Tag Archives: mortgage

White and Asian Borrowers More Likely to be Approved for a Conventional Loan

Black and Hispanic applicants twice as likely to be denied mortgages

By Jeff Sorg, OnlineEd Blog

(November 3, 2016 – Zillow) White and Asian borrowers are more likely to be approved for a conventional loan than black or Hispanic borrowers, according to the latest federally released data from the Home Mortgage Disclosure Act (HMDA). The disparity persists despite improvements in mortgage access for borrowers over the last few years.

In 2015, 22.4 percent of black applicants were denied conventional loans according to HMDA data. In 2010, 30.5 percent of black applicants were denied. Among Hispanic applicants, 17.3 percent were denied in 2015, down from 25 percent in 2010.

By comparison, 10.4 percent of all conventional loan applications were denied in 2015, a drop from 14.2 percent in 2010.

“Even though conditions have improved over the past few years, getting approved for a mortgage is still a significant barrier for some would-be buyers,” said Zillow Chief Economist Dr. Svenja Gudell. “Owning a home is an important way for the middle class to build personal wealth. It’s encouraging to see more black and Hispanic borrowers getting approved for mortgages, but there’s still a lot of progress that needs to be made.”

The problem is so entrenched that last week Fannie Mae and Freddie Mac announced programs designed to improve access to credit for these groups, which have historically had the lowest homeownership rates even though they are more likely to place a higher value on owning a home.

According to the Zillow® Housing Confidence Index, 68 percent of Hispanic respondents and 65 percent of black respondents considered homeownership necessary to living the American Dream. By comparison, 59 percent of white respondents and 58 percent of Asian respondents felt the same.

Homeowners are becoming increasingly diverse, data from the Zillow Group Consumer Housing Trends Report show. Even so, the homeownership gap between black and white households is as wide in 2016 as it has been for the past century[iii].

Metro Denial Rates for All Conventional Applications in 2015 Denial Rates for Conventional Loans from Asian Applicants in 2015 Denial Rates for Conventional Loans from Black Applicants in 2015 Denial Rates for Conventional Loans from Hispanic Applicants in 2015 Denial Rates for Conventional Loans from White Applicants in 2015
United States 10.4% 11.1% 22.4% 17.3% 8.7%
Atlanta, GA 9.6% 9.6% 18.9% 13.1% 7.1%
Baltimore, MD 8.1% 10.0% 16.6% 11.9% 6.2%
Boston, MA 7.0% 7.9% 17.2% 14.9% 6.0%
Charlotte, NC 8.8% 9.1% 16.0% 16.2% 7.0%
Chicago, IL 9.7% 10.7% 24.7% 18.6% 7.6%
Cincinnati, OH 8.6% 8.1% 19.8% 11.9% 7.9%
Cleveland, OH 7.7% 8.8% 19.4% 11.8% 6.7%
Columbus, OH 9.0% 10.6% 15.6% 22.0% 8.0%
Dallas-Fort Worth, TX 8.3% 9.5% 16.6% 11.9% 6.3%
Denver, CO 6.7% 8.2% 13.3% 10.3% 5.7%
Detroit, MI 9.9% 11.1% 21.0% 11.1% 8.6%
Houston, TX 9.9% 12.0% 17.7% 14.6% 6.9%
Indianapolis, IN 6.9% 9.7% 16.5% 16.0% 5.8%
Kansas City, MO 6.3% 9.9% 16.0% 14.3% 5.2%
Las Vegas, NV 12.8% 15.6% 17.3% 13.3% 10.3%
Los Angeles-Long Beach-Anaheim, CA 11.0% 11.1% 16.6% 12.9% 9.9%
Miami-Fort Lauderdale, FL 18.1% 18.7% 25.9% 20.4% 13.9%
Minneapolis-St Paul, MN 5.2% 7.2% 14.5% 13.1% 4.4%
Nashville, TN 6.9% 9.7% 16.5% 14.4% 5.9%
New York, NY 12.8% 13.8% 24.0% 19.7% 10.5%
Orlando, FL 13.6% 17.5% 22.5% 19.0% 10.7%
Philadelphia, PA 8.2% 11.4% 20.2% 13.8% 6.3%
Phoenix, AZ 9.5% 9.9% 16.8% 13.2% 8.3%
Pittsburgh, PA 7.2% 6.6% 11.7% 6.5% 6.8%
Portland, OR 6.1% 8.9% 10.3% 11.4% 5.2%
Riverside, CA 11.6% 14.8% 15.3% 13.4% 9.0%
Sacramento, CA 9.4% 13.0% 14.9% 12.8% 7.8%
San Antonio, TX 11.5% 9.2% 16.1% 16.7% 8.3%
San Diego, CA 10.2% 10.4% 16.0% 14.6% 9.6%
San Francisco, CA 8.5% 10.2% 17.6% 13.1% 6.6%
San Jose, CA 9.0% 9.3% 7.7% 11.8% 7.2%
Seattle, WA 8.1% 9.8% 19.2% 11.8% 7.2%
St. Louis, MO 8.0% 11.2% 25.0% 15.2% 6.7%
Tampa, FL 14.2% 15.9% 26.6% 18.1% 12.4%
Washington, DC 7.5% 8.8% 15.4% 12.3% 5.0%

