CFPB Proposes New Foreclosure Servicing Rules

The Consumer Financial Protection Bureau proposed new servicing rules geared towards saving homeowners from foreclosure. If finalized, the proposal would require mortgage servicers to prioritize helping borrowers make payments over foreclosure. The Bureau is requesting comments on this topic and possible approaches to ensuring that servicers are producing accurate credit reporting data for borrowers undergoing review for assistance. “When struggling homeowners can get the help they need without unnecessary obstacles, it is better for borrowers, servicers, and the economy as a whole,” said CFPB Director Rohit Chopra. “The CFPB’s proposal would reduce avoidable foreclosures and make the mortgage market more resilient during future crises.” The rules are influenced by commentary from both the public and the mortgage industry, which derived…

CFPB To Create Repeat Offender Registry

The Consumer Financial Protection Bureau finalized a rule creating a registry of repeat corporate offenders to deter further infractions. The goal is to identify financial institutions that have violated consumer laws and government or court orders on multiple occasions, helping it hold lawbreaking companies accountable. Court orders and agency actions against companies that have broken the law are not comprehensively tracked, the Bureau says, giving offenders leeway to keep moving forward with scams, schemes, and other illegal conduct. “When companies believe that violating the law is more profitable than following it, this totally undermines public trust and harms businesses who are playing by the rules,” CFPB Director Rohit Chopra said in prepared remarks. Now, nonbank financial companies caught violating consumer…

CFPB Launches Inquiry Into Mortgage “Junk Fees”

The Consumer Financial Protection Bureau launched a public inquiry into mortgage “junk fees,” which it says hide in closing costs. The Bureau said closing costs have “risen steeply” and cause undue financial stress on both borrowers, who bear the burden of higher prices, and lenders, who have to pass costs along to borrowers in order to offer competitive mortgages. “Junk fees and excessive closing costs can drain down payments and push up monthly mortgage costs,” said CFPB Director Rohit Chopra. “The CFPB is looking for ways to reduce anti-competitive fees that harm both homebuyers and lenders.” Median closing costs in 2022 were $6,000 and are still rising, according to a statement from the Bureau. “The CFPB wants to understand why…

CFPB Takes Aim At “Junk Fees” In Mortgage Servicing

The Consumer Financial Protection Bureau is taking aim at mortgage “junk fees” yet again, this time in the servicing sector. The bureau released supervisory highlights addressing what it classifies as illegal junk fees, such as prohibited fees, deceptive notices sent to homeowners, and violations of loss mitigation rules. “Homeowners cannot just simply switch providers if their mortgage servicer charges them illegal junk fees,” said CFPB Director Rohit Chopra. “Since mortgage borrowers are captive to a company they never chose to do business with, we are working hard to detect and deter violations of law.” Servicers were found to have charged property inspection fees banned by Fannie Mae and late fees greater than allowed by their mortgage agreements. They also failed…

Texas Lender Colony Ridge Sued By CFPB, DOJ

The Consumer Financial Protection Bureau and the U.S. Department of Justice are suing developer and lender Colony Ridge, alleging it targeted Hispanic borrowers with “bait-and-switch” land sales and predatory loans. The lawsuit claims Colony Ridge gave borrowers inaccurate information about homesites and coerced them into loans they could not afford, according to the CFPB’s press release. “Our investigation uncovered that Colony Ridge is baiting borrowers with lies, saddling families with predatory loans for homesites that the company knows have repeatedly flooded with raw sewage and lacked basic utility infrastructure,” said CFPB Director Rohit Chopra. Colony Ridge allegedly sold families flood-prone land without water, sewer, or electrical infrastructure. They are being charged with violating the Interstate Land Sales Full Disclosure Act. …

CFPB Director Calls For End To Big Bank Bailouts

By KIMBERLEY HAAS The director of the Consumer Financial Protection Bureau says it’s time to take big bank bailouts off the table. Rohit Chopra shared his candid opinions on the subject during the Mortgage Bankers Association’s annual convention and expo last week during an on-stage conversation with MBA President and CEO Bob Broeksmit. Chopra said although the financial system is dependent on the banking system operating day-to-day without interruption, he doesn’t think the public should be on the hook for bailing banks out when they get into trouble. “Banks, especially big banks, get a lot of benefits from the public. Big subsidies, direct and indirect, and I don’t think the public should be on the hook for bailing them out…

Mortgage Applicants Denied For Insufficient Income At Increasing Rates

As affordability sank in 2022, potential buyers struggled against rising fees and were denied loans for a lack of income, according to a new analysis from the Consumer Financial Protection Bureau. Mortgage applications and originations declined last year as the market corrected from the low-rate-fueled pandemic housing boom. At the same time, affordability sunk to new lows, fees rose more than 20% YOY, and borrowers faced rising monthly costs. “The higher interest rate environment had profound effects on the mortgage market in 2022, with borrowers paying much more in monthly payments,” CFPB Director Rohit Chopra said. “These trends are likely to continue given further increases in interest rates in 2023.” Today, the national median payment applied for by purchase applicants…

Freedom Mortgage To Pay $1.75M For Illegal Kickbacks

Freedom Mortgage has been sanctioned by the Consumer Financial Protection Bureau for providing illegal incentives to real estate brokers and agents for mortgage loan referrals. The CFPB says Freedom offered agents and brokers perks for past and future loan referrals, a violation of the Real Estate Settlement Procedures Act. In at least forty cases, Freedom paid for marketing services that were never performed by the brokerages, which the CFPB says amounts to paying for referrals. RESPA particularly addresses illegal marketing service agreements, and the CFPB released detailed guidelines on their use in 2020. Agents who worked with Freedom were also incentivized through paid subscription services offering important industry data, but they typically had to agree to be paired with a…

Lending Trends In The Rural South

For borrowers in the rural South, getting a mortgage is tricky. A new analysis from the Consumer Finance Protection Bureau found that consumers in hard-to-reach areas of the South have a tough time accessing credit. Southern rural consumers apply for mortgages at the same rate as consumers nationwide – 19 applications per 1,000 residents – but are more likely to be denied, with 27% of their applications shot down compared to 11% nationally. They also pay higher rates than borrowers in other regions, averaging 3.51% in 2021 compared to 3.12% nationally.  The rural South does have high levels of poverty, which can translate to poor credit scores. Almost half of the country’s persistent poverty counties – where 20% of the…

Veros Say Its Automated Valuation Model Isn’t Biased

Veros Real Estate Solutions, an enterprise risk management and collateral valuation services company, released new research that shows its Automated Valuation Model does not discriminate based on redlining. Experts have recently sounded the alarm on bias in home appraisals. Studies have shown that homes occupied by Black Americans are consistently undervalued compared to similar homes with white owners. Automated home appraisals are supposed to reduce the problem by removing human biases altogether, but concerns persist that the algorithm, fed human-produced data, can reproduce these problems. Further, they may be harder to spot because of the apparent objectivity of the technology. The Consumer Financial Protection Bureau introduced a rule intended to safeguard homeowners against this issue earlier this month. “While machines…