Mortgage Compliance

In Other CFPB News; QM Safe Harbor and PHH Response

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cfpb-news-qmBesides the recent ruling in the PHH case, there are other things happening with the CFPB.

First, some good news. Dodd-Frank requires the CFPB to review and assess the effects of any rules implemented under the Act.

Accordingly, even though it’s only been 3 years since we got the QM rule, they are already hard at work evaluating its effect on mortgage lending (QM Review). If the assessment reveals problems it would require specific rulemaking to make any needed changes to QM. This could be costly and time-consuming for both CFPB and lenders.

So, unless their assessment reveals any major problems, for now, we should not expect to see any major changes to the QM rules, with maybe an exception to extend the safe harbor provisions for agency approved and guaranteed loans. This I know would put many lenders’ minds at ease.

On the other hand, just when we thought it might be safe to go back into MSAs, CFPB filed a brief in connection with their case against Intercept Corp., a payment processor, outlining their disagreement with the issue of their unconstitutional structure as found in the PHH case (Intercept).

With the filing of this brief, it becomes quite clear that CFPB is not about to accept the ruling of the U.S. Court of Appeals for the D.C. Circuit. It looks as though they may have just begun to fight.

So what comes next?

  • Is CFPB’s structure of a single Director who can only be removed by the President “for cause” constitutional. The Appeals Court in DC says no.
  • What will the decision be in the Intercept case? What effects will these rulings have on the financial services industry?
  • How will these outcomes impact how CFPB handles future audits and enforcement actions?

Only The Shadow knows…stay tuned.

Michael Vitali

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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Michael Vitali

About Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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