Who can keep track?

Where the heck did 40 years go? Call any person who underwrites loans or draws docs and ask if they'd like to do that for 40 straight years. The answer would probably be hearing a "click" when they hung up. On the other hand, on this exact date in 1975 at Hammersmith Odeon, London, Bruce Springsteen & The E Street Band played their first gig outside of the United States during the Born to Run tour. Yes, time flies. In fact it's already been seven years since Fannie & Freddie were placed into conservatorship (September 2008). A bill authored by Rep. Ed Royce, R-Calif., to cap annual pay at $600,000 for Fannie Mae and Freddie Mac CEOs has passed with bipartisan support. I think we all know plenty of LOs and AEs that will make more than that this year.

A recent decision by the Minnesota Supreme Court (Quik Payday Inc. v. Stork) serves as a painful reminder that lenders can't ignore state laws and instead rely on Federal statutes. Ballard Spahr commented, "The perils faced by Internet lenders seeking to avoid application of a borrower's home state law also include the risk of a CFPB UDAAP enforcement action. Despite its lack of authority under the CFPB to regulate interest rates, the CFPB has brought two lawsuits against internet lenders in which it has claimed that the lenders engaged in UDAAP violations by making loans at rates that exceeded usury limits in the borrowers' home states.

"In December 2013, the CFPB filed a lawsuit in Massachusetts federal court against CashCall, several related companies and their principal.  The companies allegedly funded, purchased, serviced and collected online payday loans made by a tribally-affiliated lender the CFPB did not sue.  The CFPB charged the defendants with engaging in UDAAP violations by seeking to collect loans that were purportedly void in whole or in part under state law because the lender charged excessive interest and/or failed to obtain a required license.

"In July 2015, the CFPB filed a complaint in federal district court in New York against a group of commonly-controlled companies for allegedly engaging in unlawful conduct in connection with making payday loans over the Internet. (In its press release, the CFPB described the action as a suit against an "offshore payday lender.") According to the complaint, the defendants performed different functions such as purchasing leads from lead generation companies, brokering loans, originating loans, and collecting loans. The complaint alleged that the defendants made payday loans to residents of states in which the loans were void under state law because the defendants charged interest rates that exceeded state usury limits or the defendants failed to acquire required licenses. The CFPB claimed that the defendants engaged in UDAAP violations by actions that included misrepresenting that consumers were obligated to pay debts that were void under state law.

And for anyone who missed it remember that the CFPB issued non-binding guidance in the form of Bulletin 2015-05 on marketing service agreements (MSAs). Based on the CFPB's investigative efforts, "it appears that many MSAs are designed to evade RESPA's prohibition on the payment and acceptance of kickbacks and referral fees." The CFPB addressed the use of a third party to value services to be performed under an MSA in stating that "independently established market-rate compensation for marketing services, alone, does not suffice to ensure the legality of an MSA." The CFPB wrote, "The Bureau's experience in this area gives rise to grave concerns about the use of MSAs in ways that evade the requirements of RESPA. In consequence, the Bureau reiterates that a more careful consideration of legal and compliance risk arising from MSAs would be in order for mortgage industry participants generally."

As if preparing for TRID wasn't enough, a while back the CFPB announced a new final rule, modifying Relegation C, which implements HMDA. The 800 page rule will expand HMDA reporting requirements and include new information that will need to be gathered. For example, lenders will need to report on an applicant's DTI ratio, interest rate of the loan, and the discount points charged for the loan. The final rule is effective January 1, 2018.