Winston Churchill said, "There are a terrible lot of lies going around the world, and the worst of it is half of them are true." Figures don't lie, right? For folks who like lists, Yahoo, interestingly enough, picked up a story on the largest lenders and servicers out there. It is an interesting study in the momentum of non-bank players.

Just a quick note on yesterday's article highlighting San Francisco's look into the use of eminent domain for mortgage seizures. Readers should know that it's important to highlight that the resolution in question originally called for the City's Board of Supervisors to authorize important steps toward eminent domain, but the version that passed in late October only called for a study of the eminent domain proposal and other possible approaches to assist homeowners. The City Controller is expected to report back to the Board with the results of a study sometime in January, but the actions surrounding the original proposal have thus far indicated that most policymakers in San Francisco remain skeptical of this dangerous proposal.

I was fortunate to attend the California Mortgage Banker Association's conference in Southern California and hosted by Michael Pfeifer, Esq. this week on legal and compliance issues. It is easy to see why compliance folks make the big bucks - even I wish I'd had an acronym dictionary! The conference, which was very well attended, included conversation about the FTC Act and the CFPA, RESPA/TILA, HMDA, ATR/QM, CFPB jurisdiction/scope of Authority, UDAAP, QRM, ECOA, FHA and GSEs, MCR, the ability for DBO to adopt Uniform State Test for MLO licensing, HELOC termination, and so on. If a CEO doesn't know what all those mean, you'd better hire someone that does!

But that is world we live in. At the MBA's IMB conference last week, the session on emerging trends in CFPB examinations highlighted what the CFPB looks for during an audit. The CFPB exam is different from state audits because the bureau focuses more on policies and procedures. Part of the exam process will be to review and analyze information to identify risks, request and review documents and then make plans for on-site testing and review. The exams will be conducted both onsite and offsite, and auditors will interview senior managers, loan officers, compliance officers and other personnel as appropriate. They will also compare policies and procedures to actual practices and compare conduct to legal requirements. In order to pass a CFPB exam it's imperative to have a strong Compliance Management System (CMS) in place, as this is a priority during the examination process. Elements of an effective CMS include establishing infrastructure by creating a compliance team and board of directors responsible for the CMS, establishing a consumer complaint management program as well as an internal audit team and training team. It's also advised to document board meetings, audit committee minutes and retain evidence of training and compliance audit reports. Areas where a CMS may be lacking is ECOA compliance, HMDA data integrity, vendor management, independent compliance audit, fair lending program and tracking credit and pricing exceptions to monitor lending risk and control. Lenders who may not have a national footprint are more likely to receive a state exam than a CFPB exam, but state examiners are beginning to mirror what the CFPB is doing.

As a reminder, on November 18 was another webinar on the TILA-RESPA Integrated Disclosure rule. If you missed the webinar, a recording of the webinar is now available.

Check out the video of the webinar. Please note that registration is required to view the recording. This was the fourth in a series of webinars to address the new rule as creditors, mortgage brokers, settlement agents, software developers, and other stakeholders work to implement it over the next year. This session focused on questions related to the Closing Disclosure form.

While we are on the CFPB, as a reminder watchers know that a few weeks ago the CFPB proposed amendments to its Mortgage Servicing Rules. Right before Thanksgiving the CFPB announced the issuance of a proposed rule to amend RESPA (Reg. X) and TILA (Reg. Z). The proposed rule changes primarily focus on clarifying, revising or amending (i) Regulation X's servicing provisions regarding force-placed insurance, early intervention, and loss mitigation requirements; and (ii) periodic statement requirements under Regulation Z's servicing provisions. In addition, the proposed amendments also revise certain servicing requirements that apply when a consumer is a potential or confirmed successor in interest, is in bankruptcy, or sends a cease communication request under the Fair Debt Collection Practices Act. Further, the proposed rule makes technical corrections to several provisions of Regulations X and Z. The public comment period will be open for 90 days upon publication in the Federal Register.

BuckleySander reports that, "The proposal runs nearly 500 pages and includes several notable proposals, including an exemption from the periodic statement requirement for charged-off loans, expanded requirements for borrowers in bankruptcy, and additional loss mitigation protections. The amendments would create an express exemption from the periodic statement requirements for charged-off loans. The proposed exemption from § 1026.41, would apply if the servicer: (1) charges off the loan in accordance with loan-loss provisions and will not charge any additional fees or interest on the account; and (2) provides the borrower with a final periodic statement, meeting certain specific content requirements, within 30 days of charge-off. The proposed amendment expands several of the provisions under Reg. X and Reg. Z to apply to 'successors in interest' provided certain conditions are met. A successor in interest would be treated as the 'borrower' for the purpose of the Reg. X mortgage servicing rules, or a 'consumer' under Reg. Z, once a servicer confirms the individual's identity and ownership interest in the property."

Other items addressed include titles such as Applicability of Periodic Statement and Early Intervention to Consumers in Bankruptcy, Loss Mitigation Protections for Subsequent Delinquencies, Notice of Complete Application, Foreclosure Service Provider Oversight, Additional Guidance on the "Reasonable Date" for Return of Loss Mitigation Information, Servicing Transfer Loss Mitigation Provisions, Expedited Short-Term Repayment Plans, Definition of Delinquency, and Early Intervention Requirements. The full text of the proposed amendments can be found here.

