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Top Story Lending Related

12/21/2020

Mortgage servicer settles with CFPB

The Bureau has issued a consent order against Seterus, Inc. (Seterus) and Kyanite Services, Inc. (Kyanite), as Seterus’s successor in interest, based on the Bureau’s finding that Seterus violated the Consumer Financial Protection Act of 2010 (CFPA) and Regulation X. The Bureau found that Seterus’s actions resulted in delaying or depriving some borrowers of a reasonable opportunity to get their loss mitigation applications completed and evaluated and in some borrowers' failing to timely receive protections against prohibited foreclosure activities to which they were legally entitled.

The order requires Kyanite to pay $4,932,525 in total redress to approximately 11,866 of the consumers to whom Seterus sent a defective acknowledgment notice. The order also imposes a $500,000 civil money penalty and includes injunctive relief that would apply in the event Kyanite engages in mortgage servicing. At its height, Seterus, a former mortgage servicer based in North Carolina, serviced approximately 500,000 residential mortgage loans. Seterus is no longer operating. On February 28, 2019, after the relevant period covered by the Bureau’s investigation, Seterus was sold and its entire mortgage servicing portfolio was transferred to Nationstar Mortgage LLC, doing business as Mr. Cooper (with which the Bureau reached a separate settlement earlier this month.

12/18/2020

NCUA Board approves rules and proposals

The National Credit Union Administration Board held the first of two consecutive open meetings in December. At the meeting, the Board approved these five items:

  • A final rule on subordinated debt.
  • A temporary final rule that extends regulatory relief measures in response to COVID-19.
  • A proposed rule that permits federal credit unions to purchase mortgage-servicing rights from other federal credit unions under certain conditions;
  • A proposed rule revising the definition of a service facility for multiple common bond federal credit unions; and
  • A proposed rule on overdraft policy

12/18/2020

OCC November enforcement actions

The OCC has released a list of enforcement actions taken in November, which included:

12/18/2020

Fed and FDIC adjust CRA thresholds

The Federal Reserve Board and FDIC have jointly announced the annual adjustment to the asset-size thresholds used to define small bank and intermediate small bank under their Community Reinvestment Act (CRA) regulations. Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification. Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks unless they choose to be evaluated as a large institution. The definitions of small and intermediate small institutions for CRA examinations will change on January 1, 2021, as follows:

  • "Small bank" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.322 billion.
  • "Intermediate small bank" means a small institution with assets of at least $330 million as of December 31 of both of the prior two calendar years and less than $1.322 billion as of December 31 of either of the prior two calendar years.

12/18/2020

FHFA foreclosure prevention and refi report

The Federal Housing Finance Agency has released its third quarter 2020 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 539,451 foreclosure prevention actions in the third quarter of 2020, bringing to 5.2 million the number of troubled homeowners who have been helped during conservatorships; 4.5 million of those actions have helped troubled homeowners stay in their homes.

Forbearance: newly initiated forbearance dropped significantly to 231 thousand in the third quarter from 1.5 million in the second quarter of 2020. The total number of loans in forbearance plans at the end of the quarter was 1 million, representing approximately 3.66 percent of the total loans serviced and 79 percent of total delinquent loans. A majority of the forbearance actions occurred as a result of the Enterprises' response to COVID-19 impacts.

Mortgage Performance: The 60+ days delinquency rate decreased from 4.08 percent at the end of the second quarter to 3.58 percent at the end of the third quarter. Overall, delinquency rates remained much higher than pre-coronavirus rates due to the forbearance programs being offered to borrowers affected by the pandemic.

  • The Enterprises' serious (90 days or more) delinquency rate jumped to 3.14 percent at the end of the third quarter. This compared with 10.76 percent for Federal Housing Administration (FHA) loans, 5.77 percent for Veterans Affairs (VA) loans, and 5.16 percent for all loans (industry average).

Foreclosure starts decreased 10 percent from 7,551 in the second quarter to 6,809 in the third quarter of 2020.

Refinances increased to 1.8 million in the third quarter, from 1.5 in the first quarter of 2020.

REO inventory decreased 25 percent in the third quarter.

