What’s News for Mortgage Lenders? Fair Lending Fines, Qualified Mortgage Rule, FIRREA Claims, CFPB Fines, and More

What’s new in the world of residential mortgage lending? To start with, these five recent developments that every lender should be following. From lawyers on JD Supra:

1.       DOJ fines lenders over discrimination:

“Recently, the DOJ released information regarding three fair lending actions, all three of which included allegations related to wholesale lending programs. On September 27, the DOJ announced separate actions—one against a Wisconsin bank and the other against a nationwide wholesale lender—in which the DOJ alleged that the lenders engaged in a pattern or practice of discrimination on the basis of race and national origin in their wholesale mortgage businesses.” (BuckleySandler)

2.       HUD issues proposed qualified mortgage rule:

“HUD’s proposed QM Rule would give QM status to all single family, forward FHA-insured loans. Title II insured loans, however, would be required to meet the CFPB’s 3% limit for points and fees. Moreover, the HUD Proposed Rule, like the CFPB Final Rule, would create a bifurcated scheme for QM protection. Title II loans whose APR at consummation exceed 1.15% above the average prime offer rate, plus the Mortgage Insurance Premium amount, would only be eligible for a ‘rebuttable presumption’ of compliance. In contrast, covered Title II loans that fall within this APR threshold would receive a safe harbor for QM compliance.” (K&L Gates)

3.       FDIC proposes new rules for flood insurance

“The Federal Deposit Insurance Corporation recently approved for release joint proposed regulations to implement provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (the Act). The proposal would amend the Flood Disaster Protection Act of 1973 (FDPA) requirements relating to the escrow of flood insurance payments, acceptance of private flood insurance coverage, and force placement of flood insurance.” (Ballard Spahr)

4.       CFPB fines lenders over incorrect mortgage loan data:

“On October 9, the Consumer Financial Protection Bureau announced it had assessed civil money penalties totaling $459,000 against two financial institutions—one bank and one nonbank—after examinations identified significant data errors in mortgage loans reported pursuant to the Home Mortgage Disclosure Act (HMDA). The Bureau simultaneously issued a HMDA bulletin to all mortgage lenders regarding the elements of an effective HMDA compliance management system, resubmission thresholds, and factors the Bureau may consider when evaluating whether to pursue a public HMDA enforcement action and related civil money penalties.” (BuckleySandler)

5.       Judge gives green light to FIRREA lawsuit:

“A federal judge recently rejected motions to dismiss in a suit in which the U.S. government alleged that two mortgage originators and their officers defrauded the Department of Housing and Urban Development (HUD) into insuring risky mortgage loans. […] The government sought civil penalties and treble damages under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).” (Ballard Spahr)

The updates:

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