used to form “To-Be-Announced” (TBA)-eligible Uniform Mortgage-Backed Securities (UMBS). 

Specifically, the agency also is soliciting feedback about the government-sponsored enterprises’ oversight of UMBS prepayment speeds and alignment and other policies and practices that might affect UMBS fungibility.

Find out more about the agency’s new request of feedback.

Asserting that the Federal Deposit Insurance Corp. did not go far enough to address problems with the current methodology used to calculate the national rate cap, the American Bankers Association issued a comment letter with recommendations for how the agency should proceed.

The association has advocated for the agency to use a market-based approach, designed to naturally produce a rate which factors in all bank business models and non-bank competition.

Get more details about the organization’s recommendations.

Federal banking regulators were urged to clarify the effective date for recently finalized rules pertaining to their new tailored approach to applying enhanced prudential standards in supervising the financial marketplace. 

Four industry trade groups offered multiple detailed recommendations for clarifying provisions of the new standards.

Learn more about what the banks want to see addressed.

Parties aligned with a student-loan debt-relief operation allegedly deceived thousands of federal student-loan borrowers into paying more than $71 million in illegal advance fees and misrepresented several aspects of their services, according to charges filed by the Consumer Financial Protection Bureau (CFPB) and multiple state and municipal governments.

The bureau was joined in its complaint filing by the Minnesota Attorney General’s Office, the North Carolina Department of Justice and the Los Angeles City Attorney.

Learn more details about the lawsuit.

The Santander Group’s fintech venture capital fund, Santander InnoVentures, is expanding funding for the cloud-based digital lending platform Roostify, which was designed to enable borrowers to complete mobile eMortgage closings. Santander first invested in the company in February 2018 and this is its second investment, according to a press release.

In a bid to provide certainty to lenders, and in hopes of re-engaging depository institutions with Federal Housing Administration (FHA) lending, the Department of Housing and Urban Development (HUD) announced a Memorandum of Understanding (MOU) with the Justice Department regarding guidance on False Claims Act (FCA) enforcements.

The MOU, signed by HUD Secretary Ben Carson and Attorney General William Barr, creates guidance on the “appropriate use” of FCA for violations by FHA lenders.

Read on for details of the memo and Carson’s comments on its effect on FHA lending.

DocMagic, Inc. recently launched its new mobile application – LoanMagic. The app is provided free to all DocMagic customers, leverages a powerful backend platform that provides full interoperability with DocMagic solutions, as well as other third party mortgage software.