A report from the CFPB on January 30th says that mortgage
servicing issues remain a top concern for the agency. The CFPB's
supervisory work completed between July and October 2013 uncovered the same
sort of mortgage servicing problems that occurred in 2009 and 2010, as banks
were overwhelmed with record numbers of home foreclosures. The report claims
servicers violated the Dodd-Frank Wall Street Reform and Consumer Protection
Act's ban on unfair, abusive or deceptive acts and practices in a handful of
areas, such as payment processing, the transfer of servicing rights and
providing borrower information to consumer credit reporting bureaus. Examiners
found that two servicers engaged in unfair practices by failing to honor
existing permanent or trial loan modifications after a servicing transfer,
which resulted in borrowers being charged the wrong amount or being told to pay
the wrong amount. Agency examiners also found that two servicers were requiring
borrowers to waive any existing claims in order to get a forbearance or loan
modification agreement. The examiners found these broad waiver clauses to be
unfair as they were done without regard to individual circumstances. The end
result of the agencies efforts and due diligence have been fines and penalties
levied against the institutions it oversees; according to the CFPB consumers
have received $2.6 million as result. Mortgage Servicing Problems?
Is two years a long time nowadays? Maybe I'm not the most
qualified to judge, considering I can't even remember what I received for
Christmas 40 days ago. Thanks to Barbara Mishkin of Ballard Spahr for
including, and commenting, on Washington Post article regarding the history of
the CFPB. The story reads more like an episode of "Days of Our Lives"
than it does an hour watching C-SPAN. I guess that will happen when pools of
talented labor are drawn from the private and public sector, and meet in a sort
of micro-meets-macro government Thunderdome type scenario. The article
is good, taking the reader from concept to implementation; through confirmation
of the current Director; to employee turnover (yes, there has been substantial
turnover in two years). For an agency not-yet up to flank speed, the challenges
and expectations have never been greater.
Updates on some Lender & Investor from recent weeks
Fannie
Mae has updated Desktop Underwriter to
align with the VA 2014 county loan limit changes, which went into effect for
all casefiles submitted or re-submitted after January 18th. As of April
1st, Fannie will require servicers to send a notification to borrowers with
mortgage loan modifications with a step interest rate adjustment that includes
the amount and effective date of the increase; the amount and due date of the
new monthly payment; an explanation of how the interest rate cap was set and
how it will be fixed once it reaches the interest rate cap; a payment schedule
table; an explanation that the monthly payment includes an escrow for property
taxes, hazard insurance, and other escrowed expenses which, if changed, will
change the monthly payment; an explanation of how the new monthly payment was
determined, servicer contact information and instructions to contact the
servicer with any questions; the Homeowner's HOPE Hotline number and
instructions to ask for Making Home Affordable help; an explanation that the
borrower can seek assistance with household budgeting from HUD-approved housing
counseling agencies; and information on additional educational resources at
Fannie's Know Your Options website.
As
part of Ginnie Mae's modernization
efforts, issuers are now required to access the Ginnie Mae Enterprise Portal
in order to request Commitment Authority, for which they must authorize their
selected bank to accept ACH debits from BNY Mellon for the commitment
fees. Lenders are also able to submit master agreements, requests for
pool numbers, and requests for commitment authority directly through the GMEP
and must upload their master agreements by March 31st.
Per
the January 10th rules, Wells Fargo
is requiring that all submitted loan package include evidence of how the DTI
was determined. In recent weeks, DTI Review has recorded an influx of
loan files where the documentation does not support the calculated debt, the
credit inquiry letter is not complete, and debt and/or income documentation is
missing, resulting in suspense conditions. Lenders are encouraged to use
the Income and Debt worksheet; however, alternative forms will be accepted
provided they reflect all monthly income types for each borrower, how the
monthly income was determined, the total qualifying income, the primary
residence PTI, the front and back end DTI ratios, the total monthly debt from
the final AUS/credit report/1003, any additional debts not listed on the credit
report, an explanation for debts not included in the DTI, and a list of all
documentation used to support how the underwriter derived the total income and
assets.
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