SOURCE Zillow

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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Mortgage Customer Satisfaction Increases as Lenders Adopt New Technology

Overall satisfaction with mortgage application-related activities is higher among customers who used digital communication

By Jeff Sorg, OnlineEd Blog

customer satisfaction survey(Nov. 16, 2015) /PRNewswire/ — Overall mortgage customer satisfaction has increased this year as lenders have focused on developing functional digital channels and improving operational efficiency, according to the J.D. Power 2015 U.S. Primary Mortgage Origination Satisfaction Study(sm) released today.

Satisfaction is calculated on a 1,000-point scale, with the study measuring customer satisfaction with the mortgage origination experience in six factors:

  1. application/approval process;
  2. interaction;
  3. loan closing;
  4. loan offerings;
  5. onboarding; and
  6. problem resolution. .

Overall customer satisfaction with mortgage origination is up 7 points from 2014. The increase in satisfaction is driven by gains in the application and approval processes, influenced by improved perceptions of the speed of the loan process. When loans close earlier than promised, satisfaction is significantly higher, compared to when loans close as expected or when it takes longer than expected.

The study also finds that overall satisfaction with several mortgage application-related activities is markedly higher among customers who used digital communication channels versus those who communicated using mail and fax.

The links between the perception of mortgage processing speed and efficiency and overall customer satisfaction are particularly noteworthy in light of new TRID , a.k.a. “know before you owe” regulation, which went into effect in October 2015, which has the potential to increase the mortgage timeline and poses a significant challenge for lenders when serving home buyers across all generations, but could be particularly challenging when dealing with Millennials (ages 18-34) who are technically savvy, always connected to the Internet and noted as being capricious consumers.

“While a lot of effort has been placed on ensuring compliance with new regulations, it is imperative that lenders improve their education and communication about the impact of these changes or risk losing customers,” said Craig Martin, director of the mortgage practice at J.D. Power. “Effective communication remains one of the most important aspects of a satisfying mortgage experience, especially if the process is taking longer than it has historically. As the number of Millennial home buyers continues to rise, lenders must be ready to meet their expectations. This generation is highly digitally connected, so ongoing communication and transparency via the channels they prefer, particularly mobile, are vital.”

