July 31, 2014 | CFBP | Leave a Comment
Contact: Dr. Lesli Gooch,
Senior Policy Director for Vice-Chairman Gary G. Miller.
202 225 3201; firstname.lastname@example.org
The Protecting Independence in the Education of Loan Originators Act of 2014
On July 31, 2014, House Financial Services Committee Vice-Chairman Gary Miller introduced H.R. 5310, the Protecting Independence in the Education of Loan Originators Act of 2014, regarding loan originator training requirements in the SAFE Act. The bill amends the SAFE Act to specify that courses offered by lenders to their own employees may not satisfy the pre-licensing education or continuing education requirement for loan originators. H.R. 5310 was cosponsored by Rep. Carolyn Maloney (NY), the Ranking Member of the Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises.
- The “Secure and Fair Enforcement for Mortgage Licensing Act of 2008” (SAFE Act) was passed into law in response to mortgage origination abuses.
- The SAFE Act provides for state-centered regulation, in which all individuals working for non-depository institutions who perform mortgage origination are required to be licensed, and are also required to pass extensive pre-licensing and continuing education courses.
- CSBS is permitting lenders themselves to provide pre-licensing and continuing education courses directly to their own employees, instead of through independent entities.
- On March 29, 2012, in testimony before the House Financial Services Committee, CFPB Director Cordray expressed concerns with the practice of in-house training of mortgage originators. He testified that the CFPB would be reviewing this issue.
- Congress intended for mortgage originator education courses to be implemented by entities independent of mortgage lending and brokerage firms.
- Allowing lenders to provide their own education courses undermines the independence and integrity of pre-licensing and continuing education courses for mortgage originators.
- Allowing lenders to provide these courses is an inherent conflict of interest and significantly raises the potential of inadequately trained mortgage originators being licensed under the SAFE Act.
- Firms that provide courses to their employees have incentives to cut corners – letting employees do other work during the classes, slanting pre-licensing courses to the way the company does business, focusing on passing the test instead of teaching the full curriculum.
House Financial Services Committee Sends Fed Reform Bill to a Floor Vote
Congress Wednesday fired its latest rounds in its ever-escalating battle with the Federal Reserve, as a Republican-controlled House committee passed a reform bill aimed at making the Fed more accountable and transparent. The Fed’s has already warned of serious trouble if the nation’s top financial institution were held to formal policy regarding its ability to set interest rates.
The House Financial Services Committee’s effort to markup and vote on a series of six financial bills included the passage of a bill that requires the Fed to adopt a more predictable rules-based policy that it must share with the public and to conduct a study to determine the appropriate capital requirements for mortgage servicing assets for banks.
Other bills considered include requirements on federal agencies to ensure that new or modified financial regulations are efficient before they are introduced and for the GAO to vet the Fed’s Regulation D, which forces financial institutions to focus on compliance rather than spending time with consumers to meet their financial needs. The committee also approved a five-year reauthorization of the Native American Housing Assistance and Self-Determination Act as part of the package.
In a press statement, FSC chairman Jeb Hensarling (R-Texas) said, “With millions of our fellow Americans unemployed and underemployed, job number one continues to be jobs creation and economic growth. Our committee has approved dozens of bipartisan bills to help alleviate the red tape burden that Washington piles on job creators so all Americans can enjoy a stronger, healthier economy.”
Unsurprisingly, the Fed is wary of rules that dictate how it can set rates and other financial policies. Earlier this month, Federal Reserve Chair Janet Yellen fielded questions from Republican lawmakers about the policies that would be passed in the House two weeks later. Yellin told the lawmakers that “it would be a grave mistake for the Fed to commit to conduct monetary policy according to a mathematical rule. No central bank does that.”
Her reasoning is that any infraction of any rule, no matter how tiny, could trigger a costly and wasteful audit by the GAO. Such a course of action, she said, “would essentially undermine central bank independence in the conduct of monetary policy.”
July 30, 2014 | CFBP | Leave a Comment
CONSUMER FINANCIAL PROTECTION BUREAU LAUNCHES NATIONWIDE EFFORT TO PROVIDE FINANCIAL EDUCATION AND TOOLS TO LOW-INCOME CONSUMERS
CFPB Partners with National and Local Organizations to Train Social Services Staff With ‘Your Money, Your Goals’ Toolkit
WASHINGTON, DC – Today, the Consumer Financial Protection Bureau announced that it is partnering with national and local organizations across the country to train social services staff to provide financial education and tools to clients with low-to-moderate incomes. As part of that partnership, the CFPB unveiled a new online toolkit called Your Money, Your Goals, a comprehensive guide to empowered financial decision-making that covers topics like budgeting daily expenses, managing debt, and avoiding financial tricks and traps.
