Daily Mortgage News & Commentary

Dec. 24: MLO jobs; VOE product; Like rust, regulators never sleep: CFPB, OCC, NCUA, DOJ news

From Pennsylvania, Glenn F. writes, “Banks need to get better at restocking their ATMs, especially at Christmas time!! I just left my 5th one that had, ‘Insufficient Funds.’” Even folks at the CFPB may chuckle at that one, although they are certainly keen on expanding their power base to include all things impacting consumers. What about animals? We have a container buildup in the Midwest, decreased processing capacity at the few companies that make up the American meat processing business, logjams at ports, the deregulated trucking business, the onset of just-in-time logistics, vestigial tariffs leading to reduced incentives to import to modulate supply, and the skyrocketing cost of warehouse space. And throw in the general quality constraints of the animal-byproduct trade (you don’t think they put top sirloin in dog food, do you?) and you have higher pet food prices, and a shortage. (During this seasonal quiet time the daily podcast is having some down time but will return Monday, January 3. Earlier versions of the audio are available here; questions about sponsorship should be directed to Robbie Chrisman.)

Jobs

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“Since 2003, I’ve consulted with Mortgage Banks across the US, and what separates top companies from all the rest is bold leadership that manages with integrity”, said Rick Roque, Corporate Vice President of Shamrock Home Loans, a national Retail mortgage bank based in Rhode Island. “Shamrock is a company that celebrates Christmas and encourages the full growth of the whole person- body, mind, spirit, mother, father, sibling, etc. We know if we foster this development, we will attract and retain strong ops and sales leaders across the U.S.” Expect more from your employer: email Shamrock to learn about careers with this growing lender. Watch a Christmas message from Dean Harrington, Founder of Shamrock Home Loans!

Credit reporting & VOE product

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Compliance never sleeps

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Music aficienados will recognize the allusion to Neil Young’s “Rust Never Sleeps” album from the 1970’s. Regulators seem never to sleep either, nor do compliance personnel or attorneys. Anyone can sue, or threaten to sue, anyone, any time. Of course that doesn’t mean the legal action will go anywhere, but lenders and servicers must spend money dealing with actions that involve retaining attorneys. Regulations are a moving target, unfortunately, and complying with those regulations is a fulltime job for both lenders and third-party vendors. Heck, even keeping track of them can be tough.

Lenders and vendors repeatedly ask themselves, “Will it confuse consumers?” How are names handled by various states… New York, for example, treats different domain names as different branches. If a lender brings a mortgage brokerage on board as a branch, but allows the branch to keep its name, is the consumer plainly aware of it in the name? How are any sources of your leads regulated? Is a “lead” an “endorsement?” Do your regulators consider a “lead” a “referral?” As a lender do you use data brokers or marketing services? How does the consumer perceive the activity?

Mortgage lenders don’t dabble in pawn or payday lending, but still took note that the digital payday lender LendUp is shutting down operations after settling a lawsuit with the Consumer Financial Protection Bureau (CFPB). The Silicon Valley-backed lender billed itself as an alternative to traditional payday lenders by offering to bring down borrowers’ interest rates on future loans as they paid back their prior ones. But LendUp repeatedly came under scrutiny from the CFPB, which said the company failed to live up to that promise to tens of thousands of customers, even after the agency penalized it in 2016.

Recall that the CFPB issued its Supervisory Highlights report yesterday, which “shines a light” on legal violations identified by the CFPB’s examinations in the first half of 2021 as well as prior CFPB supervisory findings that led to public enforcement actions in the first half of 2021.

As mentioned in this daily Commentary, a few days ago the CFPB and the DOJ issued two joint letters reminding mortgage servicers and landlords to ensure that military homeowners and tenants are safeguarded during the Covid-19 pandemic and benefit equally as the U.S. economically recovers. One letter was sent to landlords and other housing providers on protections for military tenants, reminding property owners of the critical housing protections for military tenants, some of whom may have had to make alterations to their housing arrangements in response to the pandemic.

The other letter was for mortgage servicers regarding military borrowers who have exited or will be exiting Covid-19 mortgage forbearance programs. Apparently, there are complaints from military families and veterans about possible mortgage servicing violations, which include, among other things, inaccurate credit reporting and misleading communications to borrowers. Forbearance programs put in place in the early weeks of the pandemic last year to allow homeowners to hit pause on their mortgage payments are set to expire next week.

 

The Department of Justice stated that it has received complaints from servicemembers and veterans who ran into problems after entering into a COVID-19 hardship mortgage forbearance program, including being reported as delinquent borrowers for not making timely payments and being required to make lump sum payments to reinstate their home loans. The complaints are being reviewed by the CFPB.

 

All told, roughly 7.6 million homeowners entered forbearance during the pandemic, according to the DOJ. A majority of borrowers have resumed making their mortgage payments, but over a million, many military personnel or veterans, remain in forbearance programs about to expire, the government said. Members of the military have legal protections that include a clause that states mortgage servicers, which manage payment collection on home loans, are not allowed to foreclose on or evict certain servicemembers or their families without a court order.