Following are some of the key findings in this year’s study:

  • Communication Impacts Satisfaction: Communication throughout the loan process mitigates dissatisfaction with a longer timeline. When the loan process takes more than two months, satisfaction is 686. However, when an accurate time frame estimate and proactive updates are provided in that same scenario, satisfaction is 859.
  • Millennials Seek Guidance: With Millennials now accounting for the largest share of loan originations over the last two years2, it is notable that nearly 4 in 10 (37%) millennial customers indicate that the origination process was not completely explained to them, and 58 percent indicate their options, terms and fees were not completely explained.
    Effective Loan Representatives are Vital: Those loan reps who engage customers, build trust and ensure that borrowers understand each step of the process can mitigate the negative impact on satisfaction due to missing closing dates (764 missed date/effective representative vs. 511 missed date/ineffective representative).
  • Loans are Closing Sooner: The percentage of applications and approvals that close earlier than promised has increased to 35 percent in 2015 from 31 percent in 2014.
  • Satisfying Experience Leads to Recommendations and Loyalty: Providing an outstanding mortgage origination experience can generate high levels of advocacy and retention. The study finds that 71 percent of highly satisfied customers (overall satisfaction scores of 900 or higher) say they “definitely will” recommend their lender, and 76 percent say they “definitely will” consider reusing the same lender for their next home purchase. In comparison, only 5 percent of dissatisfied customers (scores of 699 or less) say they “definitely will” recommend and 8 percent say they “definitely will” consider reusing the lender.
  • 2015 U.S. Primary Mortgage Origination Satisfaction Rankings
    Quicken Loans ranks highest in primary mortgage origination satisfaction for a sixth consecutive year, with a score of 850, an increase of 15 points from 2014. Quicken Loans performs particularly well in all six factors. Fifth Third Mortgage ranks second with a score of 812, followed by Bank of America and BB&T (Branch Banking & Trust Co.) in a tie at 811 each.

The 2015 U.S. Primary Mortgage Origination Satisfaction Study is based on responses from 4,666 customers who originated a new mortgage or refinanced within the past 12 months. The study was fielded in two waves: February – March and July – August 2015.

For more information about the 2015 U.S. Primary Mortgage Origination Satisfaction Study, visithttp://www.jdpower.com/resource/us-primary-mortgage-origination-satisfaction-study

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Lender to Pay $4.2 Million to Settle Alleged False Claims Act Violations

(Jeff Sorg, OnlineEd) –  A Southfield mortgage lender has agreed to pay $4.2 million to resolve allegations that it violated the False Claims Act in its origination of loans backed by the federal government.

GTL Investments, Inc., doing business as John Adams Mortgage Company (JAMCO), reached agreement with the U.S. Attorney’s Office for the Eastern District of Michigan to resolve allegations that it originated mortgage loans that had material underwriting deficiencies. The loans were guaranteed by the Federal Housing Administration.

The FHA makes home financing available by insuring residential mortgages for the purchase of properties with modest down-payments for purchasers meeting certain criteria, known as underwriting standards. The original lender or loan originator is responsible for making sure that the borrower meets these underwriting standards to minimize the possibility of default and the need for the FHA to pay the mortgage holder for the losses caused by the default.

An investigation by the Office of Inspector General for the Department of Housing and Urban Development found that GTL originated 31 FHA mortgage loans between January 2008 and April 2012 that had material underwriting deficiencies. Twenty-nine of these loans went to claim, causing the FHA damages of $2,445,912. The investigation also identified two loans that had not yet been presented for payment by the FHA with approximately $250,000 in potential losses. GTL has agreed to indemnify the FHA for these two loans.

“By holding accountable lenders who fail to comply with underwriting requirements, we hope to send a message to all lenders that they must comply with government standards for federally insured loans,” McQuade said.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on January 7, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

 

NMLS Smart Deadlines for 2014 License Renewal

(OnlineEd – Jeff Sorg) – The deadline to complete NMLS CE for MLO license renewal is December 31, 2014. However, NMLS Rules allow course providers seven days to report their course completions to NMLS. This means licensees will not want to wait until the last minute before completing their education requirement. If the licensee completes before the deadline, but the provider does not submit until after the deadline, the licensee is prevented from submitting for renewal on time.

