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  • FDIC FIL provides guidance on HMDA partial exemptions

    Agency Rule-Making & Guidance

    On October 10, the FDIC issued FIL-58-2018 which summarizes guidance provided by the CFPB on the implementation of partial exemptions from certain of HMDA’s reporting requirements for specific insured depository institutions and insured credit unions pursuant to Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act. On August 31, as previously covered in InfoBytes here, the Bureau issued an interpretive and procedural rule to implement and clarify recent HMDA amendments and outline exemption qualification requirements. FIL-58-2018 reminds FDIC-supervised institutions subject to HMDA and Regulation C of the following clarifications made by the Bureau: (i) there are 26 data points covered by the partial exemptions and 22 other data points that all HMDA reporters must collect, record, and report”; (ii) loans counted towards partial exemption thresholds must otherwise be reportable under Regulation C; (iii) exception based on Community Reinvestment Act examination reports will be determined by the two most recent CRA ratings as of December 31 of the preceding calendar year; (iv) if an institution eligible for a partial exemption chooses not to report a universal loan identifier, it must report a non-universal loan identifier unique within the institution; and (v) institutions exempt from certain reporting requirements may still report exempt data fields so long as they “report all data fields associated with that data point.”

    Agency Rule-Making & Guidance FDIC CFPB HMDA EGRRCPA S. 2155 Mortgages CRA

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  • VA provides status update to address 2014 loan guaranty interim final rule

    Agency Rule-Making & Guidance

    On October 9, the Department of Veterans Affairs (VA) published a status update in the Federal Register to inform the public that it will not publish a final rule to adopt provisions outlined in its May 2014 interim final rule (IFR). The IFR was issued to implement provisions of Dodd-Frank concerning ability-to-repay standards and qualified mortgages (QM) as defined under TILA. According to the status update, section 309 of Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) superseded certain elements of the IFR. Specifically, the EGRRCPA’s “seasoning and recoupment requirements for [Interest Rate Reduction Refinance Loans] effectively eliminated the category of rebuttable presumption QM.” The VA reminded program participates to refer to Circular 26-18-13, previously issued in May and covered by InfoBytes, which addressed “loan churning” of VA-guaranteed refinance loans and set out new requirements for VA eligibility as addressed by EGRRCPA. The VA commented that it will publish future rulemaking to supersede the IFR, but that in the meantime, the IFR remains in effect to the extent the provisions do not conflict, or are not superseded by, EGRRCPA.

    Agency Rule-Making & Guidance Department of Veterans Affairs Dodd-Frank Americans with Disabilities Act Qualified Mortgage TILA EGRRCPA S. 2155 Mortgages

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  • Lehman seeks to add indemnity claims against mortgage sellers

    Courts

    On October 1, Lehman Brothers Holdings Inc., the firm’s plan administrator, and certain subsidiaries moved to increase the indemnification claims brought against mortgage sellers, seeking to include obligations resulting from more than $2.45 billion in residential mortgage-backed securities (RMBS) trust claims. Lehman’s prior claims addressed indemnification claims held against roughly 3,000 counterparties involving more than 11,000 mortgage loans related to litigation settlements reached with Fannie Mae and Freddie Mac. Lehman now seeks to increase the indemnification claims to include claims from additional settlements reached earlier this year for an additional $2.45 billion in RMBS allowed claims. The proposed amended order does not seek to materially change existing procedures, but only seeks to add claims which had not accrued when the original order was entered pursuant to Federal Rule of Bankruptcy Procedure 9024. Lehman asserts the amendment is appropriate under Bankruptcy Rule 7015 and would benefit the creditors by “expediting the resolution and recovery on account of such claims and by increasing distributions to creditors.”

    Courts Bankruptcy Indemnity Claims Fannie Mae Freddie Mac Mortgages RMBS

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  • Freddie Mac announces temporary selling requirements related to Hurricane Florence

