CFPB Seeks Comments on Proposed Mortgage Servicing Rule
CFPB Seeks Servicing Agent Comments on Proposed Mortgage Servicing Rules. This is an important discussion for Service Providers who work for Mortgage Lenders
| LINK TO CFPB POST |
By Erik Durbin and Paul Rothstein – MAY 04, 2017
Today, we’ve released our plan to assess the effectiveness of the Real Estate Settlement Procedures Act (RESPA) mortgage servicing rule. We are asking the public to comment on our plan, to suggest sources of data, and generally to provide other information that would help with the assessment.
Mortgage loan servicers are typically responsible for several activities relating to mortgage loans such as:
- Processing loan payments
- Responding to borrower inquiries
- Keeping track of principal and interest paid
- Managing escrow accounts
- Reporting to investors
- Pursuing collection and loss mitigation activities (including foreclosures and loan modifications) under certain circumstances
In January 2013, the CFPB issued the 2013 RESPA Servicing Final Rule. We amended the rule a few times before it took effect, and we refer to all of the requirements and related amendments that took effect on January 10, 2014, as the RESPA mortgage servicing rule. This rule gave borrowers new consumer protections related to mortgage loan servicing, many of which were aimed at helping consumers who were having trouble making their mortgage payments.
The RESPA mortgage servicing rule requires, among other things, that servicers provide disclosures to borrowers related to force-placed insurance, respond to errors asserted by borrowers in a timely manner, and follow certain procedures related to loss mitigation applications and communications with borrowers. For example, servicers generally must acknowledge written notices of error within five days and investigate and respond to the borrower in writing within 30 days. In general, the consumer protection purposes of RESPA include that servicers respond to borrower requests and complaints in a timely manner, maintain and provide accurate information, help borrowers avoid unwarranted or unnecessary costs and fees, and facilitate review for foreclosure avoidance options.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires us to review some of our rules within five years after they take effect. These formal reviews are called assessments. We are conducting an assessment of the RESPA mortgage servicing rule, and we will issue a report of the assessment by January 2019. As required by law, the assessment will address the rule’s effectiveness in meeting the purposes and objectives of title X of the Dodd-Frank Act and the specific goals of the rule, using available evidence and data. We recently released our plan for the remittance rule assessment, as well.
We see conducting the assessment as an opportunity. Conducting the assessment will advance our knowledge of the benefits and costs of the key requirements of the RESPA mortgage servicing rule. The assessment will also provide the public with information on the mortgage servicing market, and help us to fulfill our commitment to be an evidence-based and effective agency.
We would like your help in improving the assessment.
We invite consumers, consumer advocates, housing counselors, mortgage loan servicers, industry representatives, and other interested parties to comment on our assessment plan. Comments can suggest sources of data, offer other recommendations, and generally provide information that would help us understand the rule’s effectiveness or improve this important work.
We are committed to well-tailored and effective regulations and have sought to carefully calibrate our efforts to ensure consistency with respect to consumer financial protections across the financial services marketplace.
Comments on the plan will be due 60 days after it is published in the Federal Register.
Learn more about your options and rights related to mortgage loans.
For more information on how to comply with the Bureau’s mortgage servicing rules, visit our implementation and guidance page.
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Mortgage Note NOT Assigned to Foreclosing Lender?! OOOPS -It’s all in the Details
Interesting case out of Alabama. See more detail.
Her mortgage had been foreclosed, but the mortgagor challenged the foreclosure by appeal, saying the lender who foreclosed had no legal interest because the note was not properly assigned. The appeal court agreed and the foreclosure sale has been reversed and remanded to the trial court.
Moral of the story: Dot your I’s and cross your T’s when it comes to assignment of mortgage notes.
Legal Issues Affecting Real Estate and Mortgage Title Closings
Excellent article by Alston and Bird (AlstonFinance.com)
Non-Agency Residential Mortgage Loans in 2014: A Survey of Legal Issues Affecting the Market. (Read entire article)
It covers in a solid overview of :
- Qualified Mortgages
- QRM and Risk Retention
- Due Diligence Rule
- Developments in Mortgage Servicing and ECOA
- Mortgage Servicing Transfers
- Proposed Changes in Mortgage Servicing and Safe Harbor Protection
“Conclusion
As can be seen, 2014 was a watershed year in the history of residential mortgage finance. More regulations were passed than would be ordinarily expected in a full decade. A lot remains to be digested, and some areas of regulation are still unresolved, but overall the biggest surprise was that all of these regulations had a surprisingly small impact on the RMBS market. Origination standards had tightenedso much after the financial crisis that the changes from QMs had very little impact. QRMs did not have a loan-to-valueratio requirement and was virtually the same as QMs, so the impact on the market was negligible. Regulation AB IIhas resulted in no real change in the RMBS market, which was completely private anyway. There were a number ofchanges in mortgage servicing, and the mergers and acquisitions market was surprisingly active.”
More Law Firm Affiliated Title Companies Charged with Foreclosure Fraud
On December 22nd, two more title companies, affiliated with law firms, have been charged with over-inflating fees in foreclosure cases in Colorado. National Title and City Park Title are being targeted along with their related Robert J. Hopp & Assoc. and the Vaden Law Firms. The suits continue in Colorado’s investigation into what became a distinct industry after the 2008 mortgage debacle – the foreclosure mills, under a state program called StopFraudColorado.gov See the press release here.
These Title Companies continue to be part of the ongoing investigations. In July, the Colorado AG sued RE Records Research and Colorado American Title, in conjunction with their related foreclosure Law firms, Castle Law Group and Aronowitz & Mechlenberg., settling at least one case for $10 million. It was claimed that the foreclosures handled by these firms could have collected in excess of $97 million in illegal profits. See the JD Journal Article here.
