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  • Legislation Introduced to Reduce Mortgage Appraisal Requirements in Rural Communities

    Federal Issues

    On July 13, Representative David Kustoff (R-Tenn.) introduced legislation intended to decrease costs and delays when obtaining a mortgage by reducing appraisal requirements. As set forth in a July 13 press release issued by Rep. Kustoff’s office, the Securing Access to Affordable Mortgage Act of 2017 (H.R. 3221) would (i) ease “unfair” appraisal requirements, which would benefit rural communities where there is a demonstrated lack of qualified appraisers, and (ii) assist prospective homebuyers by decreasing costs and delays. H.R. 3221 would increase access to affordable mortgages by excluding loans of $250,000 or less from property appraisal requirements through new exemptions under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the Truth in Lending Act.

    As previously discussed in InfoBytes, earlier this year several financial agencies jointly issued an Interagency Advisory to address concerns regarding the shortage of certified and licensed appraisers, particularly in rural areas.

    Federal Issues Federal Legislation Mortgages TILA Appraisal

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  • House Appropriations Committee Approves Fiscal 2018 Funding Bill Designed to Overhaul Existing Financial Regulations

    Federal Issues

    On July 13, the House Appropriations Committee approved the fiscal year 2018 financial services funding bill by a vote of 31-21. The bill totaling $20.231 billion—$1.284 billion below fiscal year 2017 and $2.483 billion less than President Trump’s budget request—incorporates several provisions of the Financial CHOICE Act designed to, among other things, overhaul existing financial regulations and restructure the CFPB. The bill provides funding for the Treasury Department, Judiciary, SEC, Federal Reserve, CFPB, and other related agencies. According to the press release issued by the committee, the bill “provides the funding necessary for federal regulators to do their jobs in a timely and appropriate manner, while stopping burdensome regulations before they can damage [the] economy irreparably.”

    A summary of the bill is available here.

    A copy of the legislative text of the bill is available here.

    A copy of the bill report is available here.

    Federal Issues Federal Legislation Financial CHOICE Act Treasury Department SEC Federal Reserve House Appropriations Committee

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  • Senate Banking Committee to Host July 20 Hearing on Mortgage Reform

    Federal Issues

    On July 20, the Senate Banking Committee will hold a hearing on mortgage reform for small lenders. The hearing, entitled “Housing Finance Reform: Maintaining Access for Small Lenders,” will feature witnesses from the American Bankers Association, the Credit Union National Association, the Independent Community Bankers of America, the National Association of Federally-Insured Credit Unions, the Community Mortgage Lenders of America, and the Community Home Lenders Association.

    Federal Issues Senate Banking Committee Mortgages ABA NCUA CUNA ICBA Mortgage Lenders

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  • Judge Issues Ruling that Federal Safe Harbor Provision Applies in RESPA Case

    Courts

    On July 13, a federal judge in the U.S. District Court for the Western District of Kentucky issued an opinion holding that a safe harbor provision for affiliated business arrangements under Section 8(c)(4) of RESPA protects a Louisville law firm's relationship with a string of now-closed title insurance agencies. (See CFPB v. Borders and Borders, Plc, No. 3:13-cv-01047-CRS-DW (W.D. Ky. July 13, 2017)). In 2013, the CFPB alleged the firm violated RESPA by paying kickbacks for real estate settlement referrals through a network of joint ventures with the principals of nine title insurance companies. (See previous InfoBytes summary here.) The judge granted the firm’s motion for summary judgment on only one safe harbor question, stating that the firm’s agreements with the title insurance agencies qualified as “affiliated business arrangements” because it “disclosed the relationship…, the customers could reject the referral, and the Bureau failed to show that the [title insurance companies] received anything of value beyond their ownership interests.”

    The judge rejected the firm's claim that the CFPB cannot seek disgorgement as a remedy and further declined to address the firm’s ultra vires argument that the CFPB is an unconstitutional agency and therefore lacks legal authority to bring suit, stating that the en banc decision in PHH Corp. v. CFPB has not yet been issued.

    Notably, however, the judge appeared to suggest that case could be appealed because the firm’s other arguments fail to qualify for RESPA safe harbors under Sections 8(c)(1) and 8(c)(2).

    Courts CFPB RESPA Mortgages Litigation Disgorgement Safe Harbor

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  • Connecticut Governor Enacts Law Regarding Compliance Requirements for Mortgage Licensees

    State Issues

    On July 11, Connecticut Governor Dannel Malloy signed into law Public Act No. 17-233 (H.B. 7141), which makes various revisions to the state’s banking laws. Among other things, the law (i) applies certain mortgage servicers’ and student loan servicers’ prohibited acts to other licensees; (ii) requires non-depository licensees to maintain and enforce compliance policies and procedures; (iii) allows the banking commissioner to require the use of electronic bonds for licensed or registered individuals to participate in the Nationwide Mortgage Licensing System;  (iv) reduces pre-licensing education requirements for mortgage loan originators, loan processors, and underwriters; and (v) sets limits for money transmitters regarding virtual currency transactions and timeframes for transmitting money. The law takes effect October 1, 2017, with provisions relating to compliance policies and procedures taking effect July 1, 2018, and pre-licensing education requirements taking effect January 1, 2019.