“Since we opened our doors, we’ve worked to equip consumers to make informed decisions that will help them reach their personal financial goals,” said CFPB Director Richard Cordray. “Your Money, Your Goals opens a new channel for connecting consumers with low-to-moderate incomes to the Bureau’s information, tools, and resources through the people they know and trust.”
Staff of nonprofit and public social services programs are in a unique position to help the people with low-to-moderate incomes that they serve navigate complex and sometimes overwhelming financial situations. Their clients already know and trust them, and in many cases, they are sharing their financial information. The financial stresses consumers with low-to-moderate incomes face may interfere with their progress toward other goals, like finding and keeping secure housing, staying in school, or even landing a job.
Your Money, Your Goals trains social services staff to help their clients learn financial decision-making skills and to help them avoid the kinds of financial missteps that can erase hard-fought gains. It includes information, checklists, and worksheets consumers can use in their everyday lives. For example, clients in job placement programs who secure a job are often required to receive their pay via direct deposit. The information and tools in Your Money, Your Goals can help the newly employed worker weigh the benefits and risks of various payment methods. The topics covered in the Your Money, Your Goals toolkit include:
- Making spending decisions that help reach goals
- Ordering and fixing credit reports
- Avoiding tricks and traps in choosing financial products
- Making decisions about repaying debts and taking on new debt
- Keeping track of income and bills
- Deciding whether to open a checking account and understanding what’s needed to open one
As part of today’s launch, several national and local organizations announced that they are joining the CFPB in training social services staff to use the toolkit. Each participating organization has set a goal of training at least 500 staff that provides direct services to their clients. The participating organizations announced today include:
- Catholic Charities USA and the Community Action Partnership will offer training to staff of their affiliates.
- The Los Angeles County Department of Consumer Affairs will begin training county and area nonprofit case managers this fall.
- The National Association of Community Health Centers Community HealthCorps is equipping the 500 AmeriCorps members it places in community health centers across the country to use the toolkit.
- U.S. Department of Agriculture Cooperative Extension located in counties throughout the country will deliver the training for social services agencies in their communities.
The Your Money, Your Goals toolkit has been rigorously field tested. Through a pilot program last fall, 26 organizations led educational workshops in 21 states and the District of Columbia that introduced 1,400 case managers and other frontline staff to the materials. Workshop participants came from organizations that provide homeless services, veterans’ programs, mental health and emergency services, case management for Head Start, Temporary Assistance to Needy Families and the Supplemental Nutrition Assistance Program, as well from as housing authorities, health clinics, and faith-based organizations.
Your Money, Your Goals is available online in English and Spanish. Interested parties can sign up for news on upcoming training events and updates to the toolkit’s content. The staff that will be trained with Your Money Your Goals will have the opportunity to share new information and tools with thousands of consumers with low-to-moderate incomes in an effort to make a difference in their financial lives.
The toolkit is available at: consumerfinance.gov/your-money-your-goals/
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov.
WASHINGTON- As part of its ongoing efforts to strengthen the economy and hold Washington accountable, the Financial Services Committee today passed several bipartisan regulatory relief bills and legislation to make the Federal Reserve more accountable and transparent. The committee also approved a five-year reauthorization of the Native American Housing Assistance and Self-Determination Act (NAHASDA).
“With millions of our fellow Americans unemployed and underemployed, job number one continues to be jobs creation and economic growth. Our committee has approved dozens of bipartisan bills- several of which are piled up on Harry Reid’s desk- to help alleviate the red tape burden that Washington piles on job creators so all Americans can enjoy a stronger, healthier economy,” said Chairman Jeb Hensarling (R-TX).
The following is a summary of the bills the committee passed:
H.R. 5018, the Federal Reserve Accountability and Transparency Act, sponsored by Rep. Scott Garrett (R-NJ) and Rep. Bill Huizenga (R-MI). H.R. 5018 was approved 32-26.
