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News By Edition
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RESPA News Monthly Edition
RESPA News Monthly April 2014
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What does ‘business day’ mean to you?
Posted Date: Thursday, March 13, 2014
The Consumer Financial Protection Bureau’s (CFPB) final integrated RESPA/Truth in Lending Act mortgage disclosure form rule introduces the Loan Estimate and Closing Disclosure, but that’s not all the regulation does. In this multi-part series, RESPA News reviews additional changes that will alter current practices.
There is no question that new forms are important. Implementing the Loan Estimate and Closing Disclosure forms will mean changes to technology, additional training and new closing practices. The rule goes into effect on Aug. 1, 2015. While that may seem like the distant future, preparing early is essential to compliance because this rule isn’t just about forms. It is going to bring significant changes for those who work in the settlement service and lending fields.
“These new forms are going to transform the consumer experience, and they will affect every settlement service provider that touches them,” said Phil Schulman, a partner with K&L Gates, during Part 1 of October Research’s mortgage disclosure forms training webinar series. “That includes banks, mortgage companies, mortgage brokers, title underwriters, title agents, closing agents, closing attorneys and escrow companies. The sheer volume of this stuff, it is daunting.”
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Closing Disclosure: Who is responsible?
Posted Date: Monday, March 17, 2014
When the Consumer Financial Protection Bureau’s (CFPB) final RESPA/Truth in Lending Act (TILA) integrated mortgage disclosure form rule goes into effect, it is going to bring with it many changes to lending and closing processes. One of these changes is who has the responsibility of providing the Closing Disclosure to the consumer. In part two of this multi-part series, RESPA News reviews Closing Disclosure responsibility and liability, as well as tolerance levels and changed circumstances.
Who provides the Closing Disclosure?
Currently under Regulation X, the settlement agent prepares the HUD-1 settlement statement.
When the bureau released its proposed rule in July 2013, it requested comments from the public regarding two alternatives regarding who should provide the Closing Disclosure to the consumer:
1) The creditor provides the Closing Disclosure; or
2) The settlement agent provides the Closing Disclosure but the creditor has the liability.
The final rule states that the creditor will provide the Closing Disclosure, but allows settlement agents to provide the disclosure as long as the agent complies with all of the regulatory requirements.
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Goodbye tolerances, hello variations
Posted Date: Thursday, March 6, 2014
Under the current Regulation X, there are set tolerance levels for amounts listed on the Good Faith Estimate (GFE). The tolerance is the maximum amount that an actual charge can exceed the amount estimated on the GFE.
Regulation X provides three tolerance buckets that charges fit into: zero percent, 10 percent and charges that can change by any amount.
The zero percent bucket is where the lender’s costs go, including processing, underwriting and origination fees, along with transfer taxes. If a charge falls into the zero bucket, it means that the fee cannot increase from the amount that was estimated to the consumer, and if it does, the lender owes the consumer the difference between the estimated fee and the higher fee.
The 10 percent bucket is for lender-required settlement services where the lender selects the provider, lender-required services and title services when the borrower uses a provider identified by the loan originator, and government charges. These are services the borrower can’t shop for, like the appraisal, credit report and flood determination fees.
In the final bucket go all other settlement services charges included on the GFE. These charges can change by any amount and would include escrows and homeowner association fees.
These tolerance levels will change significantly on Aug. 1, 2015, when the Consumer Financial Protection Bureau’s (CFPB) integrated RESPA/Truth in Lending Act mortgage disclosure forms final rule goes into effect.
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CFPB’s Antonakes disappointed in servicers, emphasizes expectations
Posted Date: Monday, February 24, 2014
Before the Consumer Financial Protection Bureau’s new mortgage servicing rules went into effect on Jan. 10, the agency stressed that it was not expecting flawless compliance. While testifying before the Senate Committee on Banking, Housing and Urban Affairs, CFPB Director Richard Cordray made it clear that the bureau would be more relaxed in the beginning months. This led many to question how lenient the bureau would be and when that leniency would end. Deputy Director Steven Antonakes laid out the bureau’s expectations during a speech to the Mortgage Bankers Association.
