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  • Appellants petition 5th Circuit for en banc hearing of CFPB constitutionality challenge

    Courts

    On August 13, two Mississippi-based payday loan and check cashing companies (appellants) filed an unopposed petition for initial hearing en banc with the U.S. Court of Appeals for the 5th Circuit regarding a challenge to the constitutionality of the CFPB’s single director structure. In April, the 5th Circuit agreed to hear the appellant’s interlocutory appeal, and now the appellants request the appeals court move straight to an en banc panel, stating “if [the] appeal is heard under the normal panel process, [the] Court will likely be asked to rehear that panel’s decision en banc, as occurred in the D.C. Circuit’s PHH case.” (covered by a Buckley Sandler Special Alert here.) The appellants cite to the July decision by the 5th Circuit ruling the FHFA’s single director structure violates Article II of the Constitution (previously covered by InfoBytes here) and note that a petition for rehearing en banc has already been filed in that case. The appellants suggest coordination in scheduling the potential en banc arguments should the court accept both petitions, arguing that the decision would “guarantee that the Fifth Circuit speaks with one voice regarding the constitutionality of these agencies’ structures.”

    Courts Fifth Circuit Appellate Federal Issues CFPB PHH v. CFPB CFPB Succession Dodd-Frank FHFA

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  • Fannie Mae updates Servicing Guide with streamlined mortgage insurance claims processing

    Federal Issues

    On August 15, Fannie Mae issued SVC-2018-05, which updates the Servicing Guide to include, among other things, a streamlined mortgage insurance (MI) claims process with certain mortgage insurers to “reduce the operational burden and cost associated with the process for servicers.” While servicers will continue to submit claims in accordance with the MI policy, participating mortgage insurers will now process all claims using an algorithm named the “MI Factor.” Effective October 1, claims settled using the MI Factor will not be subject to the curtailment billing process and servicers will not be required to submit supplemental claim submissions and claim appeals to the mortgage insurer. Fannie Mae also updated its Servicing Guide to include (i) clarification of the servicer’s responsibilities for addressing urgent property conditions; (ii) policy reminders regarding insured loss repay inspection reimbursements; and (iii) notification thresholds and timing requirements regarding the transfer of default-related matters between law firms within a single state.

    Federal Issues Fannie Mae Servicing Guide Mortgage Insurance Mortgage Servicing

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  • HUD releases ANPR on Affirmatively Furthering Fair Housing regulations

    Agency Rule-Making & Guidance

    On August 13, HUD announced an advance notice of proposed rulemaking (ANPR) seeking comment on potential amendments to its 2015 Affirmatively Furthering Fair Housing (AFFH) regulations. As previously covered by InfoBytes, AFFH was aimed at helping communities who receive HUD funding meet their fair housing obligations to provide affordable housing in more communities; however, HUD now states that the rule “proved ineffective, highly prescriptive, and effectively discouraged the production of affordable housing.” The ANPR requests public comment on changes that will, among other things, (i) minimize regulatory burden; (ii) create a process focused on accomplishing positive results; (iii) provide for greater local control; (iv) encourage actions that will increase housing choice; and (v) efficiently utilize HUD resources. The ANPR also details a list of substantive questions HUD is interested in commenters responding to, including “[w]hat type of community participation and consultation should program participants undertake in fulfilling their AFFH obligations?” and “[h]ow should HUD evaluate the AFFH efforts of program participants?” Comments on the ANPR must be received by October 15.

    Agency Rule-Making & Guidance Federal Issues HUD Fair Lending

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  • CFPB Succession: Bureau reportedly no longer examining for MLA compliance

    Federal Issues

    According to reports citing “internal agency documents,” acting Director of the CFPB Mick Mulvaney intends to cease supervisory examinations of the Military Lending Act (MLA), contending the law does not explicitly prescribe the Bureau the authority to examine financial institutions for compliance with the MLA. In 2013, amendments to the MLA granted enforcement authority to the same agencies with administrative enforcement power under TILA, including the Bureau, but these amendments did not also provide these same agencies with the statutory authority to supervise institutions for compliance with the MLA. The Bureau currently includes the MLA in the statutory- and regulation-based procedures section of the Supervision and Examination Manual and has not released a formal statement in response to reports of this supervisory change.

    Federal Issues Supervision Compliance Examination Military Lending Act CFPB

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  • Federal Reserve Board fines national bank $8.6 million for legacy mortgage documentation deficiencies

    Federal Issues

    On August 10, the Federal Reserve Board (Board) announced a settlement with a national bank for legacy mortgage servicing issues related to the improper preparation and notarization of lost note affidavits. Under the consent order, the Board assessed an $8.6 million civil money penalty for alleged safety and soundness violations under Section 8 of the Federal Deposit Insurance Act. The Board emphasized that the bank’s servicing subsidiary replaced the documents with properly executed and notarized affidavits and, as of September 2017, the subsidiary no longer participated in the mortgage servicing business. The Board also announced the termination, due to “sustainable improvements,” of a 2011 enforcement action against the national bank and its subsidiary related to residential mortgage loan servicing.