H.R. 5018 is the first piece of legislation developed as part of the Committee’s Federal Reserve Centennial Oversight Project. It requires the Federal Reserve to adopt a more predictable rules-based policy — of the Fed’s own choosing — that leads to a healthy and stronger economy. It also requires the Fed to share with the public whatever rules-based approach it decides to follow. The bill also requires the Federal Reserve to conduct a cost-benefit analysis when adopting new regulations in order to ensure the benefits of proposed regulations outweigh the cost to the economy.
H.R. 3240, the Regulation D Study Act, introduced by Rep. Robert Pittenger (R-NC). H.R. 3240 was approved by voice vote.
H.R. 3240 requires the Government Accountability Office, in consultation with credit unions and community banks, to conduct a study examining Federal Reserve Regulation D minimum reserve requirements. Regulation D forces financial institutions to focus on compliance rather than spending time with consumers to meet their financial needs.
H.R. 3913, a bill to amend the Bank Holding Company Act of 1956 to require agencies to take into account the promotion of efficiency, competition, and capital formation before issuing or modifying certain regulations, sponsored by Rep. Sean Dufy (R-WI). H.R. 3913 was approved 32-22.
H.R. 3913 is based on the common-sense proposition that before any rule can be proposed, a federal agency must determine if the rule promotes efficiency, competition, and capital formation. Instead of forcing financial institutions to spend precious time and money complying with unnecessary bureaucratic red tape, Congress can allow them to focus on encouraging economic growth by providing consumers with financial products and services.
H.R. 4042, the Community Bank Mortgage Servicing Asset Capital Requirements Study Act of 2014, sponsored by Rep. Blaine Luetkemeyer (R-MO). H.R. 4042, as amended, was approved 44-9.
H.R. 4202 requires the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to conduct a study to determine the appropriate capital requirements for mortgage servicing assets for any banking institution other than an institution identified by the Financial Stability Board as a global systemically important bank. H.R. 4042, as amended, also prohibits the implementation of Basel III capital requirements related to mortgage servicing assets for non-systemic banking institutions from taking effect until three months after a report on the study mandated by the bill is transmitted to Congress.
H.R. 5148, the Access to Affordable Mortgages Act of 2014, sponsored by Rep. Blaine Luetkemeyer (R-MO). H.R. 5148 was approved 31-23.
H.R. 5148 would amend federal law to exempt creditors offering mortgages of $250,000 or below from onerous property appraisal requirements stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 11-203).
H.R. 4329, the Native American Housing Assistance and Self-Determination Reauthorization Act (NAHASDA) of 2014, sponsored by Rep. Steve Pearce (R-NM). H.R. 4329 was approved 47-11.
H.R. 4329 extends the authorization for NAHASDA for five additional years with the following reforms:
- Strengthens vital taxpayer protections and tribal accountability by giving the HUD Secretary the authority to recoup unexpended funds.
- Allows for tribes to pursue alternative funding sources by encouraging private investment.
Provides Native Americans tribes with greater efficiencies when deploying NAHASDA funds.
FOR IMMEDIATE RELEASE
Washington, DC – The Federal Housing Finance Agency (FHFA) today announced that it is extending the deadline for its Request for Input on the guarantee fees (g-fees) that Fannie Mae and Freddie Mac charge lenders to Monday, September 8, 2014. The previous deadline to submit input to the FHFA was August 4, 2014.
FHFA is extending the deadline for g-fee input to coincide with the deadline for FHFA’s Request for Input on draft private mortgage insurer eligibility requirements, also due September 8, 2014. Input on each topic must be submitted separately.
Input on g-fees must be received by September 8, 2014 and should be submitted to the Federal Housing Finance Agency, Office of Policy Analysis and Research, 400 7th Street, SW, Ninth Floor, Washington, DC 20024 or via FHFA.gov.
Link to G-Fee Request for Input – June 6, 2014
Link to Draft Private Mortgage Insurer Eligibility Requirements for Fannie Mae and Freddie Mac Counterparties Request for Input – July 10, 2014
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions.