    Federal Issues

    On October 3, Freddie Mac issued Bulletin 2018-17 (Bulletin) to announce temporary revisions to its selling requirements for certain mortgages and borrowers impacted by Hurricane Florence. The Bulletin also reminds servicers that the previously announced temporary reimbursement process for property inspections conducted on or after August 29, 2017, of mortgaged premises located in “Eligible Disaster Areas,” remains in effect. Among other things, the temporary selling requirements: (i) provide that sellers who meet certain requirements will be reimbursed for property inspections completed on and before March 14, 2019; (ii) specify age of documentation requirements that will remain in effect for six months for certain mortgages and borrowers; (iii) provide specific collateral requirements and guidance, including sellers’ responsibilities with respect to property damage, appraisal waivers, and collateral representation and warranty relief—along with notice of updates to Loan Selling Advisor, Loan Quality Advisor, and Loan Product Advisor. The Bulletin notes that the Single-Family Seller/Servicer Guide will not be updated to include the temporary requirements and advises sellers and servicers that they must retain a copy of the Bulletin to ensure compliance with these requirements.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues Freddie Mac Selling Guide Disaster Relief Mortgages

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  • Fannie Mae announces updates to Selling Guide

    Federal Issues

    On October 2, Fannie Mae issued SEL-2018-08, announcing updates to its Selling Guide.  Notably, Fannie Mae expanded its policy on the use of employment-related assets as qualifying income, increasing to 80 percent the maximum LTV, CLTV, and HCLTV ratios for loans held by asset owners who are at least 62 years old upon loan closing. With respect to jointly-owned assets, all owners must be listed as borrowers on the loan, but only the borrower whose employment-related asset is being used as income must meet the minimum age requirement. Fannie Mae indicates that, until Desktop Underwriter is updated to reflect this policy change, it will accept delivery of any loan that receives an Approve/Ineligible recommendation because of a ratio over 70 percent and has been confirmed compliant by the lender.

    Effective immediately, other announced updates to the Selling Guide include: (i) clarifications to employment verification policies for union member borrowers employed in a series of short-term job assignments; (ii) changes intended to provide clarity to Fannie’s expectations for lenders managing third-party originators; and (iii) clarifications to comparable sales requirements for appraisers of MH Advantage homes.

    Federal Issues Fannie Mae Selling Guide Mortgages

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  • Court denies motion to certify classes in TCPA action against national mortgage servicer

    Courts

    On September 27, the U.S. District Court for the Northern District of Illinois denied certification of two proposed classes in a TCPA action against a national mortgage servicer, concluding that plaintiff had failed to meet his burden of demonstrating, under FRCP 23(b)(3), that common issues of fact or law predominated over any questions affecting only individual members. According to the opinion, plaintiff alleged the mortgage servicer contacted consumer phones, without express consent, using an automatic telephone dialing system (autodialer) in violation of the TCPA. One of the four named plaintiffs sought to represent two classes of consumers who were contacted by the servicer two or more times between October 2010 and November 2014: (i) those who received calls or texts and told the servicer to cease contact; and (ii) those who received calls and told the servicer it had called the wrong number.

    The court found the issue of consent was decisive in this action, relying on authority holding that individual issues of consent predominate where a defendant “provides specific evidence that a significant number of putative class members consented to contact . . . .” The opinion notes that mortgage servicer’s policies contained a process for flagging accounts that withdrew consent to be contacted and if an account was flagged, the autodialer would not initiate calls to that number. The mortgage servicer argued that many consumers gave permission, retracted it, and gave the permission to be contacted again. The court found the servicer had “put forth specific evidence establishing that a significant percentage of the putative class consented to receiving calls.” The court reviewed expert reports by both parties and ultimately concluded that the method for determining class members suggested by the plaintiff and the plaintiff’s expert did not “adequately identify a common way to address the individual variations of consent and revocation that occurred in this case.” The court determined that it would need to conduct an individualized consent inquiry for accountholders in each putative class.

    Courts TCPA Autodialer Class Action Mortgage Servicing Mortgages

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  • Fannie Mae and Freddie Mac issue servicing updates

    Federal Issues

    On September 26, Fannie Mae issued SVC-2018-07, which includes changes to the foreclosure and third party sale program. In order to encourage more third-party foreclosure sales, Fannie Mae is now requiring the use of Fannie Mae vendors for foreclosure sale marketing services in certain jurisdictions and encouraging the use of Fannie Mae vendors for public foreclosure auctions in certain jurisdictions. Servicers must implement the requirements for all sales scheduled on or after January 1, 2019. Additionally, effective October 28, Fannie Mae will now allow servicers to accept payment changes with future effective dates.

    Freddie Mac released Guide Bulletin 2018-16, which announces new and revised requirements to facilitate a secondary market for mortgages in support of affordable housing preservation and rural housing, including (i) allowing the sale of Community Land Trust Mortgages to Freddie Mac (effective November 5); (ii) updating requirements for mortgages secured by properties subject to resale restrictions (effective November 5); and (iii) revising the Home Possible mortgage requirements to permit sweat equity as a source of funds to cover the entire amount of cash to close for the down payment and/or closing costs (effective September 26).

