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…

Bank Of America To Pay $12M For Reporting False Data

By KIMBERLEY HAAS The second largest bank in the country will pay a $12 million penalty after it was found that hundreds of loan officers falsified forms about mortgage applicants in violation of federal law. Officials at the Consumer Financial Protection Bureau say that for at least four years, loan officers at Bank of America did not ask mortgage applicants required demographic questions and then falsely reported that the applicants chose not to respond. They say this violates the Home Mortgage Disclosure Act, enacted in 1975, which requires mortgage lenders to report information about loan applications and originations to the CFPB and other federal regulators. Data collected under the act is used to monitor whether financial institutions serve their communities’…

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…

MBA CEO Critical Of Policymakers At Conference In New York City

By KIMBERLEY HAAS The president and CEO of the Mortgage Bankers Association said they are pushing for clarity and common sense as he criticized policymakers this week during his remarks at the Secondary and Capital Markets Conference and Expo in New York City. Bob Broeksmit said policymakers plan to pile on more enforcement and red tape at a time when MBA member businesses are struggling. “There seems to be a sense, at the highest levels of government, that the mortgage industry needs to be reined in,” Broeksmit said, according to his prepared remarks. Broeksmit referred to the recent failures of Silicon Valley Bank, Signature Bank, and First Republic Bank saying some policymakers are now pushing for new rules that could…

Zombie Mortgages: CFPB Warns Against Illegal Time-Barred Debt Collection

Officials at the Consumer Financial Protection Bureau have issued a reminder about zombie mortgages, saying threatening homeowners regarding uncollected time-barred debts violates the Fair Debt Collection Practices Act. The guidance warns that it is illegal for debt collectors to threaten foreclosure on silent second mortgages with statutes of limitations that have expired. “Some debt collectors, who sat silent for a decade, are now pursuing homeowners on zombie mortgages inflated with interest and fees,” said CFPB Director Rohit Chopra. “We are making clear that threatening to sue to collect on expired zombie mortgage debt is illegal.” The CFPB points to “piggyback” mortgages in particular, also known as 80/20 loans. Homebuyers would be given a first lien loan for 80% of the…

Lender Targeting Military Families Shut Down By Consumer Financial Protection Bureau

By KIMBERLEY HAAS Officials at the Consumer Financial Protection Bureau are taking action against a California-based mortgage lender that allegedly sent misleading advertisements to military families. According to a press release, RMK Financial Corporation falsely represented that the company was affiliated with the Department of Veterans Affairs and the Federal Housing Administration. RMK Financial does business as Majestic Home Loan and is licensed as a mortgage broker or lender in at least 29 states. Officials say that although the company originated loans guaranteed by the VA and mortgages insured by the FHA, they are not affiliated with these agencies. Officials warned RMK about misleading consumers in 2015 but say the company engaged in a series of repeat offenses, leading to…