"Rob, do you think that the CFPB is involved in monitoring price gouging by companies of any sort? For example, I read about a drug company that dramatically raised a drug price recently -isn't that more egregious than a loan officer taking a real estate agent to a baseball game?" I believe that the company recanted its price increase, but yes, you have a point. And wouldn't it be great if some group improved the health care billing/insurance dance that we all seem to endure? By the way, sorry for the length of the commentary today - but there is so much CFPB news...

The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ), after an investigation that begin in early 2014, announced a joint action against Hudson City Savings Bank for discriminatory redlining practices that denied residents in majority-Black-and-Hispanic neighborhoods fair access to mortgage loans. The complaint filed by the CFPB and DOJ alleges that Hudson City illegally provided unequal access to credit to neighborhoods in New York, New Jersey, Connecticut, and Pennsylvania. The bank located branches and loan officers, selected mortgage brokers, and marketed products to avoid and thereby discourage prospective borrowers in predominantly Black and Hispanic communities. If the proposed consent order is approved by the court, Hudson City will pay $25 million in direct loan subsidies to qualified borrowers in the affected communities, $2.25 million in community programs and outreach, and a $5.5 million penalty. This represents the largest redlining settlement in history to provide such direct subsidies.

The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against applicants in credit transactions on the basis of characteristics such as race, color, and national origin. In the complaint, the CFPB and DOJ alleged that from at least 2009 to 2013, Hudson City violated the law when it engaged in illegal redlining by offering unequal access to credit based on the race and ethnicity of prospective borrowers' neighborhoods. Specifically, Hudson City structured its business to avoid and thereby discourage residents in majority-Black-and-Hispanic neighborhoods from accessing mortgages. The DOJ also alleges that Hudson violated the Fair Housing Act, which also prohibits discrimination in residential mortgage lending.

Remember that last week the CFPB also took legal action against World Law Group. The lawsuit against World Law names individuals responsible for running a debt-relief scheme that charged consumers exorbitant illegal upfront fees. The CFPB alleges the debt-relief scheme falsely promised consumers a team of attorneys to help negotiate debt settlements with creditors, failed to provide legal representation, and rarely settled consumers' debts.

No, the CFPB has not been sitting on its hands. Using enforcement actions to effectively run an entire industry is not a good way to run residential lending, and everyone is certainly waiting for "another head to be put on a stake on the castle wall" regarding MSAs. That being said, the CFPB issued a final rule amending threshold adjustments for 2016 HOEPA and QM loans, effective January 1st, 2016. The final rule regarding various annual adjustments is required to make under provisions of Regulation Z (TILA) that implement the CARD Act, HOEPA, and the ability to repay/qualified mortgage provisions of Dodd-Frank. The adjustments made by the final rule are effective January 1, 2016. The revised loan amount threshold for HOEPA loans is $20,350 and the adjusted statutory fee trigger is $1,017.

HOEPA requires the CFPB to annually adjust the total loan amount thresholds that determines whether a transaction is a high cost mortgage when the points and fees are either 5 percent or 8 percent of such amount.  In the final rule, the CFPB decreased the current dollar thresholds from, respectively, $20,391 to $20,350 and $1,020 to $1,017.

Regarding QM, there is a 3 percent threshold of the total loan amount for a loan greater than or equal to $101,740, a $3,052 threshold for a loan amount greater than or equal to $61,050 but less than $101,749 and there is a 5 percent threshold of the total loan amount for a loan greater than or equal to $20,350 but less than $61,050. Additionally, the threshold for loan amounts greater than or equal to $12,719 but less than $20,350 is $1,017 and 8 percent of the total loan amount for a loan amount less than $12,719.

And helping every borrower better shop their lender (I didn't say that!), "As part of our Know Before You Owe mortgage initiative there is now a Loan Estimate that makes shopping for a mortgage easier than ever. The Loan Estimate uses clear language and design to help you understand the key features, costs, and risks of a loan offer you've received from a lender. Starting October 3, lenders will give you the Loan Estimate for most mortgages you apply for. The new design also makes it easier to compare Loan Estimates. Shopping for the best deal on your mortgage could save you money over the years. You should get Loan Estimates from at least three lenders and compare them to find the loan that's best for you and your family."

The CFPB also issued a rule that will increase the number of financial institutions that are able to offer certain types of mortgages in rural and underserved areas. "The rule also gives small creditors time to adjust their business practices to comply with the new rules. We will update some of the Title XIV implementation materials on our website to reflect the changes, and will send an email to let you know when we have posted those updates." Yes, it issued a final rule that revises the definitions of "small creditor" and "rural areas" under Regulation Z of the Truth in Lending Act (TILA). The final rule is effective January 1, 2016 and creates special small creditor provisions with regard to certain Regulation Z requirements. Certain provisions apply to small creditors in general, while other provisions apply to small creditors that operate predominantly in rural or undeserved areas.

Small creditors are able to do many things that might be the envy of larger lenders. For example, extend qualified mortgages that are not subject to the 43 percent debt-to-income ratio or the underwriting requirements of Appendix Q under the ability to repay (ATR) rule, if the loans are retained in portfolio. They can extend balloon-payment qualified mortgages if they operate predominantly in rural or underserved areas. How about extend balloon payment qualified mortgages under a temporary provision whether or not they operate predominantly in rural or underserved areas? Or include balloon-payment features in high-cost mortgage loans that satisfy certain small creditor qualified mortgage loan provisions? And avoid the requirement to establish escrow accounts for certain higher-priced mortgage loans.