    Federal Issues Enforcement Civil Money Penalties Mortgages FDI Act

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  • Fannie Mae issues updated mortgage industry alert in California

    Federal Issues

    Recently, Fannie Mae’s Mortgage Fraud Program issued an industry alert to mortgage companies operating in California regarding the use of false employment information by mortgage loan applicants. (See previous coverage in InfoBytes here). Fannie Mae extended its alert to Northern California and identified additional employers whose existence could not be verified by Fannie Mae. The alert provides “red flags” to help lenders and originators identify potential mortgage fraud when reviewing employment information.

    Federal Issues Fannie Mae Mortgages Fraud State Issues

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  • CFPB settles unauthorized payday loan allegations

    Federal Issues

    On August 10, the CFPB announced a settlement with multiple defendants that allegedly made unauthorized payday loans. The settlement results from a 2014 complaint that alleged, among other things, that the defendants accessed consumer checking accounts to illegally deposit the proceeds of payday loans and withdraw related fees without consumer consent. The stipulated final judgment and order, among other things, (i) imposes a penalty of up to approximately $69 million if the defendants fail to fully comply with the operative terms of the settlement; (ii) prohibits the defendants from performing similar activities in the future; and (iii) assesses a civil money penalty of $1, in part based on the defendants’ inability to pay.

    On July 23, as previously covered by InfoBytes, a court approved a stipulated final judgment and order against one of the defendants, who neither admitted nor denied the Bureau’s allegations, for a civil money penalty of $1 (based, in part, on his inability to pay) and agreement to fully cooperate with the Bureau.

    Federal Issues CFPB Enforcement Payday Lending

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  • OCC, FDIC provide guidance to institutions affected by California wildfires

    Federal Issues

    On August 9, the OCC issued a statement permitting OCC-regulated institutions to close their offices affected by wildfires in California. OCC Bulletin 2012-28 provides further guidance on natural disasters and other emergency conditions. (See previous InfoBytes coverage here). On the same day, the FDIC also provided guidance related to California wildfires in FIL-41-2018. Among other things, the FDIC is encouraging institutions to consider extending repayment terms and restructuring existing loans that may be affected.

    Federal Issues OCC FDIC Disaster Relief

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  • Fannie Mae, Freddie Mac issue forbearance relief to homeowners affected by California wildfires

    Federal Issues

    On August 8, Freddie Mac extended its disaster relief options to homeowners affected by ongoing California wildfires who have access to federal individual assistance programs in FEMA-declared disaster areas. The relief suspends foreclosures by providing forbearance for up to 12 months. Penalties and late fees will also be waived. Freddie Mac also reminded servicers to consider borrowers who work in eligible disaster areas but have homes outside the affected area for standard relief policies. Moreover, servicers may leverage Freddie Mac forbearance programs to provide immediate mortgage relief to those affected by the wildfires in areas where FEMA has not made individual assistance available.

    On August 7, Fannie Mae issued a notice to mortgage servicers reminding them that homeowners impacted by the California wildfires are eligible to stop making mortgage payments for up to 12 months, during which time late fees will not be incurred nor delinquencies reported to the credit bureaus. Furthermore, servicers may immediately suspend or reduce mortgage payments for up to 90 days without any contact with homeowners believed to have been affected by the wildfires. Additionally, foreclosures and other legal proceedings must be suspended for impacted homeowners.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues Fannie Mae Mortgages Mortgage Servicing Disaster Relief

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  • Court again denies request to stay CFPB payday rule compliance date

    Courts

    On August 7, the U.S. District Court for the Western District of Texas denied a request by two payday loan trade groups to reconsider its June decision denying a stay of the compliance date (August 19, 2019) of the Bureau’s final rule on payday loans, vehicle title loans, and certain other installment loans (Rule) until 445 days after final judgment in the pending litigation. As previously covered by InfoBytes, the court granted the trade groups’ and the CFPB’s joint request to stay the lawsuit—which asks the court to set aside the Rule— because of the Bureau’s plans to reconsider the Rule, but the court denied, without explanation, the request to stay the compliance date. In denying the reconsideration request, the court acknowledged considering, among other things, the trade groups’ motion and the CFPB’s response, which supported the motion but again, did not provide a substantive justification for the denial.

    Courts CFPB Payday Rule CFPB Succession Federal Issues

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