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Wednesday, October 1, 2014

CFPB Takes Action Against Michigan Title Insurance Agency

The CFPB ordered a Michigan title insurance agency to pay a civil money penalty of $200,000 for illegal quid pro quo referral agreements. The Bureau found that the title insurance agency violated Real Estate Settlement Procedures Act (RESPA), which prohibits, among other things, providing something of value to any person with an agreement or understanding that the person will refer real estate settlement services.

Read more.

Federal Reserve Announces Study to Evaluate Effects of Regulatory Capital Framework

The Federal Reserve Board announced that it will begin a quantitative impact study (QIS) to evaluate the potential effects of its revised regulatory capital framework on savings and loan holding companies and insurance holding companies. The QIS is being conducted to allow the Board to better understand how to design a capital framework for insurance holding companies it supervises.

Read more.

CFPB Looking into Manufactured Housing Loans

Mobile home owners often pay more for their loans because most borrowers — three-quarters — choose to title their homes as personal property instead of real property, according to a report from the CFPB. Signaling that it will continue to monitor the market, the bureau said:

The extent to which consumers are aware of theses tradeoffs and how consumers weigh them remains an open question. It is not clear to what degree upfront costs and convenience, lack of availability for mortgage financing, or lack of relevant information about financing options drive consumers to chattel financing.

State laws allow mobile home owners a choice of classifying homes as either personal property (“chattel”) or real estate. While chattel loans carry costlier financing with fewer of the consumer protections that apply to mortgages, they often have a shorter loan term and a simpler, faster origination. Local rules may require a more expensive permanent foundation for a home to be titled as real property.

Read the report.

Tuesday, September 30, 2014

ABA Hosts Mortgage Loan Servicing Webcast

As part of the 2014 Auditing and Monitoring Series focusing on the mortgage reform rules, ABA will host a webcast on the ins and outs of escrow, insurance forced-placement, and auditing loan statements with some credit bureau reporting audit tips and tricks. In addition, participants will receive valuable job aids to include: regulatory requirement matrices, detailed review checklists, unpretentious work paper techniques and report guidelines.

The webcast will be held on October 15, 2014 from 2:00 p.m. to 4:00 p.m. EDT.

Learn more and Register.

Monday, September 29, 2014

OCC Updates Guidance on Federal Branches, Agencies

The OCC updated the Comptroller’s Handbook booklet on supervision of federal branches and agencies. The new booklet — which replaces 1999 guidance — incorporates recent OCC guidance on third-party risk management and Dodd-Frank Act-mandated enhanced standards for foreign banks.

Read the booklet.

Pentagon to Tighten Loan Rules for Service Members

The Defense Department is proposing tightening restrictions on lending to service members. The DoD said that current restrictions in the Military Lending Act — principally targeting tax refund anticipation loans, payday loans and car title loans — leave too many loopholes, although ABA and other banking trade groups have warned that the DoD’s approach could increase costs and limit choices for service members and their families.

The proposed rule would extend the terms of the MLA to all types of credit that is subject to the Truth in Lending Act, with particular implications for credit cards, lines of credit, installment loans and deposit advances offered to service members. The rule would not cover home mortgages and money purchase loans for cars.

The DoD proposed allowing creditors to exclude “bona fide fees that are reasonable and customary” from the MLA’s 36% APR cap. It also proposed to allow creditors to verify a loan applicant’s military status through the DoD’s online database, rather than relying on the borrower’s representation.

In response to the proposal to amend the Military Lending Act, CFPB Director Richard Cordray said that it strongly supports the DoD’s efforts to protect military families. Director Cordray continued:

As one of the agencies charged with enforcing the Military Lending Act, we have seen firsthand how lenders use loopholes in the rule to prey on members of the military…This proposal would shut down the predatory lending to the military that has flourished through exploiting legal technicalities. By broadening the types of credit covered under the law, this proposal would carry out the will of Congress by enabling the CFPB to stop lenders from harming servicemembers in ways the law was intended to stop.

ABA EVP Wayne Abernathy said:

When it comes to providing financial services to the military, the banking industry’s record is a strong and positive one. We have worked with DoD over the past decade to ensure that implementing the MLA does not put military families at a disadvantage or harm their ability to access financial services provided by banks.

ABA will evaluate and comment on the proposed rule. Comments are due by Nov. 28.

Read the proposed rule.
Read the CFPB’s statement.
Read ABA’s previous comments.