Avoiding the Indirect Pitfalls of TRID Compliance


The mortgage industry is still coming to terms with the day-to-day tasks of maintaining TRID compliance. But other, broader systemic risks still loom, which, if overlooked, could significantly disrupt lenders’ operations.

For instance, there may be more riding on the accuracy of initial closing cost estimates in the new Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosures than mortgage lenders realize.

“People can make mistakes. They can forget to put a charge on the form. Sometimes charges are manually inputted and that can lead to a disclosure with an inaccurate estimate. But if the CFPB sees a pattern or practice of these, that’s when you can really get into trouble,” said Richard Horn, a former Consumer Financial Protection Bureau senior counsel and special advisor who led the final TRID rule.

Overestimating’s Hidden Cost

At first glance, TRID estimate deviations sound simple […]

CFPB Puts Writing on Wall for Marketing Agreements


The Consumer Financial Protection Bureau warned lenders Thursday to avoid marketing services agreements where payment for advertising is really just disguising kickbacks.

In a bulletin issued to the mortgage industry, the agency continued its pressure on the industry to stop using MSAs as a tactic to avoid compliance with the Real Estate Settlement Procedures Act. The new guidance summarized the federal ban on kickbacks in RESPA, illustrates some examples from the CFPB’s enforcement of the prohibition and highlighted certain legal and compliance risks institutions should watch out for in MSAs.

The CFPB said while MSAs often are characterized as payments to lenders for advertising settlement services, “in some cases the payments are actually disguised compensation for referrals.”

“In sum, the Bureau’s experience in this area gives rise to grave concerns about the use of MSAs in ways to evade the requirements of RESPA,” according to the guidance.

In […]

DOJ, CFPB Officials Warn More ‘Redlining’ Cases on Way


The Justice Department is continuing to find cases of lenders steering minority borrowers into higher cost loans three years after the agency forced several large banks into landmark settlements cracking down on the practice, according to a top DOJ official.

“Based on what is on my docket right now, stayed tuned,” said Steven Rosenbaum, chief of housing and civil enforcement at DOJ’s civil rights division, during a fair housing conference on Wednesday. “There are still lenders who seem to think it is okay to steer minority borrowers to certain loan officers or certain brokers who they know will charge more.”

Speaking at the conference, which was hosted by the Department of Housing and Urban Development, he noted that another “old nemesis” is making a comeback — redlining, the practice of lenders charging more for products or excluding altogether minorities within certain geographic areas.

“We are seeing it happen again,” he […]

Are All Marketing Services Agreements Illegal?


It’s clear that the Consumer Financial Protection Bureau has targeted marketing services agreements, but its crackdown on some alleged kickback schemes and failure to take action after other investigations has created confusion in the mortgage industry.

For example, the agency sent a letter in June to American Home Shield, which offers warranties to homeowners, saying it would not pursue an enforcement action against the company after checking for violations of the anti-kickback provision of the Real Estate Settlement Procedures Act. The outcome of the probe, which lasted more than a year, was disclosed in its parent company’s second-quarter earnings press release.

There have been other cases in which the bureau has opted against enforcement actions, said Marx Sterbcow, an attorney with Sterbcow Law Group in New Orleans.

“They say all MSAs are illegal. How can they all be illegal when you let all of these other […]