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…
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’…
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…
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 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…
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…
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…
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…
By KIMBERLEY HAAS
Officials at the Consumer Financial Protection Bureau are warning shoppers about pay-to-play mortgage comparison shopping platforms.
CFPB Director Rohit Chopra said in a statement on Tuesday that given current mortgage interest rates, it is important for homebuyers to shop and compare loan offers.
“We are working to ensure that online platforms are not manipulating their search results in order to coerce kickbacks from lenders,” Chopra said.
Rates for a 30-year fixed-rate mortgage hovered just above 6% last week.
In a press release, CFPB officials said that American consumers looking for the best deal on mortgages often turn to comparison-shopping platforms and mobile apps.
“Many of the websites and applications claim to offer ranked lists of providers suitable…
By TMN Editor The Consumer Financial Protection Bureau wants the public to weigh in on ways to improve the mortgage process for homeowners who would benefit from refinancing. They are especially looking for borrowers with smaller loan balances. CFPB Director Rohit Chopra said in a statement that the mortgage market has not provided products that allow all households to save money by refinancing at a lower interest rate. “We are eager for input on ways that borrowers taking out loans today can refinance to lower rates in the future,” Chopra said. According to a press release, the agency is also looking for input on automatic short-term and long-term loss mitigation assistance for homeowners who experience financial disruptions. For more information,…