July 29, 2014 | CFBP | Leave a Comment
CONSUMER FINANCIAL PROTECTION BUREAU AND 13 STATE ATTORNEYS GENERAL OBTAIN ABOUT $92 MILLION IN DEBT RELIEF FOR SERVICEMEMBERS HARMED BY PREDATORY LENDING SCHEME
Rome Finance and Owners Permanently Banned from Consumer Lending After Deceiving About 17,000 Servicemembers and Other Consumers
WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) and 13 state attorneys general obtained approximately $92 million in debt relief from Colfax Capital Corporation and Culver Capital, LLC, also collectively known as “Rome Finance,” for about 17,000 U.S. servicemembers and other consumers harmed by the company’s predatory lending scheme. Rome Finance lured consumers with the promise of no money down and instant financing. Rome Finance then masked expensive finance charges by artificially inflating the disclosed price of the consumer goods being sold. Rome Finance also withheld information on billing statements and illegally collected on loans that were void. Rome Finance and two of its owners are permanently banned from consumer lending.
“Rome Finance’s business model was built on fleecing servicemembers,” said CFPB Director Richard Cordray. “Rome Finance lured servicemembers in with the promise of instant financing on expensive electronics, then masked the finance charges with inflated prices in marketing materials and later withheld key information on monthly bills. Today, their long run of picking the pockets of our military has come to an ignominious end.”
Colfax, formerly known as Rome Finance Co., Inc., is a California consumer lending company and Culver is its wholly owned subsidiary, formerly known as Rome Finance LLC. The companies offered credit to consumers purchasing computers, videogame consoles, televisions, or other products. These products were typically sold at mall kiosks near military bases with the promise of instant financing with no money down. In some cases, Rome Finance was the initial creditor, and in other cases, Rome Finance provided indirect financing by agreeing to buy the financing contracts from merchants who sold the goods.
Servicemembers and other consumers would fill out a credit application at the kiosk and, if approved, sign financing agreements that did not accurately disclose the amounts they would have to pay for that financing. These contracts generated millions for Rome Finance while weighing down consumers with expensive debt. Rome Finance has been the subject of previous state and federal enforcement actions and Colfax is currently in Chapter 7 bankruptcy. The CFPB and state attorneys general uncovered substantial evidence that Rome Finance’s lending scheme violated several laws and that these illegal practices harmed approximately 17,000 consumers. The CFPB in its consent order found that Rome Finance:
- Hid finance charges when marketing products: Rome Finance and merchants it worked with masked expensive finance charges by artificially inflating the disclosed price of the consumer goods being sold. As a result, they provided consumers with disclosures that had inaccurately low finance charges and annual percentage rates (APR). Consumers received disclosures, for example, indicating the APR was 16 percent when in fact the APR was 100 percent or more. That inaccurate information prevented consumers from making an informed decision about whether to take out credit.
- Withheld required financial information from billing statements: Billing statements that Rome Finance sent to consumers failed to include certain disclosures required by law such as: the annual percentage rate, the balance that was subject to that interest rate, how that balance was determined, the closing date of the billing cycle, and the account balance on the closing date.
- Deceptively, unfairly, and abusively collected debt that was not owed: Rome Finance was not licensed to provide consumer lending in any state and charged annual percentage rates higher than some states allowed, which voided or limited the collectable debt in some states under state lending law. Rome Finance deceived consumers in these states by failing to inform them that some or all of their debt was void or otherwise did not have to be repaid. As a result, many consumers were misled into thinking that they had to repay the entire loan balance and making those payments, when they did not have to.
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices. The Truth in Lending Act also authorizes the CFPB to take action against creditors who do not accurately disclose the cost of credit and other credit terms to consumers. To address these violations, the CFPB’s consent order requires Rome Finance to:
- Provide approximately $92 million in debt relief: All efforts to collect on any of the outstanding Rome Finance financing agreements must cease. Rome Finance still has approximately $60 million in contracts owed by about 12,000 consumers that it will no longer seek to collect. Separately, a liquidating trust created as part of Colfax’s bankruptcy plan will stop collections on approximately $32 million owed by more than 5,000 consumers for Rome Finance’s financing agreements. Servicemembers may keep the merchandise they purchased.
- Update credit reporting agencies and notify servicemembers and other consumers of debt status: The Colfax Trustee must update the credit reporting agencies so that affected consumers are listed as having paid their debt. The Colfax Trustee must also notify all affected consumers that their debt will no longer be collected.
- Rome Finance and their owners must cease consumer lending: Rome Finance and two of their owners, Ronald Wilson and William Collins, are permanently banned from conducting any business in the field of consumer lending.
- Pay redress for hidden finance charges: Rome Finance was ordered to pay redress to compensate affected consumers for the amount of excess finance charges they paid. When Colfax’s Trustee has complied with certain provisions of the Consent Order, the requirement to pay redress will be suspended because Rome Finance has no ability to pay such redress.