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Chamber of Commerce tells CFBP to beware of regulation by enforcement
Posted Date: Monday, February 24, 2014
The U.S. Chamber of Commerce has some concerns about the guidance the Consumer Financial Protection Bureau is providing to companies the bureau regulates. The group said that without proper, thorough guidance, businesses cannot be certain if they are compliant. The Chamber sent the CFPB a letter detailing its concerns and explaining that regulation by enforcement settlement is not the way to go.
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FDIC releases compliance examination procedures for mortgage rules
Posted Date: Monday, March 3, 2014
The Federal Deposit Insurance Corp. released interagency consumer compliance examination procedures for mortgage rules issued pursuant to the Dodd-Frank Act. The agency said the examination procedures should be helpful to financial institutions seeking to better understand the areas the FDIC will focus on as part of the examination process.
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Bureau helps lenders create RESPA-required housing counselor list
Posted Date: Monday, March 10, 2014
The 2013 final rule for the Home Ownership and Equity Protection Act requires lenders to provide mortgage applicants with a list of housing counseling agencies approved by the Department of Housing and Urban Development (HUD). A lender can fulfill the requirement by either obtaining the list through the Consumer Financial Protection Bureau’s (CFPB) website or the lender can generate lists by using data from HUD. The CFPB announced new information on March 6 that will help lenders create their own lists.
The bureau released a bulletin on Nov. 8, 2013, providing guidance to lenders regarding homeownership counseling requirements finalized in the Homeownership Counseling Amendments to RESPA and the Truth in Lending Act. The amendments were issued in January 2013 and went into effect on Jan. 10.
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First American continues to wage battle over alleged RESPA violations
Posted Date: Monday, February 24, 2014
The Edwards v. First American case became well known in June 2011 when the U.S. Supreme Court decided to review the controversial matter. The 9th U.S. Circuit Court of Appeals had held that a private purchaser of real estate settlement services has standing under RESPA to sue for an alleged violation even if actual damages are absent, and the case was appealed to the high court. A year after granting certiorari, the Supreme Court declined to review the merits of the case, and the 9th Circuit’s decision was, in essence, upheld.
That did not, however, end the matter. Although the 9th Circuit’s decision was the final say regarding the standing issue, it did not determined whether the plaintiff, Denise Edwards, won her case against First American on its merits. The parties had to go back to the trial court to finish arguing the rest of the case.
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Borrowers claimed sharing delivery fees violated RESPA
Posted Date: Monday, March 3, 2014
In a class action suit against Fidelity National Financial Inc., the plaintiffs alleged that the company violated RESPA by accepting a portion of overnight delivery charges in exchange for a referral. Fidelity denied the allegations, filed a motion to dismiss, and in the alternative, asked the court to transfer the case to a different district.
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Title insurance company fights state enforcement action for RESPA violations
Posted Date: Monday, March 10, 2014
After being hit with a state examination and administrative order, a title insurance company in Indiana filed a petition in state court to review the matter. The company was accused of violating RESPA by failing to comply with consumer disclosure requirements on HUD-1 Settlement Statements. The trial court found in favor of the state agency. Read on to find out what the appeals court decided.
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Borrower circumvents jury waiver in TILA action
Posted Date: Thursday, March 13, 2014
In a lawsuit alleging violations of the Truth in Lending Act, the borrower was able to get around the standard jury waiver within a mortgage agreement. Read on to find out how.
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Bureau files enforcement action against 1st Alliance Lending
Posted Date: Monday, February 24, 2014
The Consumer Financial Protection Bureau ordered a Connecticut mortgage lender, 1st Alliance Lending LLC, to pay an $83,000 civil money penalty for allegedly splitting real estate settlement fees in violation of RESPA. According to the CFPB, First Alliance self-reported these violations to the bureau, admitted liability and provided information related to the conduct of other actors that has facilitated other enforcement investigations.
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CFPB recovers more than $1 million for servicemembers
Posted Date: Monday, March 10, 2014
The Consumer Financial Protection Bureau announced on March 6 that servicemembers, veterans and their families who complained to the bureau about financial products or services have recovered more than $1 million. The relief was reported in the CFPB’s second snapshot of complaints from military consumers, which also highlighted how some military families are not receiving the added consumer protections they have earned. The report covers more than 14,000 complaints from servicemembers, veterans and their families received by the CFPB from July 21, 2011 through Feb. 1, 2014.