Additionally, the annual percentage rate ceiling for a first lien loan to be a non-higher priced mortgage loan that is eligible for the qualified mortgage safe harbor under the ATR rule is higher for small creditors than other creditors (i.e., less than 3.5 percentage points above a benchmark rate as opposed to less than 1.5 percentage points above the benchmark rate). To increase the number of financial institutions eligible for these special provisions under Regulation Z, the final rule revises the definition of "small creditor" by increasing the loan origination limit for determining eligibility for small-creditor status from 500 originations of covered transactions secured by a first lien to 2,000 originations. Significantly, originated loans held in portfolio by the creditor and its affiliates are excluded from the 2,000 loan cap.

In addition it includes the assets of the creditor's affiliates that regularly extended covered transactions in the calculation of the $2 billion asset limit for small-creditor status. The CFPB took this step to prevent larger creditors from attempting to fit within the small creditor provisions through organizational changes. It also expands the definition of "rural area" to include either: (a) a county that meets the current definition of a rural county; or (b) a census block that is not in an urban area as defined by the U.S. Census Bureau. Additionally, the rule allows creditors to rely on a new automated tool provided on the CFPB website to determine whether properties are located in rural or underserved areas, or on the Census Bureau's website to assess whether a particular property is located in an urban area (based on the Census Bureau's definition). For more details definitely click on the link a few paragraphs up!

The CFPB updated two regulatory examination procedures, the Real Estate Settlement Procedures Act (88 pages) and the Truth in Lending Act (323 pages). Yes, 323 pages of simplification.

And don't forget about the CFPB's Dodd-Frank Mortgage Rules Readiness Guide. "The update was developed to help financial institutions come into and maintain compliance with the mortgage rules outlined in the Summary of the Rules in the Guide. The CFPB has designed this Guide for use by institutions of all sizes and consists of a summary of the rules and a readiness questionnaire.

Switching gears to the markets...By the time the traders hit the subway trains Thursday evening the 10-year was at 2.12% - rates sure haven't budged much given the movement in the last month of stocks - once again teaching a lesson to anyone who thinks equity and bond moves are exactly correlated. But that was prior to Fed Chairperson Janet Yellen's speech saying that the Fed believes the economy is on track to warrant a rate increase some time this year.

This morning we've had the final Q2 GDP number: +3.9% - higher than expected. Later are a couple University of Michigan numbers. In the mean time we're back to 2.19% on the 10-year with agency MBS prices worse .250.

Jobs and Announcements

In job news private mortgage insurance company Genworth Financial is hiring Account Managers in its Denver and San Diego territories. "Candidates should have exceptional customer interaction skills, as well as a proven track record of sales execution and leadership. The person hired will be expected to provide the highest level of internal and external customer service, manage customer relationships, and develop growth strategies for assigned accounts. In addition, the successful candidate will develop calling plans to cover all assigned accounts, monitor branch volume and calling activity, take necessary actions to achieve account volume goals, and execute and lead implementation of Genworth products and initiatives. The ideal candidate will have 4+ years of mortgage experience in a regional or territorial sales role, have a college degree or equivalent of industry/sales experience, great presentation and communication skills, and have the ability to work flexible hours with occasional overnight travel.  Interested candidates should email their resume to Senior Recruitment Client Manager Kristin Miller.

The most recent housing assessment by Freddie Mac's Chief Economist Len Keifer showed that many markets are experiencing improved market conditions. "To reiterate Len's analysis", says Dr. Rick Roque, Managing Director of MiMutual Mortgage, dba of Michigan Mutual, Inc., "Florida, Arizona and Texas not only have improved housing markets, but are experiencing one of the most robust recoveries in the United States with stable borrowers paying their mortgages and reducing their total household debt.  It is for this reason MiMutal is investing in strong Retail Production leadership in these markets...The key in serving these markets is having a focused retail strategy, revolving around a few branch offices in target markets, with financial investments in their growth. MiMutual is making one of the largest financial investments in retail offices in the United States as compared to other non-depository peers. It is one of the few nationwide non-depository lenders who is licensed (including apps submitted) in over 35 states. Under the retail leadership of Rick Roque, MiMutual is acquiring and recruiting Production Teams in Phoenix/Tucson (AZ), Seattle (WA), Portland (OR), St. Louis (MO), Dallas/Austin (TX), Orlando (FL), Charleston (SC) and Kansas City (KS). For a confidential discussion, contact Dr. Rick Roque (413.297.6895).

And congrats to Carmen Alailima! The Wholesale Lending Division of Carrington Mortgage Services, LLC announced she will be the Inside Regional Sales Manager of its Wholesale West Division in Henderson, Nevada. Under her direction, the Henderson location will focus on continued growth and providing expanded product offerings to the surrounding area to meet market demand. She will be involved in recruitment, training and management.

On the flip side, Ocwen Financial Corp said it would cut 300 jobs, about 10 percent of its U.S. workforce, in Waterloo, Iowa to save costs. (Impacted employees can post resumes for free at www.LenderNews. com - just select the "resumes" link!)