    State Issues State Legislation Mortgages Mortgage Origination Compliance

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  • SEC Chairman Outlines Regulatory Agenda

    Securities

    On July 12, SEC Chairman Jay Clayton spoke at the nonpartisan Economic Club of New York about the principles behind his regulatory agenda. In addition to outlining the SEC’s three-part mission on investor protection, market order and efficiency, and capital formation, Clayton stressed the need for cooperation with domestic and foreign regulators to ensure effective, sound regulatory approaches. Noting the SEC’s coordination with the Commodity Futures Trading Commission (CFTC) on issues concerning cybersecurity and swap markets specifically, Clayton highlighted plans to continue to work with the CFTC, under the guidance of Title VII of the Dodd-Frank Act, to “reduce unnecessary complexity as well as costs to both regulators and market participants.” The SEC also plans to continue to encourage strong enforcement and examination programs.

    Securities SEC Regulator Enforcement Enforcement CFTC

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  • ABA, State Banking Associations Request HMDA Implementation Delay

    Lending

    Following up on comments submitted to the CFPB on its proposal to amend the 2015 HMDA rule (see previous InfoBytes coverage here), the American Bankers Association (ABA)—along with state banking associations representing all 50 states and Puerto Rico—sent a letter on July 12 to the Bureau requesting that the new “complex” and “substantive” requirements scheduled to take effect January 1, 2018 be delayed to allow banks time to comply. The associations claim the Bureau (i) failed to sufficiently conduct industry research to identify and address questions and proposed solutions concerning the proposed changes, and (ii) inadequately addressed issues related to the protection of borrower data. The ABA also stresses that the software systems banks need to incorporate into their platforms to ensure compliant data collection will not be available in time “because the industry and systems vendors are still awaiting rule changes that will necessitate system adaptations.” The Bureau has been asked to announce its intention for a delay within the next month.

    Lending HMDA ABA CFPB Bank Compliance Mortgages Agency Rule-Making & Guidance

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  • Enforcement Actions Announced by CFTC for Fraud, Registration Violations in Florida

    Courts

    On July 11, the CFTC announced that the U.S. District Court for the Middle District of Florida entered an order for final judgment by default against two individuals and their company for fraudulently soliciting investors in a commodity pool, misappropriating pool participants’ funds, and committing futures fraud, among other things. According to the CFTC complaint filed on January 26 of 2017, the defendants fraudulently marketed their company to prospective participants, materially misrepresented their past trading success using fabricated high rates of return, provided account statements to investors showing fictitious increases in value, and failed to disclose defendant’s previous permanent injunction on trading.

    In addition to imposing a permanent injunction on trading and registration, the Court ordered defendants to pay civil monetary penalties of almost $1.85 million as well as restitution of $459,613. An appointed monitor will oversee the defendants’ payment of restitution. The Court also required one of the defendants to affirmatively disclose his violations in any future marketing materials, presentations, speeches or websites. The required disclosure names his violations, the amount of restitution and civil penalties he must pay, along with the case numbers of his CFTC actions.

    Both of the defendants recently pleaded guilty to related criminal charges. One defendant was sentenced to one year and one day in prison in connection with her guilty plea to one count of obstruction of justice, and the other defendant is awaiting sentencing in connection with his guilty plea to one count of wire fraud.

    Courts Federal Issues CFTC Securities Enforcement Fraud Litigation

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  • CFPB Seeks Comments on Proposed Amendments to HMDA Reporting Threshold

    Agency Rule-Making & Guidance

    On July 14, the CFPB announced and requested comments on proposed amendments to Regulation C, which concerns reporting requirements for banks and credit unions issuing home-equity lines of credit under HMDA. The amendments would raise the threshold from 100 loans to 500 for calendar years 2018 and 2019 to ease the burden on small-volume lenders. During this time, the Bureau will determine based on feedback whether the threshold should be permanently changed. The comment period ends July 31, 2017.

    As previously reported in InfoBytes, earlier this year the Bureau solicited and received comments on its proposal to clarify data collection and reporting requirements under the 2015 HMDA rule. The amendments are scheduled to take effect January 1, 2018.

    Agency Rule-Making & Guidance CFPB HMDA Lending Mortgage Origination

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  • President Trump Issues Executive Order Extending OFAC Review Period of Sudanese Policies and Actions

    Federal Issues

    On July 11, President Trump announced an extension to the review period established by Executive Order 13761 (EO). EO 13761, issued by President Barack Obama, provided additional time for OFAC to review the policies and actions of Sudan to allow the opportunity to revoke certain sanctions based on positive findings regarding the Sudanese government’s actions. President Trump’s new EO extends the review period to October 12, 2017. For additional information regarding EO 13761, please see OFAC’s Frequently Asked Questions.

    Federal Issues Executive Order Sanctions OFAC Treasury Department

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