This week the CPB issued two annual threshold adjustment final rules that are effective January 1. “First, the Bureau has announced the asset-size exemption thresholds for depository institutions under Regulation C (HMDA, Home Mortgage Disclosure). Second, the Bureau has announced the asset-size exemption thresholds for certain creditors under the escrow requirements and small creditor portfolio and balloon-payment qualified mortgage requirements, and the small creditor exemption from the prohibition against balloon-payment high-cost mortgages under Regulation Z (Truth in Lending).

The CFPB is not the only one lenders and vendors have an eye on. In October the Department of Justice addressed claims of redlining by Trustmark Bank in Memphis, TN. Fair Housing laws apply to mortgage bankers. For those new to the business, redlining is a discriminatory practice in which services were withheld from potential customers who resided in neighborhoods classified as “hazardous” to investment. These residents historically belonged to racial and ethnic minorities.

The OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently or formerly affiliated with such entities. Included in the release is a cease and desist order issued against an Oklahoma-based bank for alleged “unsafe or unsound practices” related “to management and board supervision, strategic and capital planning, risk ratings and loan review, credit administration, and the allowance for loan and lease losses.”

Recall that since back in 2013, financial institutions must use the FinCEN reports, which are available only electronically through the BSA E-Filing System. FinCEN is no longer accepting legacy reports. For more information, click here. Non-bank residential mortgage lenders and originators, generally known as “mortgage companies” and “mortgage brokers” in the residential mortgage business sector, are a significant subset of the “loan or finance company” category.

Want to know who’s in trouble for what? The Consumer Financial Protection Bureau (CFPB) issued its Supervisory Highlights report yesterday, which “shines a light” on legal violations identified by the CFPB’s examinations in the first half of 2021 as well as prior CFPB supervisory findings that led to public enforcement actions in the first half of 2021. Here in San Diego at the California MBA’s Legal and Regulatory Compliance Conference, there are multiple topics of concern.

In credit union news, this week Buckley LLP reported, “The NCUA unanimously approved an extension to the effective date of a temporary final rule, which granted regulatory relief to federally insured credit unions during the Covid-19 pandemic. In 2020, the NCUA issued the final rule to temporarily raise ‘the maximum aggregate amount of loan participations that a [federally insured credit union (FICU)] may purchase from a single originating lender to the greater of $5,000,000 or 200 percent of the FICU’s net worth.’ The final rule also temporarily suspended certain ‘limitations on the eligible obligations that a federal credit union [] may purchase and hold’” Required timeframes related to the occupancy or disposition of certain properties not in use for federal credit union business or that were abandoned were also suspended. The temporary final rule’s modifications will remain in effect through December 31, 2022.”

Investors and lenders are continually adjusting their policies and procedures, and fees, based on regulator’s moves as well as the pandemic.

Wells Fargo Funding is reinstating its pre-COVID Early Payment Default (EPD), delegated and CCU Loans, effective January 3, 2022. View information on this policy update in Wells Fargo Funding Announcement C21-063.

January 1, 2022, updates from Fifth Third Correspondent Lending include implementation of a suspense fee on loans that were not delivered in fundable condition and when documents to clear suspense conditions have not been delivered in a timely manner. Details are available in Fifth Third Lending News 2021-13. Early Payment Default (EPD) revisions will require the seller to repurchase the loan if the loan is unsold and the EPD renders the loan unsalable and to repay the SRP plus a $3000 administration fee on delinquent loans. Details can be found in Fifth Third Lending News 2021-11.

PennyMac is allowing electronic copies of trailing documents be delivered to PennyMac via its Correspondent Portal. View Announcement 21-101 for details.

Chase Correspondent updated some of its Non-Agency Product Guides removing or revising COVID-19 requirements. View Chase Bulletin #CB 21-50.

PRMG offered a suggestion for the IRS March 2022 implementation of a new system for processing 4506-C results. Users should start with ensuring the 4506-C form being sent to the IRS only requests what is desired from the IRS. When the process is in place, only the information wanted will be provided.

Capital markets

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The worldwide bond markets are closed. Who would lock anyway?

How about a little fun holiday from the USAF band? (Definitely entertaining.) And on the humor side of things…

A husband and wife are Christmas shopping at a busy shopping mall the morning of Christmas Eve. The wife suddenly noticed that her husband was missing and as they had a lot to do, so she called him on his cell.

” Where are you? You know we have lots to do.”

He replied, “Do you remember the jewelers we went into about 10 years ago, and you fell in love with that diamond necklace? I could not afford it at the time, and I said that one day I would get it for you?”

Little tears started to flow down her cheek and she got all choked up. “Yes, I do remember that shop.” she replied.

“Well I am in the gun shop next door.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “The Personal Touch” about MLO compensation and motivation. The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2021 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)