By:Peter King | May 18, 2011

In one of its first concrete actions meant to benefit consumers, the new Consumer Financial Protection Bureau (CFPB) has released two versions of a simplified mortgage disclosure form to be provided to borrowers.

The new form is intended to replace two documents currently provided to borrowers, the Truth in Lending Disclosure and the Good Faith estimate. Those forms, which are required by law, provide a borrower with specific information about the mortgage they are seeking, including the interest rate, monthly payment, loan fees and, in the case of an adjustable-rate mortgage, the maximum monthly payment the loan can reset to over time.

The present forms are two and three pages long, respectively, and present much of the same information. Both versions of the proposed form present most of the same information in a single document with more simplified language.

“The current forms can be complicated and difficult for consumers to use,” said Elizabeth Warren, acting head of the CFPB. “They are also redundant and can be costly for lenders to fill out. With a clear, simple form, consumers will be in a better position to answer two basic questions: Can I afford this mortgage and can I get a better deal somewhere else?”

The bureau is posting the two proposed versions of the form on its web site, under the project heading Know Before You Owe, to obtain feedback from consumers and the mortgage industry before committing to a final design.

The CFPB plans to conduct evaluations of the draft forms over the summer. The final form and accompanying rules for use are due to be released by July 2012 for public comment.

The new agency was directed to create a new mortgage disclosure form by last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act, which also created the CFPB itself.

Posted via email from Title Insurance
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Dodd-Frank Ranks as Highest Compliance Concern for Lenders in 2011

May 1, 2011 admin

According to QuestSoft’s third annual compliance survey of lenders, the Dodd-Frank Act ranks as the greatest mortgage compliance concern in 2011. The series of laws passed last year replace the Real Estate Settlement Procedures Act (RESPA) as the highest concern, which topped the list the previous two years.

The survey polled 405 lenders on their level of concern for regulatory changes affecting the mortgage industry in 2011. Seventy percent of lenders responded to the implementation of new regulations under the Dodd-Frank Act as the most significant compliance concern. Rounding out the top three identified concerns were RESPA fee tolerance rules (50 percent cited major concern) and other RESPA issues (46 percent cited major concern).

“It was no surprise to see Dodd-Frank changes as the highest ranking compliance concern among lenders, since the changes will significantly impact lenders of all sizes and the associated rules are being announced right now,” said Leonard Ryan, president of QuestSoft. “It is also interesting to see that even a year after the RESPA’s major overhaul; lenders are still concerned with how to comply with fee tolerance rules and other RESPA-related loan disclosure issues.”

Loan officer compensation, which officially became active in April, and SAFE Act changes, both tied as the fourth highest concern, with 40 percent of lenders citing these regulations as a major concern. Though loan officer compensation received fewer medium concern percentage points, it placed fourth due to more survey participants indicating they were subject to the ruling.

Surprisingly, concern for the multi-state exams that many lenders will face this year remained at the bottom of the list for the second consecutive year; with only 19 percent of respondents citing them as a major concern.

“Although multi-state exams are not required for all lenders, more than half of QuestSoft’s clients will be mandated to partake in state-level exams and be required to export exact loan information on all originated loan files to the agency conducting the exam,” Ryan said. “It does appear that lenders are continuing to place their focus on the most immediate changes based on nationally published deadlines. Unfortunately for them, many state examiners are beginning to request the data for exams and giving lenders only a few days to comply. Therefore, lenders should prepare now to adhere to these long-term compliance protocols.”

QuestSoft provides lenders with multiple software tools to handle federal, state and local lending regulations. Compliance EAGLE is an automated compliance review tool that evaluates a loan file for fulfillment with the full range of mortgage lending regulations, including RESPA, Home Mortgage Disclosure Act (HMDA), Truth in Lending Act (TILA), Community Reinvestment Act (CRA), flood determination requirements and other consumer and predatory lending laws in seconds. Other products offered include HMDA RELIEF and CRA RELIEF, which provide lenders, banks and credit unions specially designed tools to ease the collection, analysis and reporting of HMDA and CRA data.

AVAILABLE SIDEBAR TABLE:

In a survey of 405 lenders, the level of concern cited for compliance issues in 2011:

	High Concern	Medium Concern	Low Concern
Dodd/Frank Changes	70%	22%	6%
RESPA Fee Tolerances	50%	36%	11%
Other RESPA Issues	46%	39%	12%
Loan Officer Compensation Rules	40%	24%	20%
SAFE Act- Nationwide Mortgage Licensing System	40%	41%	17%
Increased Fair Lending Exam Scrutiny	36%	39%	19%
July 21, 2011 Launch of CFPB	36%	41%	16%
Increased CRA Exam Scrutiny	27%	35%	20%
State Consumer Lending Laws	25%	45%	23%
Fraud – Borrower Identity	25%	42%	31%
Risk Retention/ Qualified Mortgages	24%	42%	24%
Fraud – Income Verifications	24%	43%	30%
Fraud – Loan Flipping, Collateral	22%	39%	36%
Multi-State Exam Process (LEF)	19%	29%	24%

Totals may not add up to 100% due to rounding or responses of “Not Applicable”

Posted via email from Title Insurance
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The MERS Decision Story

May 1, 2011 admin

Fallout from the Michigan Court of Appeals decision tossing out two foreclosures by MERS is sweeping the state of Michigan. Had a call yesterday from someone whose closing was canceled at the last minute, because, MERS had done the foreclosure and quit claimed the property to the bank, which had agreed to sell the home to the caller. My realtor wife advised me title companies across Michigan are backing out of deals and canceling closings.
Because, if a MERS foreclosure is in the chain of title, it is, as they say in the title business, “clouded.”In my caller’s case, MERS foreclosed, the homeowners left and bought a new house, the redemption period expired, the
bank sold the house. But, under the Michigan Court of Appeals decision, the former homeowner could sue to get the foreclosure sale set aside, putting the home back into his name. And he would win. So, title companies, who issue insurance guaranteeing to the buyer, and the buyer’s mortgage company, that the seller does indeed have good title to the property. No title policy, no mortgage; no mortgage, no sale.
No telling how far back this can go, what if MERS foreclosed 3, 5, even ten years ago?
Not sure off the top of my head how long they have been around. I have been blogging about MERS for years.
As filing fees for real estate documents increased, the mortgage companies decided to skip paying those annoying fees every time they bought a mortgage.
They had to pay to have it recorded with the county register of deeds, to put the world on notice that there was a lien on the property.
So, the initial mortgage was recorded in the name of MERS, as “nominee”.
Then, every time the mortgage was sold or assigned, nothing else was recorded with the county, just on MERS records.
So, MERS had no actual interest in the mortgages, could not collect any money due on them, and, that is why the court threw out the foreclosures last week.