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Trade Groups Seek to Work with CFPB on Testing New Mortgage Disclosures
AFSA joined other trade associations in submitting a letter to the Consumer Financial Protection Bureau (CFPB) regarding its quantitative testing of integrated mortgage disclosure forms. The CFPB is in the process of integrating the mortgage origination disclosures that are required under two separate statutes into a single set of disclosure forms. The associations, which have strongly supported improved mortgage disclosures for many years, expressed appreciation for the CFPB’s integration efforts.
In the interest of improving the disclosures, the associations support very careful testing of the disclosure forms before they are put into use. “We fear widespread consumer confusion and frustration if the industry again has to implement insufficiently tested new disclosure forms,” the letter stated. “Testing the disclosure forms can only be effective if all relevant loan products are tested. We are concerned that the proposed collection of information will test disclosures for types of mortgage loans that the Dodd-Frank Act effectively prohibited, but will not test a great many loan products that lenders do and will continue to make.” The associations urged the CFPB to work with industry to devise a testing process that will populate the prototype forms based on actual loans that have closed, using all the facts of each loan to populate the forms, from the first disclosure through closing and through any post-closing corrections.
New AFSA SGA White Paper Discusses Judicial and Non-Judicial Foreclosure
On March 11, AFSA’s State Government Affairs Committee published a white paper on judicial and non-judicial foreclosure. The paper discusses the increasing number of states adopting legislation allowing only judicial foreclosure, despite its many drawbacks. It highlights the effect of a state’s reliance on the judicial approach on the length of the foreclosure process, illustrating the benefits of the streamlined non-judicial approach on state foreclosure inventory. The paper also discusses the growing acceptance of using expedited judicial foreclosure processes for abandoned properties, which allows lenders to take possession and maintain and secure these properties more quickly. The paper reports that 43 bills with provisions relating to judicial and/or non-judicial foreclosure processes and/or expedited foreclosure processes for vacant or abandoned properties are pending in 17 states and U.S. Congress. One bill has been enacted in Illinois and New Jersey; both bills create expedited foreclosure processes for abandoned properties.
New Member Welcome
AFSA welcomes new Business Partners CHP Consulting Inc., Solutions by Text, and United Recovery Systems.
CHP Consulting Inc. provides ALFA Systems, a software system that provides lifecycle support for the sale, administration and accounting of a wide variety of finance products. The company’s headquarters are in London, with U.S. operations based in Boston. Website
Headquartered near Dallas, Solutions by Text provides text message consulting, technology and delivery services for industries that communicate with consumers regarding billing, special offers and account information. Website
United Recovery Systems, out of Houston, specializes in high-quality, cost-efficient collections services and has more than 30 years of experience in the industry. Website
Bank and Advocacy Groups Push to Align Mortgage RulesPolitico Pro (03/11/13) Prior, Jon
A group of 50 banking, consumer and civil rights groups have joined forces to encourage regulators to conform upcoming rules concerning mortgages to those released by the Consumer Financial Protection Bureau (CFPB) in January. The groups fear that credit will be severely restricted if new rules – which are to be promulgated by six other regulatory authorities that share jurisdiction with the CFPB – do not conform to the CFPB’s rules.
The CFPB’s qualified mortgage – or QM – rule gives lenders a legal safe harbor if they operate within certain requirements, including verifying ability to repay and confirming a borrower’s debt to income ratio. The coalition argues that the QM definition should match that of the forthcoming Qualified Residential Mortgage rule (QRM).
The group has been working to lower the down payment requirement that previously was proposed.. An initial plan released in 2011 required a down payment of 20 percent, which, the group argues would have severely limited homeownership. The coalition believes strongly that any down payment requirement will result in a credit contraction and that the government’s role in the housing market needs to shrink in order for the market to continue to grow.
Hensarling Raises CFPB Funding ConcernsAmerican Banker (03/14/13) Finkle, Victoria
Following a federal court of appeals decision earlier this year that invalidated three members of the National Labor Relations Board (NLRB) appointed by President Obama, Rep. Jeb Hensarling (R-TX) is questioning whether funding for the Consumer Financial Protection Bureau (CFPB) can be appropriated by the Federal Reserve Board without an appointed director. CFPB Director Richard Cordray was received a recess appointment on the same date as the NLRB members who were deemed invalid. Hensarling, who serves as the chairman of the House Financial Services Committee, argued in a letter to Federal Reserve Board Chairman Ben Bernanke that he may not be able to fund the agency since its director’s legality is in question.
"Because it appears there is not presently a validly appointed director of the CFPB, I question the circumstances under which the Board may lawfully fund the CFPB's operations," Hensarling said. "I believe that decisions to fund the CFPB must be scrutinized by, and traceable to, a properly appointed officer of the United States, consistent with Dodd-Frank's intent and the constitutional requirement that significant authority of the United States be exercised only by such officers."
