In response to what the CFPB views as an increasing trend among mortgage brokers shifting to a mini-correspondent lender model, the CFPB recently issued “Policy Guidance on Supervisory and Enforcement Considerations Relevant to Mortgage Brokers Transitioning to Mini-Correspondent Lenders” (“Policy Guidance”) regarding the application of Regulations X (RESPA) and Z (TILA) to transactions involving mini-correspondent lenders. In addition to providing background on the differences between brokers and mini-correspondents and certain requirements of Regulations X and Z, the Policy Guidance identifies questions the CFPB may consider when reviewing mini-correspondent transactions and the relationship between the mini-correspondent lender and the investor as part of CFPB examinations or enforcement actions. The CFPB, however, stops short of drawing any lines in the sand between what it considers to be brokered transactions and bona fide secondary market transactions under the mini-correspondent model. Read More
The CFPB once again has taken aim at affiliated business arrangements (“AfBAs”), only this time, it is targeting AfBA disclosures. In prior enforcement actions, the CFPB focused on the validity of the AfBA, bringing actions against alleged “sham” AfBAs. However, in its most recent enforcement action, the CFPB entered into a consent order with a real estate brokerage company, alleging that it referred consumers to its affiliate, but failed to provide an adequate AfBA disclosure. The CFPB also alleged that the brokerage company improperly required the use of its affiliate title insurance agency.
If you are on the edge of your seat waiting for the combined RESPA/TILA proposed regulations and disclosure forms, we have our first glimpse into the changes being contemplated by the Consumer Financial Protection Bureau (“CFPB” or “Bureau”). On February 21, 2012, the CFPB announced its plan, in accordance with the Small Business Regulatory Enforcement Fairness Act, to solicit feedback from a group of small business mortgage and settlement companies that will be directly impacted by new and combined RESPA and TILA disclosure forms. In addition to describing the purpose and process for a Small Business Review Panel (“Panel”), and publishing a list of questions and issues for small business representatives to discuss at the upcoming Panel, the Bureau released an outline of the proposals currently under consideration for combined RESPA and TILA regulations. At this point, the outline is a list of issues that will allow the CFPB to measure whether the regulations under development could have a significant economic impact on a substantial number of small entities, but it gives us a first glance at the changes that could be coming for mortgage disclosures under RESPA and TILA. Read More