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Seven arrested in alleged $6 million mortgage fraud
Posted Date: Monday, March 3, 2014
California Attorney General Kamala Harris announced the arrest of seven suspects who have been charged in an alleged mortgage fraud scheme that defrauded more than 1,550 Inland Valley homeowners seeking loan modification services during California’s foreclosure crisis.
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Former HUD inspector general advises Secure Settlements
Posted Date: Thursday, April 3, 2014
Secure Settlements Inc. (SSI), a data intelligence and risk analytics company for the mortgage industry, announced that the Kenneth Donohue, former Department of Housing and Urban Development (HUD) inspector general under Presidents George W. Bush and Barack Obama, has joined its Industry Leader Advisory Board.
Donohue joins other notable industry leaders, including former Federal Housing Finance Agency Director Armando Falcon, past Mortgage Bankers Association (MBA) President Regina Lowrie, former State Insurance Commissioner Peter Stevens and past State Banking Commissioner Robert Levy, among others, in offering strategic advice and counsel in the continued development of SSI’s closing table data intelligence, risk evaluation, monitoring and reporting business.
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Senate committee moves forward with housing reform bill
Posted Date: Thursday, April 3, 2014
Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, announced the committee will markup bipartisan housing finance reform legislation on April 29 at 10:00 A.M.
“From the start, members of the committee have been extremely engaged on the issue and have demonstrated a sincere interest in advancing reform in a bipartisan manner,” Johnson said. “I look forward to a thoughtful debate in committee as we seek to move reform one step closer to the finish line.”
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Are the new disclosure forms an improvement?
Posted Date: Thursday, March 27, 2014
RESPA News asked readers in a recent poll to give their opinion of the Consumer Financial Protection Bureau’s (CFPB) new mortgage disclosure forms and whether the current HUD-1 Settlement Statement and Good Faith Estimate (GFE) are better. A majority of respondents indicated that the new forms, released in the CFPB’s final RESPA/Truth in Lending Act (TILA) integrated mortgage disclosure rule, just aren’t cutting it.
In 2008, the Department of Housing and Urban Development published a final RESPA rule. The main focus of the rule was the requirement of a new standardized GFE and a modified version of the HUD-1. The forms went into effect in January 2010.
When the CFPB was formed by the Dodd-Frank Act, one of its responsibilities was to draft new mortgage disclosure forms that merged the RESPA and TILA disclosures.
In May 2011, two months before the bureau was set to open its doors, it began releasing prototype disclosures to the public for review and comment.
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DeMarco leaving FHFA
Posted Date: Wednesday, March 26, 2014
Edward DeMarco, who served as acting director of the Federal Housing Finance Agency from 2009 until January 2014, is leaving the agency. He sent a letter to FHFA Director Melvin Watt, confirming his departure. DeMarco did not indicate his futures plans but said April 30 will be his last day at the agency.
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Mortgage broker indicted on fraud charges
Posted Date: Wednesday, March 26, 2014
A Missouri mortgage broker was indicted for his alleged involvement in a scheme to assist buyers in obtaining mortgages based on false information. According to the indictment, the broker falsified mortgage disclosure documents. He was indicted by a federal grand jury on one felony count of wire fraud and one felony count of making a false statement.
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Closing attorney headed to prison for false disclosures
Posted Date: Wednesday, March 26, 2014
Amy Robinson, a former closing attorney in North Carolina, was sentenced to 18 months imprisonment followed by three years of supervised release. According to the government, Robinson falsified numerous HUD-1 Settlement Statements. The court also ordered Robinson to make restitution of more than $2.6 million to various banks and other victims.
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Lawmakers request meeting about mortgage fraud report
Posted Date: Monday, March 24, 2014
After the Department of Justice’s inspector general issued a report finding that the DOJ has not prioritized the investigation of mortgage fraud, Rep. Elijah Cummings, Sen. Elizabeth Warren, and Rep. Maxine Waters requested a meeting with Attorney General Eric Holder to review the findings and identify actions that will be taken to combat fraudulent mortgage practices.
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Second attorney disbarred over inaccurate HUD-1s
Posted Date: Monday, March 24, 2014
Delaware closing attorney John Sullivan was disbarred by the Supreme Court of Delaware after the Office of Disciplinary Counsel filed a disciplinary action against him for misconduct in numerous real estate transactions. Sullivan worked as an attorney with the firm Sanclemente & Associates LLC. R. Keith Sanclemente, sole owner of the firm, was disbarred in a separate matter.
