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Top Story Lending Related


CFPB settles with mortgage companies

The CFPB has issued consent orders against Sovereign Lending Group, Inc. and Prime Choice Funding, Inc. Sovereign is a California corporation that is licensed as a mortgage broker or lender in about 44 states and the District of Columbia. Prime Choice is a California corporation that is licensed as a mortgage broker or lender in about 35 states and the District of Columbia. Both companies offer and provide mortgage loans guaranteed by the United States Department of Veterans Affairs (VA).

The Bureau found that the companies mailed consumers advertisements for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or lacked required disclosures, in violation of the Consumer Financial Protection Act’s prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule, and Regulation Z.

The consent order against Sovereign requires Sovereign to pay a civil penalty of $460,000. The consent order against Prime Choice requires Prime Choice to pay a civil penalty of $645,000. The consent orders also impose injunctive relief to prevent future violations, including requiring the companies to bolster their compliance functions by designating an advertising compliance official who must review their mortgage advertisements for compliance with mortgage advertising laws prior to their use; prohibiting misrepresentations similar to those identified by the Bureau; and requiring the companies to comply with certain enhanced disclosure requirements to prevent them from making future misrepresentations.


June residential sales increase

HUD and the Census Bureau reports that sales of new single-family houses in June 2020 were at a seasonally adjusted annual rate of 776,000. This is 13.8 percent above the revised May rate of 682,000 and is 6.9 percent above the June 2019 estimate of 726,000. The median sales price of new houses sold in June 2020 was $329,200. The average sales price was $384,700. The seasonally adjusted estimate of new houses for sale at the end of June was 307,000. This represents a supply of 4.7 months at the current sales rate.


CFPB settles with foreclosure relief company

The United States District Court for the Central District of California entered a stipulated final judgment resolving the Consumer Financial Protection Bureau’s allegations against Certified Forensic Loan Auditors, LLC (CFLA) and Andrew Lehman. CFLA is a foreclosure relief services company headquartered near Houston, Texas, and Lehman is CFLA’s president and CEO.

The Bureau alleged that CFLA and Lehman engaged in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act of 2010 (CFPA) and charged unlawful advance fees in connection with marketing and selling financial advisory and mortgage assistance relief services to consumers in violation of CFPB Regulation O and the CFPA. The court’s order permanently bans CFLA and Lehman from the industry and imposes a suspended judgment for redress of $3 million and civil money penalties of $40,000.

The Bureau’s complaint alleged that CFLA and Lehman made deceptive and unsubstantiated representations about the company’s mortgage assistance relief services and its ability to help consumers avoid foreclosures or negotiate loan modifications.

The court’s order permanently bans CFLA and Lehman from providing mortgage assistance relief services or financial advisory services. The order also imposes a suspended judgment against CFLA and Lehman for redress of $3 million and imposes a civil money penalty of $40,000. The suspended judgment for redress and the amount of the civil money penalty account for CFLA’s and Lehman’s limited ability to pay based on sworn financial statements.


More firms eligible to provide emergency lending facilities

The Federal Reserve Board yesterday expanded the set of firms eligible to transact with and provide services in three emergency lending facilities. Encouraging a broader range of agents for the Term Asset-Backed Securities Loan Facility (TALF) and counterparties for the Commercial Paper Funding Facility (CPFF) and Secondary Market Corporate Credit Facility (SMCCF) will increase the Federal Reserve's operational capacity and insight into the respective markets. Additional FAQs were also released.


2015 Affirmatively Furthering Fair Housing Rule replaced

HUD Secretary Carson announced yesterday HUD will ultimately terminate the Obama Administration’s Affirmatively Furthering Fair Housing (AFFH) regulation issued in 2015. It is replaced by a new rule, Preserving Community and Neighborhood Choice, which defines fair housing broadly to mean housing that, among other attributes, is affordable, safe, decent, free of unlawful discrimination, and accessible under civil rights laws. It then defines “affirmatively furthering fair housing” to mean any action rationally related to promoting any of the above attributes of fair housing.

A grantee’s certification that it has affirmatively furthered fair housing would be deemed sufficient if it proposes to take any action above what is required by statute related to promoting any of the attributes of fair housing. HUD remains able to terminate funding if it discovers, after investigation made pursuant to complaint or by its own volition, that a jurisdiction has not adhered to its commitment to AFFH.


FDIC rescinds Deposit Advance guidance

The FDIC has published [85 FR 44685] a notice rescinding its November 26, 2013, "Guidance on Supervisory Concerns and Expectations Regarding Deposit Advance Products." That guidance has been replaced by the May 20, 2020, Interagency Lending Principles for Offering Responsible Small-Dollar Loans," issued by the FDIC, Federal Reserve Board, OCC, and NCUA, as noted in FDIC FIL-58-2020, dated May 20, 2020.


House prices slip in May

The Federal Housing Finance Agency's House Price Index Report for May 2020 indicates U.S. house prices slipped down 0.3 percent from April, but were up 4.9 percent over house prices in May 2019. April 2020's reported 0.2 percent increase was revised downward to 0.1 percent.

Regionally, house price changes ranged from -1.0 percent in the New England census region to +1.0 percent in the South Atlantic region.


Published in the Federal Register today

Key proposals and rules published in today's Federal Register, with links to our earlier coverage:


OCC proposes True Lender Rule

The OCC has proposed a rule that would determine when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party.

Banks’ lending relationships with third parties can facilitate access to affordable credit. However, the relationships have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks and third parties from entering into relationships, limit competition, and chill the innovation that results from these partnerships—all of which may restrict access to affordable credit.

The proposed rule would resolve this uncertainty by amending 12 CFR Part 7 to specify that a national bank or federal savings association makes a loan and is the “true lender” if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. Comments on the proposal will be accepted through September 3, 2020.

PUBLICATION UPDATE: Published at 85 FR 44223 on 7/22/2020.


Executive Order 'normalizing' treatment of Hong Kong

Treasury has posted a notice concerning Executive Order 13936, "The President's Executive Order on Hong Kong Normalization." The order — issued on July 14 following China's imposition of national security legislation on Hong Kong, effectively eliminating its former autonomous status — states that U.S. policy will be to suspend or eliminate different and preferential treatment for Hong Kong to the extent permitted by law.


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