- Pay civil money penalty: For its inaccurate disclosures, and unfair, deceptive, and abusive practices, Colfax, through its bankruptcy trustee, will make a $1 penalty payment to the CFPB’s Civil Penalty Fund. The Bureau is not assessing a larger penalty because Colfax is bankrupt. With Colfax making a payment to the Civil Penalty Fund, Rome Finance’s victims may be eligible for relief from the Civil Penalty Fund in the future, although that determination has not yet been made.
- Cooperate with servicemembers and other consumers who seek to vacate judgments: The Colfax Trustee is required until the Colfax bankruptcy case is closed to cooperate in executing any documents presented to him to vacate or satisfy any judgments against consumers relating to the financing agreements.
The full text of the CFPB’s Consent Order will be available today at: http://files.consumerfinance.gov/f/201407_cfpb_consent-order_rome-finance.pdf
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.
Monday, July 28, 2014
We have so much going on in our industry. There are many issues that your Government Affairs team is working on with NAMB on your behalf. One of which is legislation to change the Qualified Mortgage/Ability to Repay rule (QM/ATR). They are currently working with a member of Congress to change the verbiage of the QM/ATR rule to allow the points and fees caps to increase from 3% to 4% and on smaller loans from 4% to 5%. Additionally, they are also working to have the broker compensation removed from the GFE when the new disclosures come out in August 2015.
For those of you who are working under the Mini-Correspondent Lending Model, CAMP is working on some ideas to help mitigate some potential issues with the CFPB. The CFPB is concerned that some mortgage brokers may be shifting to the mini-correspondent model under the mistaken belief that identifying themselves as such would automatically exempt them from important consumer protection rules affecting broker compensation. If you are not aware of what is going on, click here for the policy guidelines. The document is 15 pages long, but you will find the main information on page 10, which includes the questions that the CFPB will be using when they perform audits.
Did you know that NAMB is celebrating their Silver Anniversary this year? That’s 40 years of advocating on behalf of consumers and our industry! If you are not a member of NAMB, you really should consider becoming a member. The cost is only $50 and the more members we have will help win NAMB and CAMP greater influence in important regulatory issues. You can click here to join. Also, consider joining NAMB at their annual convention NAMB National which will be held September 13 -15 at the Luxor Hotel in Las Vegas. Go to www.nambnational.com. Most of your wholesale lenders are offering a free registration to attend. If you need a code for free registration, simply email me email@example.com and I will send you one. I will be there and I hope to see you there too!
Friday, August 8, 2014 at 8:30 am
Silicon Valley Chapter is offering “Preparing your Borrower’s for the Escrow Process” to be held at Three Flames Restaurant (Banquet Room) – 1547 Meridian Avenue, San Jose, CA 95125
Tuesday, August, 19 at 8:30 am
San Gabriel Valley Chapter is offering “Coffee with CAMP – Bob Tate of Online Marketing Group” to be held at C&S California Capital - 644 S. Barranca Covina, Ca 91723
Do you need your to take your Continuing Education? Check out these chapters who are offering the live classes:
San Francisco Peninsula Chapter on Tuesday, August 12, 2014 in San Mateo and on Tuesday, August 26, 2014 in San Francisco. Contact Donna Aldrich at firstname.lastname@example.org for more details.
San Gabriel Valley Chapter on Tuesday, October 21, 2014. Contact Jesse Hernandez at JHernandez@ires.com for more details.
CAMP Statewide Calendar
If you would like me to include upcoming events please send me an email
If you prefer to take classes online, we are working on a discounted rate and I will be sharing this information as soon as the details are finalized. As I hear of more classes and more events, I will add them to the Echo. If you have any comments, questions or concerns just email me at email@example.com. I look forward to hearing from you and seeing you at NAMB National!
Michelle Velez, President
California Association of Mortgage Professionals
firstname.lastname@example.org I thecampsite.org
July 28, 2014 | NAMB | Leave a Comment
Monday, July 28
As we draw closer to having a great NAMB National, we are beginning to tweak the schedule for Monday to make it better for upcoming events and to make the information that we give you be the most up to date and most current items available. Please stay tuned to the NAMB National website for the most current schedule and up to date information. And don’t forget to go get your airplane tickets and your reservations at NAMBNational.com to attend. Again, this is our 40th Anniversary and you won’t want to miss it.
