Justice Department Sues Quicken Loans Over Mortgages

Quicken Loans, the nation's third-biggest mortgage lender, is being sued by the U.S. Department of Justice under the False Claims Act for allegedly making hundreds of improper loans through the Federal Housing Administration and costing the agency millions of dollars. According to the DOJ, Quicken knowingly submitted or caused the submission of claims on hundreds of bad loans from September 2007 to December 2011. It also is accused of encouraging employees to disregard the FHA program's rules and falsely certify that loans met the agency's requirements. Among other things, the lawsuit claims that when a home value came in too low, Quicken would request a specific, inflated value from the appraiser without giving a reason despite such practices being banned under the program. Quicken has responded to the investigation by filing complaints against the DOJ and the U.S. Department of Housing and Urban Development, insisting that it was being pressured to make admissions that were "blatantly false" and required to pay a penalty or face legal action. DOJ has already settled similar cases with JPMorgan Chase, SunTrust Banks, U.S. Bank, and Bank of America.

From "Justice Department Sues Quicken Loans Over Mortgages"
New York Times (04/24/15) P. B1 Bernard, Tara Siegel

CFPB Issues Guidance on Housing Counselor Requirement    By Anna DeSimone

April 15, 2015,the Consumer Financial Protection Bureau (CFPB) issued a final interpretive rule on how to provide mortgage applicants with a list of local homeownership counseling organizations. The interpretive rule restates guidance the CFPB issued in 2013, and provides further guidance for lenders who are building their own lists of housing counselors. The rule also includes guidance on the qualifications for providing high-cost mortgage counseling and for lender participation in such counseling. To view the document, click on the following link:  CFPB Interpretive Rule, Homeownership Counseling Director Richard Cordray states in his introductory letter, "Buying a home is often the largest financial decision in a consumer's lifetime, and we want to ensure that consumers can access the independent and informed advice they deserve before making that decision."  "Housing counselors are a crucial source of that helpful advice. We will continue to work to improve the home-buying experience for consumers, and the April 15th interpretive rule will help industry comply with these important protections." Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, and credit issues. Advice from housing counselors can be provided at little or no cost to consumers. The Dodd-Frank Wall Street Reform and Consumer Protection Act included a requirement that mortgage lenders provide applicants with a list of local housing counselors. Consumers will receive the list shortly after they apply for a mortgage so they know where to get help when deciding what loan is best for them. Lenders may fulfill the requirement by using CFPB-developed housing counseling lists, which are available through an online tool the Bureau created in 2013, or by generating their own lists using the same Department of Housing and Urban Development (HUD) data that the CFPB uses to build its lists. Lenders choosing to build their own lists can look to the interpretive rule for instructions. The interpretive rule restates the detailed guidance from 2013. It also includes new instructions about: how to provide applicants abroad with homeownership counseling lists; permissible geolocation tools; combining the homeownership counseling list with other disclosures; use of a consumer's mailing address to provide the list; and high-cost mortgage counseling qualifications and lender participation in such counseling. The online tool can be accessed here:  http://www.consumerfinance.gov/find-a-housing-counselor/

Friday Rate Update

Mortgage Rates Edge Down

The rate for a 30-year fixed-rate mortgage averaged 3.65 percent this week, down slightly from the previous week’s average of 3.67 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.33 percent.

This week’s 15-year FRM rate averaged 2.92 percent, down slightly from last week’s 2.94 percent rate. A year ago, the 15-year FRM rate averaged 3.39 percent.

---ABA Daily Newbytes

Regulators Dial Up Enforcement Actions Against Banks

Bank regulators issued 176 enforcement actions across the nation in the first quarter, according to information in the Banking Compliance Index report, a 30 percent increase compared with the fourth quarter of 2014. "There's no singular reason for the spike in enforcement actions last quarter; it's simply the regulatory environment we're operating in these days," says Pam Perdue, executive vice president of regulatory operations at the bank consulting firm Continuity. "For institutions that haven't yet found a way to manage compliance, the risk of costly enforcement actions remains high." The BCI showed that the average community financial institution needed to devote an additional $30,988 and 331 hours to manage the 61 new regulatory changes introduced in the first quarter alone. The total cost of the regulatory burden on banks was about $202 million in the first quarter.