12/18/2020

FHFA proposes Enterprise Liquidity Requirements

The Federal Housing Finance Agency (FHFA) has announced a proposed rule regarding liquidity requirements for Fannie Mae and Freddie Mac (the Enterprises). The proposal builds on existing FHFA guidance and the experience gained from managing the Enterprises' liquidity positions in conservatorship.

Among other things, the proposal seeks to implement minimum Enterprise liquidity and funding requirements, daily management reporting of the Enterprises' liquidity positions, monthly public disclosure reporting requirements, and other liquidity-related requirements. It includes four liquidity requirements designed to ensure that the Enterprises are a source of strength for the mortgage market during downturns in the economy, and to incentivize the Enterprises to issue an appropriate and stable mix of debt over the long term. To protect taxpayers and support the mortgage market, the proposed rule takes into account the Enterprises' lack of access to the Federal Reserve Bank discount window, unique structure, and public charter. Currently, the Enterprises would meet or exceed all requirements of the proposed rule.

Comments on the proposal will be accepted for 60 days following publication in the Federal Register

12/17/2020

CFPB: Avoiding reverse-mortgage scams

The CFPB has posted a Bureau Blog article, "Avoid reverse mortgage scams," explaining reverse mortgage shopping scams and how to avoid them. As a result of the economic uncertainty caused by the COVID-19 pandemic, scammers may be targeting older homeowners through reverse mortgage schemes. The article describes several such schemes, and offers tips on how to avoid them.

12/17/2020

Mortgage performance declines

The OCC has reported the performance of first-lien mortgages in the federal banking system declined during the third quarter of 2020. The OCC Mortgage Metrics Report, Third Quarter 2020 showed that 92.5 percent of mortgages included in the report were current and performing at the end of the quarter, compared to 96.4 percent a year earlier. The percentage of seriously delinquent mortgages—mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due—was 5.8 percent in the third quarter of 2020, compared to 6.8 percent in the prior quarter and 1.5 percent a year ago.

Servicers initiated 369 new foreclosures during the third quarter of 2020­, a 48.2 percent increase from the previous quarter and a 98.3 percent decrease from a year ago. Events associated with the COVID-19 pandemic, including foreclosure moratoriums, caused significant decreases in these metrics. Servicers completed 14,097 mortgage modifications in the third quarter of 2020, and 40.8 percent of the modifications reduced borrowers’ monthly payments. Of these 14,097 modifications, 10,050, or 71.3 percent, were “combination modifications”— modifications that included multiple actions affecting affordability and sustainability of the loan, such as an interest rate reduction and a term extension. Among the 10,050 combination modifications completed during the quarter, 78.1 percent included capitalization of delinquent interest and fees, 69.9 percent included an interest rate reduction or freeze, 54.4 percent included a term extension and 47.4 percent included principal deferral. Of the modifications with a single action, 3,692 or 91.9 percent received a term extension.

The first-lien mortgages included in the OCC’s quarterly report comprise 27 percent of all residential mortgage debt outstanding in the United States or approximately 14.4 million loans totaling $2.87 trillion in principal balances.

12/17/2020

FOMC Statement issued

The Federal Reserve Board has released the Statement of the Federal Open Market Committee following its December 15–16 meeting.

"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses."

Also released were tables and charts summarizing the economic projections made by Committee participants for the meeting.

12/17/2020

FHA Catalyst Claims Module updated

The FHA has announced the implementation of additional functionality in its FHA Catalyst: Claims Module, achieving full, digital submission capabilities for all FHA Single Family Title II forward mortgage claim types and the elimination of manual, labor intensive paper-based claim submission processes for servicers of FHA-insured mortgages. New claim types available in the module include electronic submissions for FHA’s Claims Without Conveyance of Title (CWCOT) program, augmenting the programmatic streamlining made to this alternative conveyance method announced by FHA in July. Servicers submitting claims to FHA for insurance can now use the FHA Catalyst: Claims Module for all 17 Single Family forward mortgage claim types, including FHA’s special COVID-19 National Emergency Standalone Partial Claim and other home retention claim types designed to help homeowners regain sustainable homeownership as they recover from the financial effects of the COVID-19 global pandemic.

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