LIEB BLOG

Legal Analysts

Showing posts with label Mortgage Industry. Show all posts
Showing posts with label Mortgage Industry. Show all posts

Wednesday, June 19, 2019

Loan Officer Compliance Trainings Needed for HMDA Data

Loan Officers (LOs) frequently have issues collecting and entering applicant information on their electronic systems, which results in a denial of the loan. These issues occur when customers don't want to provide the information. At all costs, LOs seek to avoid a loan denial. As a result, LOs often develop strategies to fudge information, as a workaround, so that they can close their loans. These workarounds are often spearheaded by management at structured LO meetings. The LOs and managers know that without fudging the data, their system will hard stop the file and kill their loans. This is a non-starter for one with a broker's mindset.

Lenders - the Consumer Financial Protection Burea (CFPB) recently gave a $1.75 million reminder as to why lenders cannot fudge the data and need a compliance plan, in place, to avoid their LOs and managers from fudging the data. This $1.75 million civil penalty occurred by way of settlement In the Matter of Freedom Mortgage Corporation case.

The Freedom Mortgage Corporation case concerned LOs fudging information required by HMDA and Regulation C where such LOs selected non-Hispanic white when consumers refused to provide their race, ethnicity, and sex.

Interestingly, a compliance plan would have avoided this civil penalty because the applicable regulation permits lenders to report that the applicant did not provide the information and the loan can close. Had there been a compliance plan in place, Freedom Mortgage Corporation would have $1.75 million more today. In fact, CFPB ordered the lender to "develop, implement, and maintain policies, procedures, and internal controls to ensure compliance with data collection, recording, and reporting requirements set forth in HMDA and Regulation C." Additionally, trainings were required by CFPB.

Lenders - you need a compliance company to create policies and train your LOs before you get hit with a case by CFPB.


Tuesday, May 26, 2015

The Making Home Affordable Program (MHA) has been formally extended 1 year

The Making Home Affordable Program (MHA), has been formally extended 1 year, through December 31, 2016, by Supplemental Directive 15-04. The program has been widely successful in providing affordable alternatives to foreclosure for millions of homeowners nationwide, and the extension through 2016 will provide relief to the millions more who will be in danger of falling behind on their mortgages in the next year.

This extension applies only to mortgages that are not owned or guaranteed by Fannie Mae or Freddie Mac and for applications that are submitted to the Lender on or before December 31, 2016. Though it is not necessary to have a decision on the application for a loan modification, short sale, or deed-in-lieu by the end of 2016 to be eligible under the MHA program, the transaction must close on or before September 30, 2017 if the borrower would like to receive incentive compensation, such as relocation assistance, payments for successfully completing a short sale or deed-in-lieu, or payments for making timely loan modification payments. Since the amount of relocation assistance that Lenders must offer has increased from $3,000 to $10,000 for all HAFA (short sales & deeds-in-lieu) transactions closing on or after February 1, 2015, borrowers must be mindful of the deadlines so that they may be eligible to receive this increased amount to assist them in moving costs.

This Directive also amends the MHA guidebook to allow servicers to establish a cap on the amount that they will pay to release the second mortgage liens, as long as the cap is not less than $12,000. It establishes a floor amount that borrowers may receive from their primary mortgage lenders to assist them in closing on their short sales or deeds-in-lieu.


These amendments ensure that borrowers will continue to have access to adequate relief through the MHA program.

Wednesday, April 22, 2015

Consumer Step-by-Step Guide for the Mortgage Purchase Process

The Federal Government’s Consumer Financial Protection Bureau (CFPB) recently released a Home Loan Toolkit, a step-by-step guide through the mortgage purchase process, for consumer use. This is a must use tool for real estate professionals to create realistic expectations for their clients and customers. 

This toolkit helps consumers to:

  1. Calculate affordable monthly mortgage payments;
  2. Understand the importance of credit scores to obtaining better mortgages;
  3. Pick their mortgage type;
  4. Choose the best down payment amount;
  5. Shop with different lenders;
  6. Understand and know about issues that may arise;
  7. Choose a mortgage closing agent; and
  8. Understand the overall closing process.


This Home Loan Toolkit has fillable text fields, buttons, and list boxes, allowing consumers to update the toolkit as they work through the process. It is designed to be much easier and more accessible version of the existing Settlement Cost Booklet that is currently provided to consumers and should be used in connection with the new (and simpler) Loan Estimate and Closing Disclosure forms that will be effective on August 1, 2015.

Though creditors are required to provide the toolkit to all potential homebuyers, the CFPB encourages that real estate agents understand and provide this toolkit to their clients as well. The more informed the parties, the smoother the real estate transaction will go.

Tuesday, December 09, 2014

Help is Here to Prevent Mortgage Modification Scams

Do you feel that you are a victim of a mortgage modification scam?

According to the Attorney General: "Thousands of New Yorkers are scammed by companies who take advantage of homeowners in distress." 

To combat these scams, the Attorney General established AGScamHelp.com, which offers "free, qualified mortgage assistance relief services from a network of trusted partners operating across the state under the New York Attorney General Homeowner Protection Program (HOPP)." 

The new site offers both English and Espanol.

The site also enables one to report a scam in a loan modification.

So, protect yourself if you need a modification. Remember, attorneys can provide valuable assistance in defending a foreclosure, but be careful of "attorneys who bring baseless lawsuits just to charge consumers a fee". Rarely, if ever, can attorney get your mortgage removed from your house. Instead, attorneys can assist in modifications, short sales and deeds-in-lieu of foreclosure incident to defending a lender's lawsuit.

Wednesday, October 22, 2014

Ocwen Mortgages May Get a Reprieve from Foreclosure

On October 21, 2014 the New York State Department of Financial Services sent correspondence to Ocwen's General Counsel raising issue "with Ocwen's systems and processes".

The issue presented by NYS DFS deals squarely with Ocwen engaging in bad faith negotiations to modify mortgages. 

Borrowers in New York should be arming their applications for violations of CPLR 3408's good faith negotiation requirement as they review this correspondence and asking the Courts to sanction Ocwen should they have experienced the issues highlighted in the correspondence.

Of note are the record keeping inaccuracies attributed to Ocwen by NYS DFS, which impact RPAPL 1303 and 1304 as well as issues with standing and, in particularly, the attorney verification requirements embodied CPLR 3012-b. How can a Court trust their applications to foreclose in light of this correspondence?

The correspondence claims that "these issues remain unresolved today". This is very concerning.