I had a conversation about a Broker that was having an audit completed in Massachusetts. He stated that he was having a state audit and they were using the CFPB checklist and treating them like a bank. They were looking at taxes, financial statements, payroll records, receipts, loan disbursements and everything you could imagine. As I wrote a few weeks ago, this is now the norm and it is going to be this way going forward. He stated that they wanted to know all about their training of employees, the procedure books on how to originate and how to process loans and more. There is no time like the present to make sure that you are prepared for this. Do not continue to sit on the sidelines and do nothing as they will soon be knocking on your door. Take action today. Contact a company like BrokersComplianceGroup.com (an NAMB+ Endorsed Provider) to get this taken care of today. If they come in and you are not prepared, I promise you that it will cost more than the investment of these documents to get back on track.
I was talking about belonging to NAMB to a group of people and they said that they were members and that they appreciated what NAMB has done over the past 2 plus years. I just happened to check their names on my phone app and they were not members. They said that they thought that they paid their membership dues at the same time as their state dues. It isn’t always the way this works. So, you need to be pro-active and check on the NAMB website and see if you are a member. If not, join today. And if you are, check to make sure that you have your Lending Integrity Seal and register for it if you don’t.
If you know someone in your state that is very worthy and has participated in state and national committees, does great things for your state and is involved in the National Association and involved in your state association, please take the time to nominate these people for the Mortgage Professional of the Year and /or the Kathy Love Volunteer of the Year awards. If you need an application, send a request to email@example.com and ask for the form to nominate that person. The actual requirements are listed with the form. We are always looking for great members to honor and this is the time of year we ask for these nominations. The awards will be given out in Las Vegas at NAMB National September 13-15.
I want to leave you this week with a thought that I have tried to live with and it involves dreams. As we grow through life, we are all reminded that you need to set goals and dreams that you want to achieve in your life. I remember that I always dreamt about my career and life in the business sector. I have to admit that I didn’t dream about being the NAMB President, but I wanted to be successful in whatever I chose as a profession. As I moved up through the ranks of the State Association, I just aspired to go to the National Association Board. I dreamt about this all through my tenure in Indiana. So when I was young, my father had a saying: “Dreams not only come true, but they can do so beyond your wildest expectations!” Let me tell you, this has been 3 of the greatest years of my life. It has truly been an honor to represent you and be one of you. As we move forward, I will continue to be involved.
I want to thank all of you for everything that you as members are doing to make this association successful. I am truly grateful to all of you for your support. Thank you.
Until next week!!!
Donald J. Frommeyer, CRMS, President
NAMB—The Association of Mortgage Professionals
July 25, 2014 | CFBP | Leave a Comment
The Consumer Financial Protection Bureau’s proposal to require more data from lenders through the Home Mortgage Disclosure Act has already sharply divided industry and consumer groups.
The plan would significantly expand HMDA requirements, including requiring lenders to disclose the age and credit score of homebuyers, the property value and interest rate details. Currently, publicly released data is primarily broken down by geography, race, gender and whether the applicant was approved.
Although the proposal released Thursday was required by the Dodd-Frank Act and has long been anticipated, those in the lending industry said they were taken aback by the amount of information the CFPB is seeking, arguing it goes far beyond the regulatory reform law.
“Our issue was that the bureau should stick to what’s required in the statute and not require additional data fields for the sole purpose of collecting more data,” said Ron Haynie, executive vice president of mortgage services at the Independent Community Bankers of America. “It’s not like all of this data is housed in one spot and not every bank has an automated system. We’re talking about big changes here.”
But consumer groups immediately praised the proposal, saying it would disclose more data on products that spurred the financial crisis, including adjustable-rate mortgages.
“There were a lot of tricks and traps of new mortgage products during the financial crisis that” were not included in HMDA, said Ken Edwards, policy counsel for the Center for Responsible Lending. “Having real-time assessments on points and fees, high debt-to-income ratios and teaser rates would have definitely given examiners a snapshot of predatory trends in the market. The fact that we have it now on top of the new mortgage rules is critical.”
The agency’s proposal, which includes some data streamlining, would require lenders to disclose pricing and more information about the underwriting of a loan, including an applicant’s debt-to-income ratio and the total discount points charged. The plan would also require lenders to report other forms of financing for residential dwellings such as reverse mortgages and open-end lines of credit.