Beware of Document Prep, Imperfect Mortgage May Grant a Homebuyer a Free Home
A great article “Mortgage Recording Requirements: Tiny Technical Defect Strikes Again” in Lexology this week by Vicki Harding of Pepper Hamilton LLP, reminds us how dangerous it is for a lender or settlement to make a mistake on a Mortgage Document. While the situation of an errant mortgage is settled in some states (such as Minnesota) where a law or title standard dismisses a recording problem, in other states, a mortgage can give a consumer a “free home” by testing the technical waters in court. Think of the potential costs to those of us that prepare mortgages every day with a careless error. Think again when preparing and reviewing those common documents.
A good quote reads:
There are a surprisingly large number of cases that avoid mortgages based on technical defects. As illustrated by this case, two points to remember: (1) on the one hand, just because a document was recorded does not mean thathttp://landrecs.com/wp-login.php it was properly recorded so that it provides constructive notice, and (2) on the other hand, there may be remedial provisions that lead to the result that once a document is recorded specified defects are no longer relevant.
$7 Billion being Paid to Settle Mortgage Claims
Citigroup will pay a total of $7 billion, including a record $4 billion fine to the Department of Justice (DOJ) for charges related to the packaging, marketing, sale, and issuance of residential mortgage-backed securities (RMBS.) The deal was reached after months of negotiations – between Citigroup and a division of the Financial Fraud Enforcement Task Force consisting of state and federal authorities, and financial regulators.
Why it matters: The settlement arguably is the product of a hard-line approach taken by the Department of Justice, providing the largest civil penalty ever. U.S.
Attorney General Eric Holder characterized Citi’s conduct as “egregious,” adding that “the bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008.” Holder also stated that the deal does not absolve Citi or its employees of possible criminal charges.
Read more at Lexology and Citibank
CFPB Turns Three and Shows its Stuff
This is a great article from Lexology, showing the power and focus of the CFPB. Early on I was not a fan of the CFPB,
but as time goes by, their policing powers have been excellent. Good for the consumer and good for “cleaning up” the
type of problems we had that ended in the crisis of 2008.
Among the details the article shows some of the results of the CFPB police:
Penalties / Consumer Relief Obtained
• Amount of penalties ordered to be paid in enforcement actions (total): $150 million
• Highest civil money penalty ordered to date: $27.5 million
• Amount ordered to be returned to consumers: $4.6 billion (more than half of which is mortgage servicing related).
To read the entire article, click here
Foreclosures Wend Their Way Through the System
Foreclosures … down 23% since March 2013
Good article by Trey Garrison of HousingWire on the status of foreclosures in the U.S. The good news is that the glut of foreclosures seems to be working its way through the system, so that those homes foreclosed can now be dealt with more efficiently by banks, and moved onto the market for sales and useful homes, which is good for both the consumer and neighborhoods. It will also help cities that are struggling with maintaining homes that have been vandalized and neighborhoods where homes have simply not been maintained.
A comment by Daren Blomquist, vice president at RealtyTrac mentioned that
“Banks will also now be able to devote more resources to dealing with the lingering inventory of nearly half a million already-foreclosed homes that still need to be sold,” Blomquist continued. “Our estimates indicate only 10% of these bank-owned properties are listed for sale and more than half are still occupied by the former homeowner or tenant.”
Read the full article here.
Midwest Abstracting Seminar Announced
May 14-15, 2012 St Paul, MN
WHY TAKE THIS SEMINAR?
To Improve and Update Knowledge of Title Abstracting
To Improve and Update Knowledge of Title Examination
To Review for the Minnesota State Abstracter’s License
AS A RESULT OF THIS SEMINAR, PARTICIPANTS WILL BE ABLE TO:
Read, Draw and Recognize Valid Legal Descriptions
- Follow the Public Land Survey System to Identify Parcels
- Identify and Diagram Metes & Bounds Descriptions
- Discover Critical Information shown on Plats and Survey Maps
- Recognize Legal Differences in single family, Townhomes, Timeshares,
Condominiums, Co-ops, Common Interest Communities, etc.
- Identify Atypical Title Issues for Manufactured Housing/ Mobile Homes
- Summarize Documents Accurately in the Public Real Estate Offices
- List the Eight Public Offices that All Abstractors Must Know and Use
- Demonstrate the Ability to Index and Find all Public Real Estate Documents
- Answer Where Needed Records are Indexed, and How they are Organized
- Compare/ Contrast Torrens Property with Abstract Property Searches
- Explain Fundamentals of Bankruptcy and Bankruptcy Searches
Construct and solve missing links in a “chain of title”
- Follow complete Chains of Title and Find Missing Links
- Correctly Define Rights, Title & Interests follow them as they’re Created and Change
- Apply the 30 & 40 Year Laws in Abstracting and Examining and ID the Exceptions
- Properly Execute Abstract and Torrens Name Searches in All Counties
- Recite Critical Updated Minnesota Real Estate Laws and Title Searches
Remember information for your abstracter’s license test
- Define and Use Scores of Key Real Estate Title Terms
- Respond to Dozens of Updated Abstracter Questions
- Answer questions regarding the State Licensing Requirements, Laws and Rules
- Respond to Ethics and Standards of Professional Conduct Questions
State of Delaware Sues MERS
In a new twist, the State of Delaware is suing MERS under the Unlawful and Deceptive Trade Practices Act (UDTPA.) The suit claims that MERS has left for borrowers “no public trail by which anyone can identify the principals or verify the propriety of the (mortgage) transfer.” The private and obscure nature of their database makes it difficult for consumers “to know of or challenge inaccuracies in the MERS System” i.e. – who the heck holds the mortgage and who the heck has the right to foreclose? Read more at Delaware Online
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