Kentucky Attorney General Announces Launch of Legal Toolkit to Protect Military Service MembersWTVQ-TV (03/07/13)
An initiative of the Consumer Protection Working Group of the President’s Financial Fraud Enforcement Task Force (FFETF), and the attorneys general from Kentucky, Illinois, Indiana and North Carolina will provide service members with a toolkit to help them avoid scams and consumer protection violations. When it is complete, the toolkit will be provided to all attorneys general to help educate service members on financial products and current scams and privacy issues. Recently, service members have been the target of a number of financial scams.
The toolkit will outline important strategies for evaluating home mortgage terms, vehicle financing, credit issues and short term loans. “Our servicemembers risk their lives every day to protect our nation and defend our freedom,” said General Conway, who serves as co-chair of the Consumer Protection Committee of the National Association of Attorneys General (NAAG). “We in law enforcement need to do what we can to protect our nation’s heroes from abusive lending practices, scammers and other unscrupulous businesses that prey on the men and women of our Armed Services.”
Members of the military who believe they may have been taken advantage of, have questions about a company, or who face a consumer-related issue are encouraged to contact their attorney general for assistance.
No Vacancy in Stockbridge - City Council Moves to Keep up Foreclosed PropertiesHenry Daily Herald (03/14/13) Shirey, Rachel
Stockbridge, Ga., has become the latest city to approve a vacant property registration and impose a financial penalty on lenders that fail to register and maintain properties. On March 11, the city council unanimously approved the property registration, which will go into effect on April 1. The registration fee was set at $100 per property. City code enforcement officers will be tasked with inspecting registered properties each month.I If violations of city code are found, penalties can be assessed against property owners.
The city council highlighted the grave need for closer control of abandoned properties after a rash of copper thefts and vandalism occurred in the town. Residents applauded the city council effort. “It’s going to protect the property values of everyone,” said resident Kathryn Gilbert, who is also the homeowners’ association president for Windsong Plantation. “It’s going to keep the sort of vandalism that is attracted to vacant properties down.”
Home Repossessions Drop 29% to Lowest in U.S. Since 2007BusinessWeek (03/12/13) Levy, Dan
“The U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years,” Daren Blomquist, vice president at RealtyTrac, said in a report that showed U.S. home repossession have dropped by nearly 29 percent in February. The drop represents the lowest level of repossessions since 2007. Blomquist does warn, however, that dangerous “flare ups” of home foreclosures and repossessions are popping up, particularly in states where judicial foreclosure is required.
The drop in repossession comes as more homeowners are taking advantage of programs that assist those who owe more on their mortgage than their home is worth. Additionally, mortgage interest rates remain historically low and U.S. companies are adding jobs, both of which help drive foreclosures down. The Home Affordable Refinance Program (HARP) has also greatly assisted those in the hardest hit states, like California and Nevada.
However, some areas of the country experienced an increase in foreclosure filings. Baltimore had the largest increase in home foreclosure filings, which rose by 145 percent for the month, followed by Seattle, with an increase of 129 percent. “When we dig down into local markets, there’s still a foreclosure problem that needs to be dealt with,” Blomquist said.
Ally to Sell Bulk of Servicing Rights to OcwenAmerican Banker (03/12/13) Berry, Kate
Ally Financial will almost completely exit the mortgage market with the $94.8 billion sale of its mortgage servicing arm to Ocwen, an Atlanta-based company that has been steadily building its portfolio. The deal between the two companies will close in phases over the next several months and includes nearly $85 billion of unpaid principal balances as of January 31. "Ally continues to make significant progress in exiting its non-strategic mortgage activities,” said Barbara Yastine, Ally Bank's president and chief executive. She continued that the sale would allow the financial institution to focus on its "direct banking franchise and advancing customer-centric deposit activities, as well as continuing to grow its key role in Ally's auto finance operation."
Ocwen continues to acquire mortgage stakes, including a $2.1 billion servicing rights purchase from Residential Capital, which was formerly the mortgage-lending arm of Ally. In the deal, Ally retained the right to sell its remaining $30 billion portfolio of mortgage servicing rights to Ocwen.
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AFSA's mission is to protect and improve the consumer credit business, maintain a positive public image, and create a legislative climate in which reasonable credit regulation can and will be enacted. The association operates in the public interest, encourages and maintains ethical business practices, supports financial education for consumers of all ages, and provides other assistance in related fields on an as-needed basis.
The American Financial Services Association has provided services to its members for over ninety years. The association's officers, board, and staff are dedicated to continuing this impressive legacy of commitment through the addition of new members and programs, and increasing the quality of existing services.