This data would help the agency determine the impact of its so-called qualified mortgage rule that was implemented in January, the agency said. The rule requires loans to meet certain underwriting criteria in return for greater legal protections.
The CFPB said the added information is necessary to get a more complete view of the mortgage market.
“It is critical that we shed more light on the mortgage market—the largest consumer financial market in the world,” said CFPB Director Richard Cordray in a press release. “Today’s proposal would help us understand better how to protect consumers’ access to mortgage credit while simplifying the reporting requirements for financial institutions.”
Still, the industry is questioning how much more data the CFPB needs, what it would do with all the information and whether it creates greater privacy risks.
“The CFPB’s proposal will substantially increase the amount of publicly available information financial institutions must report on home mortgages,” said Steve Zeisel, general counsel for the Consumer Bankers Association, in a written statement following the CFPB’s release. “CBA will provide comments on the proposal, to ensure any consumer privacy concerns and increased compliance costs do not outweigh the benefits of additional data reporting.”
The CFPB said in its release that it was “looking at ways to improve how the public can securely use HMDA data modified to protect applicant and borrower privacy.” It was also looking at how to streamline and ease the burden on lenders required to do additional reporting. For example, the CFPB is considering excluding small banks from having to report HMDA data if they make fewer than 25 mortgages a year.
The agency is also looking at allowing lenders that are already reporting similar data to the secondary market to apply the same definitions to data in the HMDA system.
However, Haynie said the proposal “goes way beyond what the intent of HMDA,” especially considering the CFPB is already forming a mortgage database with the Federal Housing Finance Agency, which has data on loans owned by the government-sponsored enterprises.
“And there’s a lot of lenders who don’t sell loans to the secondary market so they could now have to report a huge level of data,” he said. “It just seems like increased costs and yet another reason why some banks will decide to get out of mortgage business.”
July 24, 2014 | CFBP | Leave a Comment
CONSUMER FINANCIAL PROTECTION BUREAU, FEDERAL TRADE COMMISSION AND STATES ANNOUNCE SWEEP AGAINST Foreclosure RELIEF SCAMMERS
CFPB Files Suits for Operations that Used Deception and False Promises to Collect More than $25 Million in Illegal Fees from Distressed Homeowners
WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and 15 states announced a sweep against foreclosure relief scammers that used deceptive marketing tactics to rip off distressed homeowners across the country. The Bureau is filing three lawsuits against companies and individuals that collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages. The CFPB is seeking compensation for victims, civil fines, and injunctions against the scammers. Separately, the FTC is filing 6 lawsuits, and the states are taking 32 actions.
“We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,” said CFPB Director Richard Cordray. “These companies pocketed illegal fees—taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began. These practices are not only illegal, they are reprehensible.”
The first lawsuit names Clausen & Cobb Management Company and owners Alfred Clausen and Joshua Cobb, as well as Stephen Siringoringo and his Siringoringo Law Firm. The second lawsuit is against The Mortgage Law Group, LLP, the Consumer First Legal Group, LLC, and attorneys Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford. The third lawsuit is against the Hoffman Law Group, its operators, Michael Harper, Benn Wilcox, and attorney Marc Hoffman, and its affiliated companies, Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions, and BM Marketing Group.
The CFPB alleges that the scammers used deceptive marketing to persuade thousands of consumers to pay millions in illegal, upfront fees for promised mortgage modifications. Each of the scammers was a law firm or was associated with one. The defendants disguised their false promises of foreclosure relief for struggling homeowners with claims that they were performing legal work. These tactics are used by foreclosure relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law.
The CFPB alleges that the defendants violated Regulation O, formerly known as the Mortgage Assistance Relief Services (MARS) Rule, which generally bans mortgage assistance relief service providers from requesting or receiving payment from consumers for mortgage modifications before a consumer has signed a mortgage modification agreement from their lender. It also prohibits deceptive statements and requires certain disclosures when companies market mortgage assistance relief services. In addition, the CFPB alleges that some of the defendants violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, which generally prohibits deceptive practices in the consumer financial market.