In order to allow enough time for CE to be reported into the system and for the MLO to file for renewal, NMLS sets Smart Deadlines each year. These 2014 Smart Deadlines are:

SMART: Course(s) reported by your provider to NMLS by Friday, December 19
AT RISK TO MISS: Course(s) reported by your provider to NMLS by Friday, December 26
GUARANTEED TO MISS: Course(s) reported by your provider to NMLS on Wednesday, December 31

At OnlineEd®, we report your course completions just as fast as we possibly can! This means completions are usually reported to NMLS not later than the next business day from completion (weekends, holidays, and NMLS closures excluded). For completions during the At Risk to Miss and Guaranteed To Miss, we upload completions several times daily. While we do as much as we possibly can to upload in a timely manner, it remains the licensee’s responsibility to know the rules and complete in time for provider reporting to take place before the deadline.

 

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This article was published on July 31, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

For more information about OnlineEd and their education for real estate and mortgage brokers, visit www.OnlineEd.com. OnlineEd is NMLS Sponsor: 1400327

Consumer Financial Protection Bureau, Federal Partners, and State Attorneys General File Order Requiring Suntrust to Provide $540 Million in Relief to Homeowners for Servicing Wrongs

Company Also Ordered to Pay $10 Million for Servicing Misconduct and Fined $418 Million by the DOJ

canstockphoto15349787sack of money resized

SunTrust to Provide $540 Million in Relief to Homeowners

(CFPB -WASHINGTON, D.C.) — Today the Consumer Financial Protection Bureau (CFPB), Department of Justice (DOJ), Department of Housing and Urban Development (HUD), and attorneys general in 49 states and the District of Columbia filed a proposed federal court order requiring SunTrust Mortgage, Inc. to provide $500 million in loss-mitigation relief to underwater borrowers. The order also requires SunTrust to pay $40 million to approximately 48,000 consumers who lost their homes to foreclosure and $10 million to the federal government. The order addresses systemic mortgage servicing misconduct, including robo-signing and illegal foreclosure practices. SunTrust must also pay a $418 million penalty, in a parallel mortgage lending filing announced by DOJ today.

 “Deceptive and illegal mortgage servicing practices have pushed families into foreclosure and devastated communities across the nation,” said CFPB Director Richard Cordray. “Today’s action will help homeowners and consumers harmed by SunTrust’s unlawful foreclosure practices. The Consumer Bureau will continue to investigate mortgage servicers that mistreat consumers, and we will not hesitate to take action against any company that violates our new servicing rules.”

SunTrust is a mortgage lender and servicer headquartered in Richmond, Va., and is a wholly-owned subsidiary of Atlanta-based SunTrust Banks, Inc. As a mortgage servicer, it is responsible for collecting payments from the mortgage borrower on behalf of the owner of the loan. It handles customer service, collections, loan modifications, and foreclosures.

 The CFPB, DOJ, HUD, and state attorneys general uncovered substantial evidence that SunTrust was engaged in systemic mortgage servicing misconduct. According to the complaint filed in the federal district court in the District of Columbia, SunTrust’s illegal practices put thousands of people at risk of losing their homes. Specifically, the complaint alleges that SunTrust:

  •  Took advantage of homeowners with servicing shortcuts and unauthorized fees: SunTrust failed to promptly and accurately apply payments made by borrowers, and charged unauthorized fees for default-related services.
  •  Deceived homeowners about foreclosure alternatives and improperly denied loan modifications: SunTrust failed to provide accurate information about loan modification and other loss-mitigation services, failed to properly process borrowers’ applications and calculate their eligibility for loan modifications, and provided false or misleading reasons for denying loan modifications.
  • Engaged in illegal foreclosure practices: SunTrust provided false or misleading information to consumers about the status of foreclosure proceedings where the borrower was in good faith actively pursuing a loss mitigation alternative also offered by SunTrust. The company also robo-signed foreclosure documents, including preparing and filing affidavits whose signers had not actually reviewed any information to verify the claims.