    Federal Issues Fannie Mae Freddie Mac Servicing Guide Mortgages Mortgage Servicing Foreclosure

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  • 11th Circuit holds filed-rate doctrine bars class actions relating to lender-placed insurance

    Courts

    On September 24, the U.S. Court of Appeals for the 11th Circuit affirmed the district court’s dismissal of two class actions on grounds that the “filed-rate doctrine” precludes the plaintiffs’ claims. In their complaints, the plaintiffs alleged that their loan servicers charged “inflated amounts” for lender-placed insurance by receiving “rebates” or “kickbacks” from an insurance company without passing the savings on to consumers. The district court dismissed the actions with prejudice, holding that the filed-rate doctrine barred the plaintiffs’ claims. On appeal, the 11th Circuit upheld the lower court’s decision, finding that the plaintiffs’ allegations challenged the insurance company’s filed rate. As a result, the court determined that the plaintiffs’ allegations were textbook examples of claims barred by the nonjusticiability principle, which provides that duly-empowered administrative agencies have exclusive say over the rates charged by regulated entities because agencies are more competent than the courts at the rate-making process.

    Courts Eleventh Circuit Appellate Force-placed Insurance Flood Insurance Mortgages Class Action

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  • Federal Reserve seeks to repeal SAFE Act regulations to reflect CFPB authority

    Agency Rule-Making & Guidance

    On September 21, the Federal Reserve Board (Board) issued a notice of proposed rulemaking seeking comment on the repeal of certain provisions of regulations that incorporate the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act), which the Board states are intended to reflect the transfer of rulemaking authority to the CFPB by the Dodd-Frank Act. Specifically, the Board proposes amending Regulation H (Membership of State Banking Institutions in the Federal Reserve System) and Regulation K (International Banking Operations) to repeal the provisions that incorporate the SAFE Act because of the change in rulemaking authority and because the CFPB finalized a rule that is substantially identical to the Board's regulations. Comments on the proposal are due within 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Federal Issues Federal Reserve CFPB SAFE Act Licensing Mortgages

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  • California expands state servicemember civil relief protections

    State Issues

    On September 19, the California governor signed AB 3212 that provides several benefits and protections to servicemembers under the state’s Military and Veterans Code. The legislation’s protections apply to members of the National Guard, State Military Reserve, and the Naval Militia called to full-time active state service or full-time active federal service, as well as other individuals called to full-time active duty for a period in excess of seven days in any 14-day period. Highlights of the amendments include:

    • Extension of Interest Rate Protection. The legislation extends the prohibition on charging an interest rate in excess of six percent on any obligations bearing interest to 120 days after military service. The legislation also extends the six percent interest rate protection for student loans to one year after military service, which previously only applied to mortgage obligations.
    • Written response for Good Faith Requests for Relief. The legislation requires that any person who receives a good faith request from a servicemember for relief and believes the servicemember is not entitled to the relief to provide, within 30 days of the request, a written response acknowledging the request. The written response must include (i) the basis for asserting that the request was incomplete or that the servicemember is not entitled to the relief; (ii) information/materials that are missing, if the servicemember’s request was deemed incomplete; and (iii) contact information. If the written response is not provided, the person waives any objection to the request, and the servicemember shall be entitled to the relief requested.
    • Extension of the Default Judgment Protection. At any stage in any action or proceeding in which a servicemember is involved, the court may stay an action or proceeding during the period of military service or 120 days thereafter (previously 60 days).
    • Inclusion of Motor Vehicles in the Lease Termination Protection. Existing state law allows for the termination of leases of premises that are occupied for dwelling, professional, business, agricultural, or similar purposes by the servicemember, upon entry into military service. The legislation now mirrors the federal Servicemember Civil Relief Act protections for motor vehicle lease termination. Specifically, it provides that a servicemember may terminate a motor vehicle lease after the servicemember’s entry into military service for a period of not less than 180 days. Additionally, it provides for cancelation of leases executed while in a period of military service if the servicemember receives military orders for a change of permanent station from a location in the continental U.S. to a location outside the continental U.S., or from a location in a state outside the continental U.S. to any location outside that state, or to deploy for a period not less than 180 days.

    State Issues Military Lending SCRA Servicemembers Auto Finance Interest Rate Student Lending Mortgages

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