How's the morale at your company? Probably better than at the CFPB, according to this article. Seems a little like the old game of "Post Office", but hey, what do I know? I can't certify the validity of it.

And those watching the CFPB also know that it issued its financial report for its 2014 fiscal year, which ended on September 30, 2014.  Perhaps most illustrative of the CFPB's growth are the report's statistics on the CFPB's employees and funding. The report indicates that the number of CFPB employees grew from 663 in 2011 to 1,443 in 2014. Transfers to the CFPB from the Fed (which are capped by Dodd-Frank at a pre-set percentage of the Fed's total 2009 operating expenses, subject to an annual adjustment) increased from $162 million in 2011 to $534 million in 2014. The report also indicates that as of the end of FY 2014, 45% of the CFPB's employees were in its Supervision, Enforcement and Fair Lending Division. The report includes the CFPB's annual report on its civil penalty fund (CPF).  It states that as of September 30, 2014, the CPF had $112.8 million in funds available for future allocation to harmed consumers and/or financial education. The report indicates that $13 million of the CPF was allocated for financial education in FY 2013 but there was no allocation in FY 2014. The report includes information on civil penalties collected by the CFPB in FYs 2013 and 2014, which amounted to, respectively, $49.5 million and $77.5 million. It also provides information on allocations made to consumers from the CPF during FYs 2013 and 2014.

The report contains an independent auditor's report from the U.S. Government Accountability (GAO). Unfortunately in the audit report, the GAO states that during its FY 2014 audit, it found "serious control deficiencies that affected CFPB's determination and reporting of accounts payable accruals.  Specifically, we found that CFPB did not have effective procedures in place to determine and record an appropriate amount for goods and services received but not yet paid as of September 30, 2014.  Additionally, CFPB did not have effective review procedures to timely detect and correct inaccuracies in the accrual amounts." The GAO concluded that these deficiencies "represent a material weakness" in the CFPB's internal controls. The GAO notes that it had reported a significant deficiency in the CFPB's reporting of accounts payable in its FY 2013 audit opinion but the corrective actions taken by the CFPB were insufficient to remedy the deficiency. In a letter responding to the GAO's audit report, Director Cordray outlines various corrective steps the CFPB plans to take in FY 2015 to remediate the deficiencies found by the GAO.

The Congressional Budget Office (CBO) recently released a cost estimate for H.R. 4662, entitled the "Bureau Advisory Opinion Act."  This was part of series of bills reported in June 2014 by the House Committee on Financial Services that were intended to promote greater transparency and accountability at the CFPB. H.R. 4662 would require the CFPB to establish procedures for issuing advisory opinions in consultation with other federal regulators and after allowing for a public notice and comment period.  The bill would also require the CFPB to issue an advisory opinion within 90 days of receiving a request, create a rebuttable presumption in an action brought under a federal consumer financial law that conduct in conformity with an advisory opinion complied with such law, and require the CFPB to make advisory opinions available on its website with information redacted that is exempt from disclosure under the Freedom of Information Act. The CBO estimates that H.R. 3662 would increase direct spending by the CFPB over 2015-2024 by $815 million.

There was no market-moving news yesterday, and the only news out today is the MBA's Mortgage Application Index: +7.3% vs. -7.3% from last week's report.  Refinance applications increased +13.2% and purchase applications were also higher up +1.3%. And we're looking at an unchanged market today with the 10-year matching its Tuesday close of 2.22% and agency MBS prices roughly unchanged. Seems already "holiday quiet" out there in the markets...

Jobs and Announcements

On the new product side, Roadrunner Solutions is an exciting new (and free) service to help connect LOs and their pre-approved borrowers with local Real Estate professionals. "Roadrunner has a large network of Realtors that will respect the relationship between you and your borrower. Roadrunner will improve your closure rate and help deliver a high level of customer service required for the purchase money borrower. If you are a Call Center LO, run a Call Center Platform, or originate loans outside of your local area, Roadrunner is a great service for you to try.  And there is no fee or cost for you or your borrower to take advantage of our program.  Roadrunner has also added website design and support to their product offering.   If you would like to find out more, email RoadRunner and see how they can customize a solution for you.

For jobs, Citibank, N.A. is searching for experienced, high-performing Home Lending Officers (HLOs) in key Citibank retail markets including New York, Boston, Washington, D.C., S. Florida, Chicago, Los Angeles and San Francisco. HLOs work with customers to offer lending solutions that meet their home financing needs and promote Citi and its financial services. HLOs work as a team with bank branch staff to drive mortgage originations and will develop key referral relationships with Realtors, builders, etc. to develop self-sourced business. Ideal candidates will have expert knowledge of lending products, services and pricing alternatives and the ability to explain them to clients and referral sources. Citibank offers the best of both worlds - an established global brand with a 200-year history that operates in many ways like a small local lender. Citi has exclusive products and relationship pricing discounts and offers one of the best retail branch partnership models in the industry. To learn more about Citibank and this opportunity apply today here.

PRMG announced it has significantly reduced its Lender FEES from $590 to $99 through the month of December on all FHA Streamlines and VA IRRRLs except for New Jersey. (If you'd like to learn more about PRMG contact: Paul Lucido, National Marketing Director.)