Enforcement Action

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Today’s proposed court order, filed in federal district court in the District of Columbia, would require SunTrust to correct their practices and provide relief to harmed consumers. Under the terms of the order, SunTrust must:

  • Provide at least $500 million in relief to underwater borrowers: Over a three-year period, SunTrust must provide more than $500 million in loss mitigation relief to consumers, including reducing the principal on mortgages for borrowers who are at risk of default and reducing mortgage interest rates for homeowners who are current but underwater on their mortgages. If SunTrust fails to meet this requirement, it must pay a cash penalty equal to at least 125 percent of the shortfall.
  •  Provide $40 million in refunds to foreclosure victims: SunTrust must refund $40 million to consumers whose loans it serviced who lost their homes to foreclosure between Jan. 1, 2008 to Dec. 31, 2013. All consumers who submit valid claims will receive an equal share of the $40 million. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Eligible consumers can expect to hear from the settlement administrator about potential payments later this year.
  •  Pay $10 million to the federal government: SunTrust must pay $10 million to cover losses it caused to the Federal Housing Administration, Department of Veterans Affairs, and the Rural Housing Service.
  •  Homeowner protections: Today’s order will require SunTrust to establish additional homeowner protections, including protections for consumers in bankruptcy. Like other servicers, SunTrust is subject to the CFPB’s new mortgage servicing rules that took effect on January 10, 2014. The agreement only covers SunTrust’s violations before the new rules took effect, and does not prevent the CFPB from pursuing civil enforcement actions against SunTrust for violations of these rules.  

 A copy of the SunTrust complaint that was also filed in the federal court in the District of Columbia will be posted at: http://www.consumerfinance.gov/

The complaint is not a finding or ruling that the defendants have actually violated the law. The proposed federal court order will have the full force of law only when signed by the presiding judge.

The settlement administrator will be in touch with eligible consumers who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2013.  Consumers who are interested in loss mitigation should contact SunTrust at 1-800-634-7928 or by email through the SunTrust Mortgage, Inc. support page at www.SunTrustMortgage.com.

U.S. Supreme Court to hear mortgage loan officers’ pay case

(Reuters) – The U.S. Supreme Court on Monday agreed to weigh a dispute over whether mortgage loan officers are exempt from minimum wage and overtime pay regulations.

The two related cases concern a decision in 2010 by the U.S. Labor Department, which reversed a 2004 finding made during the administration of President George W. Bush that had concluded mortgage loan officers were exempt from the regulations.

The Mortgage Bankers Association challenged the more recent finding in court, leading to the current litigation over whether the government followed the correct process in changing course.

[Read the story]

CFPB Goes Hunting for Zombie Foreclosures

From 2006 to today, 10 million homes have fallen into foreclosure.   Of those homes, more than 2 million remain in foreclosure.  An estimated 152,000 homes are zombie foreclosures.   That's 22% of the 676,000 homes that are owned by banks but are not listed for sale.

Zombie foreclosures can cost already struggling borrowers thousands of dollars.

(Joseph Mikkelson, OnlineEd) Zombies have been enjoying a renaissance as of late. Ever since George Romero’s 1968 film, “Night of the Living Dead,” zombies have maintained a steady presence in the media. However, one doesn’t have to look far to see that their popularity has risen to new heights in recent years. Zombies are represented in the theater, on TV, in adventure 5K races, and now in . . . real estate?

With the flood of foreclosed homes in 2008, many banks found that many low-value properties simply weren’t worth the cost to repair the home, and opted not to complete the foreclosure. Zombie foreclosures are properties that have had foreclosure proceedings initiated and have been vacated by the owners, but have not yet been reclaimed by banks. The owner of the foreclosed home may have been long gone, only to find out years later that he or she technically still owns the home and may owe thousands.

The walking dead these properties may not be, but they still pose a threat to borrowers. The CFPB aims to help bring these zombie properties back to life.

“The CFPB is beginning to look very closely at abandoned properties and zombie foreclosures. There is direct borrower harm if a borrower believes a foreclosure on their property has been conducted and they are no longer responsible, and months or years later find out that they are, that there was never a foreclosure and they have large financial responsibilities that they never knew about.” – Laurie Maggiano, CFPB servicing and secondary markets program manager

[ezcol_2third]Servicers typically send dozens of letters and calls to defaulted homeowners notifying them that their home is going into foreclosure, but usually don’t communicate nearly as well, if at all, when the foreclosure is stalled. The CFPB found it was “extremely common” for servicers to charge off low-balance loans and not notify borrowers or municipalities if they did not take title to the property. Consequently, borrowers had no idea that they were still on the hook for continuing to pay not only the mortgage debt, but code violations, municipal services, taxes and upkeep as well.[/ezcol_2third] [ezcol_1third_end]

Quick Facts:

  • Since 2006, 10 million homes have fallen into foreclosure.
  • More than 2 million homes remain in foreclosure.
  • An estimated 152,000 homes are zombie foreclosures.