The illegal practices alleged in the complaints include:
- Collecting fees before obtaining a loan modification: Companies cannot legally accept payment for helping to obtain a mortgage modification for a consumer before the consumer has a modification agreement in place with their lender. All of these companies charged consumers advance fees without having first obtained modifications for them, which was not only illegal but also caused significant harm to consumers who often paid thousands of dollars without ever receiving a modification. The CFPB alleges that, after pocketing illegal fees from one distressed homeowner after another, defendants typically stopped returning consumers’ phone calls and emails.
- Inflating success rates and likelihood of obtaining a modification: The firms’ marketing materials misrepresented the likelihood that they would help consumers save substantial sums in mortgage payments. Ultimately, many consumers who paid these companies advance fees did not receive a mortgage modification and ended up worse off than they began.
- Duping consumers into thinking they would receive legal representation: All of these companies engaged in a particularly egregious scam where the perpetrators used their status as attorneys to dupe consumers into thinking they would receive legal representation when many consumers never spoke with an attorney or had their case reviewed by one.
- Making false promises about loan modifications to consumers: During meetings, some consumers were misled into believing that they were eligible for a loan modification. Other consumers were promised that they would receive relief within a few months. In the end, many consumers learned that the defendants had not contacted their lenders or obtained any meaningful relief for them. Ultimately, homeowners across the country lost thousands of dollars and suffered significant economic injury, including losing their homes.
Today, the Bureau is also releasing a Consumer Advisory to help consumers recognize the red flags of foreclosure relief scams, especially when someone is claiming to provide legal help. Many scammers require consumers to send a third-party authorization form to their lender so that the scammer can communicate with the lender on the consumer’s behalf. Often, the scammer tells the consumer to no longer have any contact with the lender. The Consumer Advisory being released by the Bureau also helps consumers better understand what it means to authorize a third party to act on their behalf.
Clausen & Cobb Management Company, Inc. and Siringoringo Law Firm
The Bureau filed its complaint against three individuals, Stephen Siringoringo, Alfred Clausen, Joshua Cobb, and a corporation, Clausen & Cobb Management Company, Inc. (CCMC), for allegedly charging homeowners illegal advance fees for mortgage loan modifications. Their operation charged initial fees ranging from $1,995 to $3,500, in addition to monthly fees of $495, to thousands of California homeowners in distress. The complaint alleges that Clausen, Cobb, and CCMC managed, staffed, and supported the deceptive loan modification operations of Stephen Siringoringo’s southern California law firm. The California State Bar initially referred the misconduct to the CFPB.
The complaint against Clausen & Cobb Management Company, Inc. et al. is available at: http://files.consumerfinance.gov/f/201407_cfpb_complaint_clausen-cobb.pdf
The Mortgage Law Group and the Consumer First Legal Group
The CFPB alleges that the Mortgage Law Group (TMLG) and Consumer First Legal Group (CFLG) took in over $19.2 million in fees from over 10,000 distressed homeowners nationwide, with most, if not all, of that money coming from illegal advance fees for so-called loan modification services. Both TMLG and CFLG have ceased operations, but the CFPB is seeking redress for consumers harmed by their practices and permanent injunctive relief against the principals, Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford.
The complaint against The Mortgage Law Group et al. is available at: http://files.consumerfinance.gov/f/201407_cfpb_complaint_cfpb-v-tmlg-et-al.pdf
Hoffman Law Group
The CFPB alleges that since April 2012, the Hoffman Law Group (HLG) enterprise has accepted over $5 million in illegal upfront fees. The Hoffman Law Group sold consumers the chance to join mass lawsuits as a plaintiff and falsely promised them that the lawsuits will help them get mortgage loan modifications or foreclosure relief. HLG typically charged consumers an upfront fee of $6,000 plus a $495 monthly maintenance fee every following month. The Bureau alleges that the Hoffman Law Group frequently failed to help consumers obtain relief, and often did not answer or return phone calls and emails from consumers who had already paid their fees.
The Bureau’s complaint against the Hoffman Law Group was filed jointly with the Attorney General for the State of Florida, who has been a strong partner in the case. Upon filing their complaint against the Hoffman Law Group, the Bureau and the State of Florida sought a temporary restraining order that was issued by the court, freezing the company’s assets and installing a receiver to oversee the business and ensure that the company’s illegal conduct ceases.
The complaint against Hoffman Law Group et al. is available at: http://files.consumerfinance.gov/f/201407_cfpb_complaint_hoffman-law-group-et-al.pdf
The Bureau’s complaints are not a finding or ruling that the defendants have actually violated the law.
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov.
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