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Top Story Lending Related

12/11/2020

COVID 19-related loan flexibilities extended

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities through January 31, 2021. The changes are to ensure continued support for borrowers during the COVID-19 national emergency. The flexibilities were set to expire on December 31, 2020.

Extended flexibilities include:

  • Alternative appraisals on purchase and rate term refinance loans
  • Alternative methods for documenting income and verifying employment before loan closing; and
  • Expanding the use of powers of attorney to assist with loan closings.

12/10/2020

NMLS annual conference

Registration for the 2021 NMLS Annual Conference & Training is now open. It will be held online from February 23-26, 2021, 1:00-5:00 p.m. ET.

12/10/2020

Bureau sues debt collector BounceBack, Inc.

The Consumer Financial Protection Bureau has sued BounceBack, Inc.. a Kansas City, Missouri-based operator of bad-check pretrial-diversion programs on behalf of more than 90 district attorneys' offices throughout the country. The Bureau alleges that in the course of implementing this program, BounceBack violated the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act of 2010 (CFPA). The Bureau’s complaint seeks injunctions against BounceBack, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.

The Bureau's complaint alleges that since at least 2015, in the course of administering these bad-check pretrial-diversion programs, BounceBack used district-attorney letterheads to threaten more than 19,000 consumers with prosecution if they did not pay the amount of the check, enroll and pay for a financial-education course, and pay various other fees. BounceBack failed to—

  • reveal to consumers that BounceBack—and not district attorneys—sent the letters
  • reveal that district attorneys almost never prosecuted these cases, even when consumers ignored BounceBack’s threats. In fact, in most cases, BounceBack did not refer cases for prosecution, even if the check writer failed to respond to its collection letter.
  • include disclosures required under the FDCPA.

The Bureau alleges that BounceBack’s conduct violated the FDCPA, was deceptive under both the FDCPA and the CFPA, and that its violations of the FDCPA constituted violations of the CFPA.

12/09/2020

Debt collector settles with Bureau

The Consumer Financial Protection Bureau has issued a consent order against RAB Performance Recoveries, LLC (RAB) for threatening to sue and suing consumers to collect debts where it did not have a legally required license to do so. Therefore, RAB was not legally entitled to take the actions that it threatened to take against consumers in those states. The Bureau found that RAB misrepresented that it had a legally enforceable right to recover payments from consumers in these states through the judicial process in violation of the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act of 2010 (CFPA).

The consent order prohibits RAB from collecting on the judgments against, or payment agreements from, consumers it obtained in Connecticut, New Jersey, and Rhode Island when RAB did not hold a required debt-collection license in those states. It also requires RAB to take all necessary steps to vacate those judgments and suspend collection of those judgments and to notify consumers with payment agreements that they have been satisfied. The consent order also requires RAB to pay a $204,000 civil money penalty.

12/08/2020

Nationstar Mortgage settles with CFPB and states

The Consumer Financial Protection Bureau has announced it has filed a complaint and proposed stipulated judgment and order against Nationstar Mortgage, LLC, which does business as Mr. Cooper. The Bureau’s action is part of a coordinated effort between the Bureau, a multistate group of state attorneys general, and state bank regulators.

Nationstar is one of the nation’s largest mortgage servicers and the largest non-bank mortgage servicer in the United States. The Bureau alleges that Nationstar violated multiple federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners. In its complaint, the Bureau alleges that Nationstar engaged in unfair and deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010, violated the Real Estate Settlement Procedures Act, and violated the Homeowner’s Protection Act of 1998. Specifically, the Bureau alleges that between January 2012 and January 1, 2016, in numerous instances Nationstar—

  • failed to identify loans on its systems that had pending loss-mitigation applications or trial-modification plans, and as a result failed to honor borrowers’ loan modification agreements
  • foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending
  • improperly increased borrowers’ permanent, modified monthly loan payments
  • misrepresented to borrowers when they would be eligible to have their private mortgage insurance premiums canceled
  • failed to timely remove private mortgage insurance from borrowers’ accounts
  • failed to timely disburse borrowers’ tax payments from their escrow accounts
  • failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings

The proposed judgment and order, if entered by the court, would require Nationstar to pay approximately $73 million in redress to more than 40,000 harmed borrowers. It would also require Nationstar to pay a $1.5 million civil penalty to the Bureau. Attorneys general from all 50 states and the District of Columbia and bank regulators from 53 jurisdictions covering 48 states and Puerto Rico, the Virgin Islands, and the District of Columbia have also settled with Nationstar today and their settlements are reflected in separate actions, concurrently filed in the United States District Court for the District of Columbia.

The Bureau’s and states’ proposed judgments and orders, if entered by the court, will yield nearly $85 million in recoveries for consumers to date and over $6 million more in fees and penalties. They are also part of a larger government effort, which also includes assistance from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the United States Trustee Program, to address Nationstar’s alleged unlawful mortgage loan servicing practices.

12/08/2020

California wildfire disaster relief webinar today

The FDIC and Federal Reserve Bank of San Francisco will be presenting a Northern California Banker Wildfire Disaster Relief webinar today, December 8, 2020, from 10:00 a.m. to 12:00 p.m. PST, to share information about available emergency funding and resources. They will also discuss opportunities to collaborate in community development activities to expand the distribution of aid to Low-to-Moderate (LMI) individuals and small businesses affected by the recent wildfires.

12/08/2020

FDIC releases three Outstanding CRA evaluations

The FDIC has released a list of 58 banks recently examined for compliance with the Community Reinvestment Act. Of the banks listed, 54 received a Satisfactory rating for their evaluations. A bank in North Dakota received a "Substantial Noncompliance" rating.

We congratulate these three banks, whose evaluations were rated Outstanding:

12/07/2020

Bureau sues online lender for MLA violations

The Consumer Financial Protection Bureau has filed a lawsuit against LendUp Loans, LLC. The Bureau alleges that LendUp violated the Military Lending Act in connection with its extensions of credit.

LendUp, which has its principal place of business in Oakland, California, is an online lender that offers single-payment and installment loans to consumers. The Bureau’s complaint, filed in the U.S. District Court for the Northern District of California, seeks an injunction, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.

The Bureau alleges that since October 2016, LendUp has made over 4,000 single-payment or installment loans to over 1,200 covered borrowers in violation of the MLA. The Bureau claims that LendUp’s violations of the MLA include extending loans with an MAPR that exceeds the MLA’s 36% cap, extending loans that require borrowers to submit to arbitration, and failing to make certain required loan disclosures, including a statement of the applicable MAPR.

The Bureau said that its action against LendUp is part of a sweep of investigations of multiple lenders that may be violating the Military Lending Act.

12/04/2020

NCUA proposes removal of ban on interest capitalization

The National Credit Union Administration Board has published [85 FR 78269] a proposed rule for comment that would amend its regulations at 12 CFR 741 by removing the prohibition on the capitalization of interest in connection with loan workouts and modifications. The Board has determined that the current prohibition on authorizing additional advances to finance unpaid interest may be overly burdensome and, in some cases, hamper a federally insured credit union's (FICU's) good-faith efforts to engage in loan workouts with borrowers facing difficulty because of the economic disruption that the COVID-19 pandemic has caused.

Comments on the proposal will be accepted through February 2, 2021.

12/03/2020

Foreclosure and REO eviction moratoriums extended

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac (the Enterprises) will extend the moratoriums on single-family foreclosures and real estate owned (REO) evictions until at least January 31, 2021. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on December 31, 2020.

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