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Former loan officer admits to mortgage fraud scheme
Posted Date: Thursday, March 20, 2014
A former Wells Fargo Home Mortgage employee admitted to his role in a $40.8 million mortgage fraud conspiracy in which he used his position as a loan officer to get the company to release more than $4.6 million based on fraudulent mortgage loan applications. He is the tenth defendant to plead guilty in the case.
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Housing finance reform text released
Posted Date: Thursday, March 20, 2014
Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, released the legislative text of the bipartisan housing finance reform agreement that they announced on March 11. The announcement sparked enthusiasm from the White House, Senators, members of Congress and key industry participants who recognized the agreement as a positive step toward reforming the U.S. housing finance system.
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Medallion Analytics launches new reporting tool
Posted Date: Thursday, March 20, 2014
Medallion Analytics announced that it is rolling out Medallion Vendor Scorecard, a reporting tool that provides a loan-level analysis of errors made throughout the post-closing process. The Scorecard also gives lenders an overall picture of their settlement services vendors’ performances. Medallion Analytics customers using the company’s post-closing audit tools can immediately start using the Medallion Vendor Scorecard.
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Webinar provides explanation to troublesome QM/ATR issues - Webinar
Posted Date: Monday, March 17, 2014
Dodd Frank Update is offering an exclusive webinar on March 26, from 2-3:15 p.m. ET, to provide mortgage lending and real estate professionals instruction on implementation best practices, various implications from the rule and overcoming sticky issues arising from adhering to the new Qualified Mortgage/Ability-to-Repay Final Rule.
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CFPB announces new senior staff
Posted Date: Thursday, March 13, 2014
The Consumer Financial Protection Bureau hired three experts to fill senior positions within the agency.
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Start planning for the new mortgage disclosure forms - Webinar
Posted Date: Monday, March 10, 2014
The Title Report and sponsor WFG National Title Insurance Co. are offering an exclusive webinar on March 19, from 2-3:30 p.m. ET, to provide title companies instruction on implementing the Consumer Financial Protection Bureau’s mandated mortgage disclosure forms. The presenters include: Richard Horn, who was instrumental in writing the final rule; Vincent Danzi of OneTitle National Guaranty Co. Inc.; and Leslie Wyatt, of SoftPro.
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Richey May launches new lender oversight review program
Posted Date: Thursday, March 6, 2014
Richey May & Co., a CPA and business advisory firm serving the mortgage industry, has launched its loan subservicer oversight review program for lenders that use third-party subservicers to service their loans. Richey May’s subservicer oversight program helps lenders comply with all regulations that apply to the lender/servicer relationship, including those set forth by the Consumer Financial Protection Bureau and the government sponsored enterprises, Ginnie Mae, Fannie Mae and Freddie Mac.
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Former real estate broker pleads guilty to mortgage fraud
Posted Date: Thursday, March 6, 2014
A former California real estate broker pleaded guilty to orchestrating a property flipping scheme in which he purchased houses in short sales at artificially low prices and immediately resold the properties at their true market values.
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Bureau extends search for advisory council members
Posted Date: Thursday, March 6, 2014
The Consumer Financial Protection Bureau announced in January that it was inviting the public to apply for membership to its Community Bank Advisory Council and Credit Union Advisory Council.
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Fidelity National Title Group returns as Summit presenting sponsor
Posted Date: Monday, March 3, 2014
Erica Meyer, chief executive officer and publisher of October Research, LLC, announced that Fidelity National Title Group has signed on as the presenting sponsor for the 10th Annual National Settlement Services Summit, making this the third consecutive year the company has taken on this central role.
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Bill to restructure CFPB passed in House
Posted Date: Monday, March 3, 2014
The U.S. House of Representatives has passed the Consumer Financial Freedom and Washington Accountability Act, HR 3193, on a vote of 232 to 182. The bill was debated on Feb. 27.
The Republican-backed bill, sponsored by Rep. Sean Duffy, R-Wis., was introduced in the House in September 2013. It contains the text of several bills that were reported by the Financial Services Committee in November 2013, including HR 2385, HR 2446, HR 2571, HR 3193 and HR 3519.
Republicans have been trying to restructure the Consumer Financial Protection Bureau since before it opened its doors in July 2011. There have been other bills introduced in the house seeking similar changes, but none have been passed into law.
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