[/ezcol_1third_end]

The CFPB indicated that consumers had repeatedly asked the agency for help, saying the servicers were not complying with disclosure requirements. The agency has joined a task force to identify the estimated 152,000 zombie properties. It intends to help resolve the problem by creating a national definition of “abandonment,” which will accelerate the foreclosure process, making vacant homes available for transfer to potential owners, as well as creating a national registry of these zombie properties.

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This article was published on March 14, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author. Due to the fluid nature of the subject matter, regulations, requirements, laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

CFPB Faces Unfair Employment Accusations, Overhaul Bill

Consumer Financial Protection Bureau logo

(Joseph Mikkelson, OnlineEd) – The CFPB is off to a rocky start in 2014.

In an interesting turn of events, the CFPB will undergo a probe regarding how the entity treats its employees.  According to an American Banker report, there are striking racial disparities in how employees are ranked in performance reviews.

According to the report, CFPB managers specifically ranked white employees “distinctly better” than minorities in performance reviews.  There reviews are used to determine raises and issue bonuses.  The CFPB ranking system rates employees on a 1-5 scale, where employees with higher ratings receive better benefits than employees with lower rankings.

The report found that overall, whites were twice as likely in 2013 to receive the agency’s top grade than employees of a different race.

Some quick facts from the report:

  • Nearly three quarters of white employees received a rating of 4 or 5, compared with 65.5% of Asians, 65.2% of Hispanics, and 57.6% of African-Americans.
  • The disparities were even greater towards the extremes of the range: one-fifth of white employees (20.7%) received a 5 – and were dubbed “role models” – compared with 10.5% of African-Americans and 9.1% of Hispanics.
  • These discrepancies carried over into the lower ratings as well, with 42% of African-Americans, 34.5% of Asians, 34.8% of Hispanics receiving a 3 rating, the lowest grade given out in high volume.  Only 24.4% of white employees received the low 3 rating.

These findings are disappointing to proponents of the CFPB and serve to fuel the fire of its detractors, as the government entity is expending millions trying to enforce regulations aimed at reducing just this kind of disparate impact.  In the mortgage industry, the emphasis on fair lending and responsible financial practices has never been higher.  The CFPB must now answer serious questions about addressing their own shortcomings in an area that they were being reasonably expected to be setting an example.

This report comes at an inopportune time for the bureau, as a bill was recently passed in the House of Representatives approving an overhaul of the CFPB, which would effectively hamstring the agency.  The bill, which passed 232-182 would replace director Richard Cordray with a five-member commission, and would subject the CFPB to regular budget appropriations and includes no funding beyond the next two years.  This bill is not likely to go much of anywhere, however, as majority leaders in the Senate have said the bill would not even be considered, and President Obama has indicated willingness to veto the legislation.

Whether these two obstacles will be bumps in the road, or lingering issues, it is clear that it’s still business as usual for the CFPB, with a period of vigorous rulemaking on the horizon.  After a few years focusing on the mortgage industry, the CFPB is shifting focus to the debt collection, student loan, and mortgage loan servicing industries. Stay tuned for more developments coming out of the CFPB.