From "Regulators Dial Up Enforcement Actions Against Banks"
Kansas City Business Journal (04/20/15) Dornbrook, James;

Friday Rate Update

Mortgage Rates Rise Slightly, Remain Low

The rate for a 30-year fixed-rate mortgage averaged 3.67 percent this week, up slightly from the previous week’s average of 3.66 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.27 percent.

This week’s 15-year FRM rate averaged 2.94 percent, up slightly from last week’s 2.93 percent rate. A year ago, the 15-year FRM rate averaged 3.33 percent. Read more.


--ABA Daily Newbytes

CFPB Disclosure Regime Could Force Smaller Lenders Out of Mortgages

Small lenders are concerned that they will be forced out of business by the Consumer Financial Protection Bureau's rule to merge various disclosure documents. Though it sounds simple, the process could be more difficult than complying with the qualified mortgage rule in that it requires so many systems to be altered. During a recent American Bankers Association conference, Joshua Weinberg, senior vice president at First Choice Bank in Lawrenceville, N.J., said, "[This] eats QM for breakfast. There are significantly more ramifications not just on the disclosure elements, but from the business process side." The new disclosure rules that combine the requirements of the Truth-in-Lending Act and the Real Estate Settlement Procedures Act will go into effect Aug. 1, but many lenders will not be ready. In particular, the rules open up a private right of action under which lenders can be held liable for errors in the new merged Closing Disclosure document. "It doesn't take very many lawsuits to really feel the pain," says Donald Lampe, a partner at Morrison & Foerster. In response, more smaller lenders plan to outsource their mortgage operations.

From "CFPB Disclosure Regime Could Force Smaller Lenders Out of Mortgages"
American Banker (04/15/15) Collins, Brian

ABA Urges Changes to CFPB Complaint Narrative Database


ABA President and CEO Frank Keating in a letter yesterday shared members’ concerns about the Consumer Financial Protection Bureau’s recent decision to publish consumer complaint narratives, and he urged the bureau to improve its portal and database to help “mitigate unfair and inaccurate reputational damage to the banking industry.”

The letter follows a recent conversation between Keating and CFPB Director Richard Cordray during which Cordray invited suggestions for improving the reliability and accuracy of the information published.

ABA -- which has strenuously objected to the bureau’s plan to disclose the consumer narratives -- urged the CFPB to create specific procedures for identifying complaints that are “materially inaccurate” or not submitted in good faith. The letter also suggests the bureau: notify banks if a consumer has opted to publish a narrative; strengthen its disclaimer; prevent publication of complaints for which a bank has no responsibility; and work with the industry to provide context for the data.

--ABA Daily Newbytes

Consumer Delinquencies Tick Up, Still Near Historic Lows


Delinquencies in closed-end loans and bank cards rose slightly in last year’s fourth quarter but remain near record lows, according to the ABA Consumer Credit Delinquency Bulletin that was released today. The broader results paint a positive picture, with delinquencies in seven of the 11 individual loan categories falling.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose three basis points to 1.54 percent of all accounts -- well under the 15-year average of 2.29 percent. Bank card delinquencies ticked up one basis point to 2.52 percent of all accounts, also well below their 15-year average of 3.75 percent.

Delinquencies in two of the three home-related categories -- home equity loans and home equity lines of credit -- trended downward, falling to 3.23 percent and 1.48 percent, respectively. Delinquencies for property improvement loans increased 11 basis points to 0.93 percent.

“The economy is better, incomes are higher and the risk of lending is lower,” said ABA Chief Economist James Chessen. “People have a greater capacity to repay their debts, and we expect delinquencies will continue to fluctuate near these low levels for the foreseeable future.”

---ABA Daily Newsbytes

Rate Update

Mortgage Rates Little Changed

The rate for a 30-year fixed-rate mortgage averaged 3.70 percent last week, up slightly from the previous week’s average of 3.69 percent, Freddie Mac said on Thursday. At this time last year, the 30-year FRM rate averaged 4.41 percent.

Last week’s 15-year FRM rate averaged 2.98 percent, up slightly from the previous week’s 2.97 percent. A year ago, the 15-year FRM rate averaged 3.47 percent