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This article was published on March 13, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author. Due to the fluid nature of the subject matter, regulations, requirements, laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

Michael Milken: How Housing Policy Hurts the Middle Class

(MICHAEL MILKEN, Wall Street Journal – March 5, 2014) The American dream traditionally meant that anyone could get ahead based on ability and hard work. But over the past few decades, the United States government created incentives through housing programs and the tax code that changed the dream for many Americans. Middle-class families began to think of homes as investments, not just shelter. When the housing market crashed, everyone suffered—homeowners, investors, wage-earners and taxpayers.Aggressive housing programs have not always helped the poor and middle class.
ED-AR922_milken_G_20140305175404(1)The median net worth of American adults is now one of the lowest among developed nations—less than $45,000, according to the Credit Suisse CSGN.VX -0.42% Global Wealth Databook. That compares with approximately $220,000 in Australia, $142,000 in France and $54,000 in Greece. Almost a third of American adults have a net worth of less than $10,000. Those statistics don’t convey the pain endured by millions of American families who lost their homes.
The American dream traditionally meant that anyone could get ahead based on ability and hard work. But over the past few decades, the United States government created incentives through housing programs and the tax code that changed the dream for many Americans. Middle-class families began to think of homes as investments, not just shelter. When the housing market crashed, everyone suffered—homeowners, investors, wage-earners and taxpayers.Aggressive housing programs have not always helped the poor and middle class.  (Read the rest of the story)

CFPB Orders Connecticut Lender to Pay $83,000 Civil Penalty

Pay Fine

Connecticut Lender to Pay $83,000

(Consumer Financial Protection Bureau – Washington, D.C.) Today, the Consumer Financial Protection Bureau ordered a Connecticut mortgage lender, 1st Alliance Lending, LLC (First Alliance), to pay an $83,000 civil money penalty for violating federal law by illegally splitting real estate settlement fees. First Alliance self-reported these violations to the Bureau, admitted liability, and provided information related to the conduct of other actors that has facilitated other enforcement investigations.

“These types of illegal payments can harm consumers by driving up the costs of mortgage settlements,” said CFPB Director Richard Cordray. “The Bureau will use its enforcement authority to ensure that these types of practices are halted. We will, however, also continue to take into account the self-reporting and cooperation of companies in determining how to resolve such matters.”

First Alliance is a mortgage lender in East Hartford, Conn. that focuses primarily on providing loss-mitigation financing to distressed borrowers. First Alliance obtains troubled mortgages from mortgage servicers, and reaches out to consumers to offer them new loans with reduced principal amounts under federally related mortgage programs.

First Alliance started using a hedge fund to finance its loans in 2010. Under this arrangement, First Alliance split revenues and fees with affiliates of the hedge fund. In 2011, First Alliance secured less costly financing and ended its arrangement with the hedge fund and its affiliates. Although the hedge fund and its affiliates no longer financed First Alliance’s mortgages, First Alliance continued to split origination and loss-mitigation fees with them. The hedge-fund affiliates received payments from 83 First Alliance loans made between August 2011 and April 2012.

In 2013, First Alliance reported to the Bureau that it believed it had violated the Real Estate Settlement Procedures Act (RESPA) by paying these unearned fees. RESPA bans a person from paying or receiving a portion or split of a fee that has not been earned in connection with a real estate settlement. First Alliance cooperated with the Bureau’s investigation, and the Bureau concluded that First Alliance’s payments to the hedge fund and its affiliates had violated RESPA. First Alliance’s self-reporting and cooperation, consistent with the Bureau’s Responsible Business Conduct bulletin published on June 25, 2013, were taken into account in resolving this matter.

Under the terms of today’s consent order, First Alliance is required to pay a civil money penalty of $83,000 to the Bureau and agrees not to violate RESPA in the future. The Bureau will continue to enforce RESPA’s provisions to protect consumers and to deter unlawful activity.

A copy of the Bureau’s consent order is available here: http://files.consumerfinance.gov/f/201402_cfpb_consent-order_first-alliance.pdf

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 For more information about OnlineEd and their pre-license and continuing education for real estate and mortgage brokers, please visit www.OnlineEd.com. For more information about mortgage-specific products for compliance training, tracking, and management, please visit  https://www.onlineed.com/inlineed.php or contact Joseph Mikkelson at 1.866.519.9597.

This article was published on February 25, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author. Due to the fluid nature of the subject matter, regulations, requirements, laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.